Fight for that CX Budget: A Strategic Investment for the New Fiscal Year
Shefali Mathur
We are in the budget season and with every department vying for attention, it is possible that leaders may find it difficult to strike the right balance between what they want, what they need and how they can justify the expense.
Customer experience management underwent a paradigm shift when the pandemic burst the virtual door of customer service – leading to omnichannel catering. Omnichannel meant more channels, more people and more hands-on decks. However, it also meant more challenges, and more customers bringing in voluminous concerns that need immediate attention.
The challenging domain of CX (customer experience) mandates the need for a budget that can satisfy the demands of the customers, their dynamic industry and of course, the digital revolution upkeep that continues to cost more and more each passing day. All this, and you need to utilise the funds as judiciously as possible. However, the budget allocation remains to be painfully low.
So how can CX leaders pitch their budget demands for the new fiscal year?
Well, the good news is that 64% of CX leaders can expect a spike in their budgets to tackle the wavering economic and business climate. (Forrester) Thanks to the political-social climate as well, managing experience is no longer focused on the transactional agents but also on how the customer feels about the company, the mission and so much more.
This mammoth challenge is the primary reason for the budget increase. However, the expectation remains that this extra money is put towards value-driven initiatives for customers in terms of technology and predictive modelling.
Understanding the Consumer Climate
Your customers determine how the consumer climate is going to be. This makes it imperative to understand the psychology behind the purchasing of your customers.
Are they more likely to make an impulse purchase decision? Then they are more likely to make an impulse return decision as well. So, how can your brand initiate a journey that helps them make more informed decisions? The answer to this question may lead to the suggestion of integrating predictive technology with your customer experience program.
That requires extra resources in the form of technology as well as human hands, making up for an extra cost and now needs to be a part of your CX budget.
Your understanding of your customer, their purchase pattern etc, is crucial to determine the what, when and how of things that are needed to satisfy their demand, help them make better choices, optimise your resources and of course, increase your bottom line.
Drafting the CX Budget for Your Program
While the budget is all about the money, knowing where this money will be spent and whether it will be put to good use are important factors that need to be a part of your outline.
These are the elements that make up for an ideal budget:
- Defining your CX vision and goals
- Choosing a budgeting method
- Estimate the cost and advantages
- Prioritising your initiatives
- Allocating resources
- Measuring ROI (or creating a use case for representation purposes)
1. Defining your CX vision and goals
You need a clear idea of what your CX plan is set to achieve in the upcoming year. Based on this clear idea, you can determine the pain points and opportunities that may come along as a part of this annual CX journey.
Are you looking for the perfect technology that can streamline your CX agents’ path towards different customer queries or concerns on different platforms? Or perhaps you might be on a lookout for talented leaders who can help you create a crisis management plan on-the-go.
Possessing an understanding of the your desired outcomes and benefits for your business can give you a crystal ball vision and a clearer pathway to set the right monetary expectations for each element.
For instance, you can start with budgeting for a customer experience by listing down investments that offer the highest impact and ROI. Now this may cost a little more but since it has more likelihood of getting things done, this should undoubtedly be a part of your customer experience program. It can be followed by testing processes, design and outreach programs that tie your CX journey together.
So, these elements are based on a predictive model which outlines the necessities of the program and should be accounted for in your budget.
Defining your CX vision and goal should be the first step towards your budgeting.
2. Choosing a budgeting method
A budgeting method is the next step to building your CX budget. Such a method is important to highlight the cash flow, assess the highest cost per capita ratio and also take into account the uncertainties along the way.
Some of the most common methods are fixed budgeting, value-based budgeting and the time and materials budget.
Fixed budgeting: This method involves freezing the expenses and making it a hard stop when it comes to transactions. While this budgeting process is great for small projects with well-defined timelines, it can be cumbersome when it comes to larger projects. Primarily because its inflexibility, while saving money, can hinder the process or development prospects, ending up doing more harm than good.
Time and materials budget: This type of budgeting is helpful when it comes to large or complex projects with evolving or unclear requirements. While it offers the flexibility to make new changes almost immediately, it may lead to opening a floodgate of uncontrolled expenses and reduce the control over the project.
Value-based budgeting: Suitable for innovative and never-done projects, this budgeting method quantifies the cost based on quality and effectiveness. Having said that, these metrics are not very tangible and can be difficult to represent in a budget pitch.
