Customer Service

How to measure ROI of in-location experiences

Raydiant CEO Bobby Marhamat maps out a strategy for determining return on investment for something that seems so intangible: the customer experience.

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September 13, 2021 by Bobby Marhamat — CEO, Raydiant

Our State of Consumer Behavior 2021 report found 30% of consumers felt the in-store experience they received over the past 10 months had gotten better. As retailers work to ensure that their organization is part of this rising tide, it's critical that their investment in customer experience is sustainable.

The only way to ensure sustainability is a healthy return on your investment. While wow-ing your customers with immersive, revenue-driving experiences is a must, you mustn't pursue these goals at all costs.

But how can you gauge ROI for something that seems so intangible: the customer experience? Let me explain.

How to start: Embrace a proven framework for influencing customer behavior

Before you can measure ROI, you need to know what the goal of your investment is. When you're talking about investing in the customer experience, the goal is always to influence customers' behavior in some way.

After working with over 2,500 organizations to plan, deliver, and scale in-location experiences, we've developed a proven framework that can be applied to each and every experience you create.

Here's what that looks like in action:

(Retailer name) will offer an (experience) to customers because we believe it will lead to (behavioral change). By influencing the customer's behavior, we believe it will lead to (objectives). To measure our success, we will track (key results).

Here's what that completed framework looks like:

ABC Electronic Depot will offer an immersive, hi-def gaming experience in our physical locations because we believe it will prompt them to buy more televisions. By influencing customers to test the televisions, we believe it will lead to greater sales. To measure our success, we will track television sales before and after launching the immersive experience.

Think carefully about the alignment of your experiences, objectives, and key results. Ask yourself and your team:

● Are these experiences likely to achieve the customer behavior changes we're aiming for?
● Do our key results truly tell us whether our experiences are effective?

If you can, apply these questions to every in-location experience you provide. Whether you are aiming to increase enrollment in a loyalty program, sell more televisions, or spread brand awareness on social media, are you aligning your objectives and key results logically?

Without cohesion in these areas, you can't accurately measure your ROI for in-location experiences. And, if you can't measure ROI, you can't confidently invest in these defining features of physical retail.

The impact of in-location experiences cannot be overstated

The impact that positive (or negative) in-location experiences can have is truly brand-defining. Positive experiences can prompt customers to return more, spend more, and rave more about your brand. Poor experiences have the inverse effect.

As you devise ways to tweak, tinker, or even overhaul your experiential offerings for customers, keep these common objectives and key results in mind:

Objective 1: Boost revenues

Key results to measure:

● How much are customers spending in your store per-visit?
● What percentage of customers that walk through the door make a purchase (conversion rate)?
● What is the cost of acquiring new customers for your physical locations (customer acquisition cost)?

Objective 2: Sell specific products, services, programs

Key results to measure:

● How much revenue (or how many enrollees) are you generating for promoted products, services, and programs?
● How many customers are buying these specific products and services? Or enrolling in the programs that you are promoting?

Objective 3: Streamline the customer journey

Key results to measure:

● How long does it take customers to get from door to checkout counter? And from the checkout counter to the exit door?
● How frequently are customers using self-service stations to obtain answers?
● How many sales are self-service checkout kiosks accounting for? (Self-checkout stations can help reduce checkout times and streamline the customer journey)

Objective 4: Trim staffing costs

Key results to measure:

● How frequently are staffers engaging with customers? Are their interactions benefiting the customer? (surveys can help here)
● How many customers are checking out on their own versus with a cashier?

Objective 5: Unify your website, app, and in-store marketing efforts

Key results to measure:

● What is the average customer spend for online and offline channels?
● What is the lifetime value of customers for each channel?
● How effective are online promotions at compelling customers to visit your stores?

Objective 6: Spread awareness of brand values and messaging

Key results to measure:

● What is the average spend per customer one month after a store visit?
● Are social campaigns translating into higher revenues?
● What is your level of social engagement?
● Are customers engaging with your brand partnerships (philanthropic drives, partnered promotions, etc.)?

These are starter metrics, not the whole enchilada. For best results, tailor each objective and key result to your organization's goals for customer experiences.

Conclusion

Eighty percent of respondents to our State of Consumer Behavior 2021 report said customer experience is very important to their shopping decisions. You know that you must continually update your stores to meet the demands of these experience-hungry customers.

You also know that you've got a bottom line to abide by. And, justifiably, you want to know whether all of your investments are paying off, or whether you need to change strategic course.

With this framework, I hope that you have a better idea of how to think about the convergence of customer experience, ROI, and your organization's unique objectives.

Bobby Marhamat is CEO of Raydiant