First, what is Customer Experience and why should you care? Private Equity firms care about Customer Experience (Cx), because it is key to driving revenue growth, reducing the expense to bookings ratio, while providing customers with a great interaction across the customer journey. This will drive valuation.
Cx is all about seeing how each role plays into a customer’s overall satisfaction with the product or service, and the organization. The ultimate goal is a solution that seamlessly integrates into the customer with ease, and with extra features that will help your organization provide more value. If you are in a PE firm as an Operating Partner, you should get close the to the Cx Strategy of your Portfolio Company (PortCo), this is the best place to drive EBITA and incremental revenue, EBITDA expansion and know what the customer journey looks like. The graphic below shows why this is critical.
The 3 main reasons PE firms care about Customer Experience:
- Great Cx drives 5 times faster growth
- Customers that have a great experience are willing to pay 2x higher prices and Cross Sell and Upsell 2x faster
- Great Cx drives customer references which are the key to success in existing and new customers
So lets unpack this further.
- Great Customer Experience Drives 5 Times Faster Growth
- Customers That Have a Great Customer Experience Are Willing to Pay 2x Higher Prices and Cross Sell and Upsell 2x Faster
The Cx motion is an organizational design not a sales item. Making sure your PortCo has a great customer journey map that is understood by all of the facets of the organization is key. The acquisition cost of a new customer is 5x an existing one, high there needs to be a good balance between net new logo and existing customers.
Cross selling of new products to existing customers is also key to managing cost while driving exponential growth. As a PE firm, you invest because you want to use the money to drive EBITDA and growth at a faster rate than pre investment, and this is an area to focus on. The other concept that is more and more prevalent in PE portfolios today is cross selling across different PortCos. This can only be achieved with a great Customer relationships, and that comes from a Cx program. A great tool to accelerate your program is the SBI CX Strategy 2019 Workbook.
- Customer References
Some additional tips in the articles below might help you in your Customer journey:
- How Do You Measure Customer Success
- The Account Manager Position Is an Endangered Species
- Will a Traditional Customer Success Approach Work for You?
- UX Isn’t Enough – Why an Integrated CX Strategy Will Help Drive Growth
Download the CX Exploratory Questions Tool to build a starting point of questions to ask of your buyers and customers, to understand how your own company perceives the CX, and to start to plan actions that initiate your company’s CXT based on real insight.
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