Pro Tip: Try going for an Activity-Based Budgeting approach. In this type of budgeting, the plan assigns resources based on the specific activities that will enhance and elevate customer experience. For instance, if the idea is to improve point-to-point communication between the brand and customer experience agent, there is a need to integrate 24/7 chat support, a training module for the said agents and new integrative models necessary to connect the chatbot with the website. This breaks down the entire project cost based on each resource required to make the macro activity a success. |
3. Estimating your costs
Congratulations! You have determined your challenges, your resource allocations, and even your budgeting methods. Now it’s time to talk money.
Now it is understandable that you cannot jot down the exact number but it is important to set the estimates, to know a ballpark figure of how much it is going to cost the company. These expenses incurred may include digital tools, training material (including software and human trainers), loyalty program awards, marketing activities, consultants (should you need it) and much more. You can go through your historical data and add a certain extra percentage to ensure that you are valuing uncertainties and new prices.
However, the use cases are one of the biggest benefactors of this activity. Use cases help you design various scenarios for your program, right from the best case to the worst case, preparing you for every situation. You must include variations, dips, rises and risks even in hypothetical scenarios to be as close to reality when demanding sufficient funding for your program.
Last but not least, be realistic when it comes to allocating deliverables that are attached to your proposed budget. It is easy to overestimate capabilities to justify the costings but it is advisable to be realistic.
4. Prioritising your initiatives
If everything is important, then nothing is.
This is a very apt saying that counters the need to “get everything done now”. While getting things done now is a very desirable attribute in the corporate world, translating it into the CX budget means a lack of clarity and understanding.
Now that you know what resource requires how much money, it is time to prioritise the said expense. As explained in previous examples, a certain task or action in the CX journey may likely prove to be more impactful and lead to a stronger ROI. This makes this action item a priority.
You can also use existing frameworks to create a priority list that will be crucial in achieving your CX goals. Some of the frameworks are:
1. MoSCoW Method: In this framework, you can classify the action items in four different quadrants based on their urgency and importance, relevant to the project.
2. Impact Vs. Effort Matrix: This is a real-time matrix that entails the value they bring to your business and customers versus the cost or resource they require. It is a simple qualitative analysis that not only saves cost but effort as well.
3. Customer feedback: As the name suggests, these are words of your customers highlighting their concerns and demands which makes it easier to prioritise your action items. For instance, if your audience wants to be able to get in touch with your support team while on the go, it should be a priority to add more platforms to invariably, add more touch points and resources to support the agenda.
5. Allocating resources
The previous step of initiative prioritisation gives way to accurate resource allocation. This is the vital step that helps determine which resource will be frozen where and for what exact period of time. The allocation can also help assess the fruitfulness of the investment and determine the expenditure for such a resource was worth it or not. These resources can be money, time, people, and equipment.
Frameworks like a Gantt chart can visually represent the resource allocated for each chart across the project. The representation of the allocation helps manage the CAPEX while in line with the demand and supply equation, while ensuring that shortages and surpluses are managed easily.
6. Measuring ROI (or creating a use case for representation purposes)
Your budgeting journey does not end with resource allocation but continues until there are tangible numbers in play. Measuring your ROI is what ties all the budget together. While it is something that needs to be undertaken later, i.e. post implementation, the assuming ROI ratio can be a part of your budget pitch.
Measuring your ROI gives you a clear picture of profitability (or not) which earmarks the efficiency of your project, the value created for the business and the customers. It can be represented via the following equation:
ROI = {(Net benefit – Net cost) / Net cost} x 100% Net benefit: Total benefit – Total cost Net cost – total cost of the project |
The calculated ROI can be compared with expected or target ROI to calculate the success rate of your CX plan.
Is there a way you can track your ROI automatically?
If you’re big on social, then we have a suggestion for you. Try the Locobuzz Social Analytics feature. Complete with detailed reports, this feature allows you to track your campaigns, success TAT and other goals which help you understand whether your time and efforts are worth it and if not, how you can tweak it based on the reports.
Budgeting is tough, but you’ve got this!
Budgeting for a business is not an easy task but you don’t have to cross the ends of the earth to manage your CX budget. Envision your goal, list your requirements, prioritise them and implement them to make a CX that is great for your business as well as realistically attainable.
