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Why ROX (Return on Experience) is the New ROI

woman analysing ROX return on experience

Return on experience (ROX) is quickly gaining traction as a way to track the results of investments in customer and employee experiences. If implemented correctly, return on experience can be highly effective in showing how investing time, money in effort invested in improving experiences can generate results. Let’s take a closer look at how to track and apply ROX.

What is return on experience?

In the past, ‘customer service’ was seen as crucial for long-term business growth and success. In recent years, it has been replaced by customer experience. The difference between these two is that customer service is one part of the customer journey that focuses on personal interaction in supporting customers (such as advice and assistance), while customer experience (CX) is the totality of the customer journey with a company. As businesses started to focus on CX, calculating the return on investment (ROI) from it became a challenge. This is where return on experience comes in. It’s a way to measure customer engagement and how it affects business performance and KPIs. 

While it’s often used to measure the ROI of digital experiences, such as the experience of using a website, it can also be used to assess other interactions. Another important aspect of return on experience is that it’s not a narrow metric – like a net promoter score which measures how likely a person is to recommend a business to a friend or colleague – but requires a holistic approach that looks at the complete customer journey and the touch points along the way.

Why use return on experience in your business?

There are sound economic reasons for improving customer experience. Research by PwC revealed that companies that prioritise customer experience can charge a premium of up to 16 per cent for their products or services. Other research by Salesforce showed that 84 per cent of customers believe that experience is more important than the products a business offers, while 66 per cent are willing to pay more for a good experience. This applies to both business-to-consumer and business-to-business interactions. 

Given these facts, it makes sense to improve customer experience. But you’ll want to make sure that your investment in this is justified by the returns you receive. This is what return on experience is all about.

In mathematical terms, return on experience = (Net value of benefits ÷ Cost of investment) x 100

At first glance, this looks like an ROI calculation. But ROX measures the success or failure of the complete experience, and calculating it reveals the key interactions that deliver the most value.

How does ROX work?

ROX consists of several elements that exist in business environments and influence each other. According to PwC, these are: 

  • Pride – the emotional commitment to brand purpose and strategy
  • Influencers – internal and external brand ambassadors and sources of emotional energy
  • Behaviours – the critical positive habits and actions that define the culture, drive excellence, and need to be embedded in performance management
  • Value drivers – the key sources of value in the eyes of customers and employees
  • Outcome – the financial results produced by a higher ROX. 

The idea behind ROX is to uncover how these elements affect each other when changes are made. One example of this works is the impact that the time it takes to check-in at a hotel chain has on the how frequently business travellers rebook at these hotels. When the data shows that check-in times have a large impact on repeat business, steps can be taken to improve this metric. This could include training hotel managers and reception staff, and encouraging guests to use a mobile app that ensures fast check-ins. 

In Denmark, the mobile phone retailer 3 found that satisfied customers and repeat business are closely connected to getting good advice from staff. Improving onboarding was one step they took to boost staff knowledge of the products and services offered. Another step was decreasing staff turnover, as more experienced staff are able to build their knowledge and provide better advice. Applying this to the ROX equation, the business could compare the cost of better onboarding and staff retention to the resulting increase in sales to quantify this figure. 

In Hollywood, The Magic Castle Hotel has created a simple yet powerful experience that has positively impacted their bottom line. They created a Popsicle Hotline for children using the swimming pool. By picking up the red phone at the pool, kids can order free icy poles which are brought to them. This low-cost experience has enabled the hotel to increase repeat stays and gain word of mouth recommendations. The hotel is now known as the Home of the Popsicle Hotline. 

Uncovering connections such as these take time and effort, so ROX can’t be developed overnight. It requires gathering data, testing hypotheses and developing KPIs across the five elements. In the long run, the ROX framework will help you uncover customer touch points that need improvement and what you are already doing well. These interactions could be online through digital interactions, on the phone or in person.

ROX goes beyond customer experience

While ROX is often associated with customer experience, this is only part of the picture. Employee experience (EX) is the journey an employee takes with an organization. It includes all interactions that happen during the time with an organisation, plus the experiences that involve an employee’s role, workspace, manager and wellbeing. It has a large impact on the elements that influence return on experience. Ultimately, employees play some role in customer experience, whether creating digital experiences or serving them directly.

Getting started with return on experience

In order to build a baseline for ROX, PwC recommends that business owners and managers ask the following questions:

  • How strongly are employees committed to your brand purpose?
  • How large is the gap between knowing what the critical few behaviours are and acting on them?
  • How well are you progressing in getting influencers involved with key CX and EX initiatives? These influencers energise and influence others in the business without relying on their title or position to do this.
  • How well are you progressing on establishing value in the eyes of external and internal customers?
  • What are you doing to measure CX and EX initiatives?
  • How have behaviours that drive value affected your profitability?

Funding your ROX initiatives

While it can be the path to business growth, many SMEs find it challenging to finance their return on experience efforts. Unsecured business loans are one way to fund your ROX plans. Learn more about business loans from Moula and get an estimate of principal and interest repayments with our business loan calculator.


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