Budgeting for customer experience vs. advertising
Feb 04, 2016
$30 million. According to a news story I came across, that's the amount one company is spending, just on an ad campaign, to attract online visitors to their poorly designed site. It's pretty clear that the investment will be mostly wasted. The company's customer experience is sorely lacking online, yet leadership has so far declined to make any significant investment to fix it. But $30 million for an ad campaign? No problem.
It reminds me of a conversation I had a few years ago. A potential client contacted Creative Good about improving her company's online business. It seemed like a good fit: the company was an established, profitable company; and improving the customer experience would, without a doubt, create significant gains in metrics like revenue and customer acquisition. The site needed help, customers were frustrated, but with a bit of work the business could enjoy enormous returns.
The problem came when we talked about our consulting fee. Creative Good was too expensive, she said, because her boss (the CEO) only wanted to spend a few tens of thousands of dollars per year on anything dealing with the customer experience.
I told her that seemed a tad low for an annual budget to be spent improving the site for customers, especially given that the annual revenue of the company was around $50 million.
"Well," she responded, "we already spend $25 million a year just on advertising, so there's not much left over."
Needless to say, the project never happened. The CEO decided to continue to "run a few surveys" with his $20,000-or-so budget; his $25 million campaign continued to bring users into an experience that frustrated them and turned them away.
Let's review the numbers.
$25,000,000......Driving people to the website
$20,000..............Customer experience (what happens when they get there)
So a good chunk of every dollar the company earned went to sending potential customers to have a bad experience. A tiny percentage of those frustrated people might muddle through and become customers; the vast majority would click away, never to return.
Is this any way to run a business?
Believe it or not, it's the normal, accepted way business is run today in many companies. I know because I've encountered it again and again throughout Creative Good's 19-year history. $25 million for an ad campaign; $1 million to redesign the visual "branding" on the home page; a few thousand to "run a focus group" to assure the executives they're doing the right thing. Business as usual.
The good news is that more and more companies are beginning to invest in improving what happens when customers actually arrive on the site. They're not abandoning ads; they're just investing in a more balanced fashion to include some attention to the customer experience.
Imagine what would happen if the potential client above had had these numbers:
Can you imagine a company investing in the customer experience as if it was this important? Imagine an experience changing from a slow, frustrating process into a quick, easy, informative, delightful experience that you wanted to return to - and might even tell your friends about. Imagine a team that is hired, trained, and organized around the core activity of including customers and designing for customer delight. Shouldn't that be a way (THE way) to run a business?
The most effective companies today realize that they can't succeed solely by trumpeting a tag line; the customer matters. Indeed, the customer experience requires a transformation of the company's strategy, backed up by the organization, and fueled by a real budget. Executives that spend their entire budget on ads will eventually learn their lesson.
To build a better customer experience, drop Creative Good a line. We can help.