What is the Path to Value?
The Path to Value is my way of describing how an investment in CXM creates business value. It shows the relationship between customer trust and your bottom line.
Sharing your Path to Value raises your credibility and helps you persuade budget holders and stakeholders (investors)
- It uses storytelling to engage investors.
- You make small links between provable assertions. This is much more effective than a big arm wavy – it’s good to have happy customers – declaration.
- You acknowledge the contribution of the whole team to designing and delivering a great customer journey.
A word of warning – don’t be tempted to gloss over gaps in your data, stretch your point or make leaps of faith.
How to build your Path to Value?
- Understand your customers’ experience and how they respond. Does, say, late delivery drive them to your competitors? Or perhaps your sales team are frustrated with the head winds created by poor CX…
- Work out how their response impacts your business, consider
- Lifetime Value, customer churn, referrals, upsells and cross-sells
- Disruption, employee experience, employee churn, motivation and productivity, impact on reputation
- Determine the impact on your organisation
- Reduced revenues
- Higher operating costs
- Higher Customer Acquisition Cost (CAC)
How to use your Path to Value
When you are seeking support for a specific project or activity, the Path to Value helps you build your case in two ways:
With your Financial Controller, Finance Director etc. you can turn the Path to Value into numbers.
But to persuade the FD you need the other half. Use your Path to Value to tell a story. Learn from feedback and questions, and adapt your story. Tell it again. Learn and adapt, and so on. Be ready to communicate more than you expected to win hearts and minds. People will amaze you by identifying other opportunities to earn a return on your investment.
You can also use your path to value to understand the impact of CX and prioritise your change and design activities, and, over the longer term, record the results of activities on your Path to Value. This helps future cases and gives you a library showing the value your CXM adds.
A Path to Value example
Imagine you lead a CX team for an e-commerce store. You have identied an issue with delivery. By speaking with the wider team and using data, you might pull together a story like this:
- 12% of our 100 customers are unhappy with delivery.
- 67% of customers who complain about delivery don’t shop with us again.
- 75% of our customers of happy customers shop with us again and spend an additional £20.
- By fixing delivery, we believe we can keep a further 5% of customers.
- Fixing delivery will generate an additional £100 of income without extra sales costs.
You can add cost reduction opportunities. Notice how I describe how to realise these benefits.
- Each complaint about delivery costs £13.75 to resolve. So, eliminating delivery complaints will save £165 in customer services.
- We cannot save this directly. We recommend investing this time to enhance key areas of service.
- Replacing the eight customers who leave every year costs £50.
- We cannot save this directly. We recommend growing our customer base by this number every year to increase revenue and margin.
You need to choose the narrative style that suits your business. Use your quotes from customers and engaging formats to make the story more interesting.