In tough times every department must be able to justify their spend and we are increasingly asked to help develop business cases.
The three key questions we are most often asked to help develop these business cases are:
- What KPIs should we report?
- How do changes in those KPIs relate to the bottom line?
- And how quickly could we expect to see meaningful improvements in our performance?
Whilst answers are situation specific I’ll try to provide some insights here, based on real results from our work with a wide range of Clients that I hope will help you.
KPIs
It is worth thinking both off measuring inputs (factors that influence how customers respond to their service experiences) and the customer outcomes that result from good and bad experiences.
- Inputs can include service speed, having a query resolved in one attempt, ease of navigation, the number of steps in a process and so on.
- The outcomes can include higher conversion rates, likelihood to recommend you (net promoter score), retention and feelings of satisfaction.
It is of course important to understand for your organisation which inputs stimulate the biggest outcomes and which outcomes have the strongest impact on sustained profit. These can be detected and measured through a mix of research, surveys and regression analysis.
Measuring inputs helps you make sure you are doing the right things. Measuring outcomes gives confidence that you are having the impact you expect.
Large CX programmes therefore typically have two types of measures. Service performance tracking that is done as frequently as practical (monthly or quarterly) and done on as granular a level as volumes will allow (by service type, branch, or Agent for example). And secondly higher level KPIs that look at the health of customer relationships and the business.
How changes to satisfaction link to profit.
So what is the link between KPIs like satisfaction and profit? For one large insurance Client of ours regression analysis proved that improving satisfaction from 7, to 8 out of 10 increased retention by 10%. For this client the cumulative impact of this alone after 10 years was 38% increased profit per customer.
But that’s not all, improved customer experiences tend to have multiple impacts. For this same client we also saw a direct link between satisfaction and recommendation, a higher annual spend and fewer complaints.
How quickly can you expect to see significant improvement?
In a few rare occasions organisations can make structural changes that have an immediate impact. So for example our client NHS Property Services restructured their contact centres within a few weeks of our completing our Customer Journey insight and strategy work which quickly impacted satisfaction with a key element of their service experience.
However it is more common that multiple changes are required before customers register that things are indeed markedly better. In these circumstances the challenge is to create enough capacity and project support so the organisation can both manage the As Is experience whilst also developing and implanting change.
This is exactly what another Client of ours, Workspace did. In the 3-years following our initial insight work and supported by us, they identified and tackled 8 key improvement projects. These included improving the digital and telephony services they provide customers through to changing the role of their front-of house team so they could focus on creating deeper, strategic customer relationships.
Over this time they saw satisfaction with their digital and telephony services improve by 20 percentage points and overall Net Promoter Score increase by 10 percentage points.
In conclusion
There are many different input and output KPIs that you may choose to help you measure and manage your Customer Experience.
There are proven, direct links between satisfaction and profit and recommendation, a few of which we highlight in this article.
It is likely to take sustained effort over a 2 – 5 year period but organisations that use customer insight to inform the improvement of customers’ journeys can expect to see measurable improvement. 10 – 20% uplift in satisfaction is achievable and this typically has a multiplier effect significantly improving income and reducing the cost to serve over the long-term.