Five ways to increase ROI with CX metrics programs

First, how do you determine the return on your mystery shopping investment or customer experience metrics program?

ROI = ((Returns from Investment – Cost of Investment) ÷ Cost of Investment) x 100.

Sounds simple enough. But if you are trying to convince other team members or stakeholders that investing in a Customer Experience Metrics Program is worth it, how can the investment pay for itself and increase your ROI on insights?

We have five use cases we want to review with you to show how a Customer Experience Metrics Program can increase your Return on Investment for an insights and feedback program. We may get a little math-nerdy, but hang in there, and it will make sense as we explain how to measure customer experience ROI.

All figures below are illustrative estimates built on simplified assumptions, so your own numbers will differ. Where a client has not shared its financial figures, we add supporting math based on published industry research and cite the source.

The five examples at a glance

1) Unwritten Rules:

We recently had a client who started an auto service mystery shop for their chain of car dealerships. Within the first month, we discovered that 40% of their locations turned away business because of an 'unwritten rule' that they would not perform oil changes on vehicles not purchased from them.

This was noticed not just once but several times when they were contacted to book appointments. The Owner and Managers had no idea where this 'policy' came from or how long it had been going on. That had never been communicated to the customer-facing team, and it identified one of their biggest service gaps.

To simplify the situation, let's assume a few things:

• Each service was $100.
• 40% of the locations were 4 out of 10 locations.
• There were two rejections of service per month per affected location (likely more, but we'll assume it to be simple)
• This had been occurring for one year (they suspect likely much longer, but we will keep it simple)
• The cost of the service mystery shop was $100 (to keep it simple)
• All 10 locations were shopped once a quarter, since you cannot know in advance which ones have the problem

• $100 x 2 = $200 per location per month in lost sales
• $200 x 4 locations = $800 per month in lost sales across the brand
• $800 x 12 months = $9,600 per year in lost sales
• $100 per mystery shop x 10 locations x 4 quarters = $4,000 in yearly mystery shopping costs
• $9,600 Return on Investment (regaining lost sales) - $4,000 (program costs) = $5,600
• $5,600/$4,000 = 1.4 x 100 = 140% ROI

TLDR: Having a customer experience program measure what actual customers are experiencing can highlight issues that are affecting your sales.

2) The Missing Contacts:

We have many very different but similar use cases where our clients had no idea there was a problem until we found it, and it ties into response times and the beginning of the customer journey with your brand.

Many large companies have different systems and platforms to handle inbound inquiries. We will focus on a client that, through its Customer Experience Metrics Program, discovered it had been missing 100% of online meetings booked through its website.

During the Pandemic, our client changed CRM providers and ultimately updated how their appointment bookings integrated with their calendars. A glitch meant that meetings created manually still appeared in the calendars, but the website's booking link was broken. Clients would book a virtual meeting, join at the scheduled time, and find no one there.

We did not evaluate all their locations, but after our shoppers reported the issue a third time, the client investigated internally. They had discovered that this had affected all their locations and lasted over 16 months. They estimate they missed 1,000+ booked meetings without realizing it.

The calculation for their ROI looks a bit different and is a bit more complex. I will provide you with the highlights of areas that were impacted:

• Their overall NPS score dipped at this time, initially attributed to the Pandemic but ultimately related to the reliability factor.
• Their CSAT (Customer Satisfaction Score) dipped for the same reason.
• Their CES (Customer Effort Score) had the greatest impact, as customers noted difficulty contacting the location to make appointments.
• Their call centre experienced a higher-than-anticipated call volume because callers were frustrated with their online booking experience, necessitating additional staffing.
• Their Voice of the Customer Surveys indicated that clients were switching brands due to a lack of 'effort' on their part.
• The overall cost and impact remain undetermined, as this has caused a ripple effect that will take years to repair and manage.

TLDR: Having a third-party review typical customer processes can outline gaps that are costing you an unknown amount of business.

3) Do you want to make it a combo:

There are several metrics that every business with customers uses, including AVT (average value per transaction). Upselling and cross-selling are two of the simplest ways to raise it. It is easier and more cost-effective to sell more to an existing customer than it is to acquire a new one.

Take, for example, a brand that we work with that has over 200 locations in Canada and the US. We worked with them on their mystery shopping program, where we designed the survey so the shopper would not ask for anything extra besides a main dish.

We calculated how many times each shopper was asked simply, 'Do you want anything else?' and, for comparison, later asked, 'Did they ask you if you wanted to make it a combo with a side and drink?' When our client had their front-line staff narrow down the upsell to something specific, it took the thinking away from the customer and let them just decide 'yes' or 'no' on a combo rather than rethinking the whole menu for something else.

The average receipt increased by $1.25 over three months, establishing new brand standards. Let's take a look at what that ROI would look like over a year with some generalized numbers.

• 200 locations x 200 (avg) transactions daily = 40,000 (avg) daily transactions
• 40,000 (avg) daily transactions x $1.25 = $50,000 in (avg) increased revenue daily
• $50,000 x 360 (minus avg. stat holidays) = $1.8 million from direct combo upsells
• 200 locations x $30 (avg.) mystery shops x 12 months = $72,000
• $1.8 million - $72,000 = $1,728,000 / $72,000 = 24
• 24 x 100 = 2400% ROI

Because $1.8 million is added revenue rather than profit, let's be conservative and assume a 30% margin: $1.8 million x 30% = $540,000. $540,000 - $72,000 = $468,000 / $72,000 = 6.5 x 100 = 650% ROI. Even on profit alone, the program returns more than six times its cost.

