Kate Fannin has a great mental model she shared on Future Commerce that gets right to the heart of this: “People buy things; they pay for experiences.” That’s the core of Return on Experience (ROE). It’s a framework for measuring your return on investments across the entire customer journey, not just on a single ad click or conversion event.
The first step is to mentally move away from just optimizing for Return on Ad Spend (ROAS). As guests like Rabah Rahil on the DTC Podcast and Dave Levett on eCommerce Australia have pointed out, ROAS can be a vanity metric. It tells you if an ad is working in a silo, but it doesn’t tell you if you’re building a sustainable business with loyal customers. ROE, on the other hand, is about long-term brand equity and customer lifetime value.
To apply it, start by mapping your key customer experience touchpoints. Think beyond the buy button. This means evaluating your site’s usability, the checkout flow, your social media interactions, the unboxing experience, customer support, and especially the returns process. The hosts of Ecommerce Playbook cover this well by talking about how to make every single click more valuable, which is a key part of the experience.
Next, you can identify specific areas for ROE investments. The post-purchase experience is probably the lowest-hanging fruit. On the 2X eCommerce Podcast, I heard a great segment on transforming product returns into a retention-driving profit center. Instead of viewing a return as a total loss, you can use a smooth, customer-friendly process to build trust. Using a service that encourages exchanges over refunds is a perfect ROE play. It retains revenue, satisfies the customer, and increases the odds they’ll shop with you again.
A great pre-purchase experience is another powerful investment. On Retail Remix, there was a fascinating discussion about taking try-on experiences beyond the fitting room with virtual try-on tech. This type of tool doesn’t just increase conversion; it improves the customer’s confidence, reduces their likelihood of returning the item, and makes the shopping experience more memorable and engaging.
Finally, you measure ROE through a basket of metrics rather than a single number. You’re looking at changes in Customer Lifetime Value (LTV), repeat purchase rate, Net Promoter Score (NPS), and customer satisfaction (CSAT) scores. As Ronnie Teja of Branzio Watches explained on The eCom Ops Podcast, prioritizing customer satisfaction is what builds a brand that lasts. You can also look at non-transactional engagement, like the brand awareness and community loyalty that Niall Horgan builds through events, which he detailed on Shopify Masters.
The place this framework breaks down is with direct, immediate attribution. You can’t always draw a straight line from “we invested $5,000 in a better returns portal” to “we generated $50,000 in LTV.” It requires some faith in leading indicators and a longer-term view. For a business that needs to prove the immediate cash-on-cash return of every dollar spent, focusing solely on ROE can be a challenge.