TLDR: Measuring the typical customer experiences while at your location can demonstrate if sales policies are being followed and identify where follow-up is needed to ensure that you are making the most of your sales.

4) What are they doing better:

One of our favourite things to do for our clients is competitor intelligence. We have so many examples of how competitor intelligence has changed our clients' businesses that it is hard to choose just one example.

I am going to share with you what we did for ourselves. We wanted to know how we stacked up against our competitors, so I did the only thing I could think of; I mystery-shopped us and our competition! Now, to be clear, I did not let the rest of the team know I was doing this, as I wanted authentic results.

I created a company with a website, email addresses, and a LinkedIn profile. I let them sit and gain traffic for a while. I then posed the same use case to my team and our competitors. The results that I gained were invaluable. Here are a few key takeaways that we learned.

• The response time from the quote request to the information varied widely. Ranging from an hour to weeks. We noted how this likely affects clients and their deadlines for providing stakeholders with needed quote information. Side note: we were the fastest!
• The information required for the quote varied substantially for the same ballpark results. We noted the baseline level of information to ask everyone to minimize the friction in receiving the estimated costs.
• Some brands required three or more meetings to create a ballpark quote. This created scheduling difficulties, which took a lot of time away from my current role. We noted that this was likely how a client would feel as well.
• Some brands would not quote me because my standard ask was only $25K a year, and they only work with/talk to businesses that will have contracts greater than $50K-$1M, which showed us how underserved smaller businesses are.
• The pricing varied wildly for the same type of program. There were many options added that were not required in some locations, and it would have been better if these had been offered à la carte so our team could choose what would be best for us and our budget. We took this information and are using it for our clients going forward.
• The style of our quotes was lacking compared to the others we received. We have updated our quoting system multiple times now to better suit our clients and eliminate friction points as a result of this realization.
• Follow-up is key! Many brands never followed up with me, and it seemed that several made following up with me their full-time job. There is a happy medium to find when sending follow-ups, and annoying people, even after politely declining, never goes well. Striking a balance is key to learning the effective timing between helpful and pushy.

TLDR: Mystery shopping your competitors (and yourself) shows exactly where you win or lose on speed, effort and clarity before a prospect ever tells you.

5) Who took the cookies from the cookie jar:

Revenue leakage in business can occur at many points. Incorrect POS usage, improper itemizations in the system, not entering sales and plain taking cash. One client suspected that a particular combination of kitchen and waitstaff was taking cash from orders and not entering the information into the system.

We designed an employee integrity plan with them to fill the location with shoppers for five nights when this combination of staff was scheduled over a dinner/evening shift, and have all of the shoppers pay in cash. Over the five nights, we had 20 shoppers and their guests visit the location and pay in cash between 5 pm and 9 pm. There were multiple items that we were able to uncover from this 'quick-hit' mission:

• Many submitted reports had the same receipt number, and the provided receipt photos showed 'reprint' on them.
• Our transaction records of the amount our shoppers spent each day exceeded the location's reported earnings for that shift, even though non-mystery-shop customers were present.
• The food orders for those dates exceeded what the system noted should be ordered.
• The shifts where the 'suspect' combo of staff was not working did not experience these issues.
• Our mystery shop analysis estimated that approximately $500 per shift was being taken in cash; over the five shifts, this totalled $2,500. As this was suspected for months, the location estimates it lost well over $20,000 in cash sales before it could take action. Stopping the leak protects at least that much again going forward.
• $30 (avg.) mystery shop + up to $70 meal reimbursement = $100 per shop
• $100 x 20 shops = $2,000
• $20,000 (losses prevented) - $2,000 = $18,000
• $18,000/$2,000 = 9
• 9 x 100 = 900% ROI

Put simply: the program cost about $2,000, and at $500 a shift, it paid for itself within four shifts of the problem being fixed.

TLDR: The investment in uncovering suspected leakage costs pales compared to the cost of continuing to leak revenue.

We would love to discuss your needs and how we can help increase your ROI on creating a program with us. To see these ideas at work in a real program, read our franchise mystery shopping case study or browse all of our case studies. Curious what a program like this would cost? Read How Much Does a Mystery Shopping Program Cost?

Frequently asked questions

How do you calculate the ROI of a mystery shopping program?

Use ROI = ((Returns from Investment – Cost of Investment) ÷ Cost of Investment) x 100. The return can be sales recovered, revenue added (such as a higher average receipt) or losses prevented (such as cash leakage that was stopped).

How do you show ROI when a client does not share financial figures?

We pair the real findings from the program with supporting math based on published industry research, and cite the source. Examples 2 and 4 in this article work this way.

How quickly can a mystery shopping program pay for itself?

It depends on the problem. In the examples above, an unwritten rule was found within the first month, and a cash integrity program paid for itself within four shifts of the problem being fixed.

What does a mystery shopping program cost?

The examples in this article use $30 to $100 per shop. Costs depend on the type of visit, the number of locations and how often they are shopped. Read How Much Does a Mystery Shopping Program Cost? for a full breakdown, or request a custom quote.

Sources for supporting math

• Oldroyd, McElheran and Elkington, "The Short Life of Online Sales Leads", Harvard Business Review, 2011
• Gartner, "Gartner Says Only 9% of Customers Report Solving Their Issues Completely via Self-Service", 2019
• RAIN Group, "Average Sales Win Rates: How Do You Compare?"