Forget customer experience improvements, how can businesses provide hard evidence that their VoC programmes deliver commercial value?
Voice of the Customer programmes – if ever there’s cause to use that unpleasant phrase ‘no-brainer’, then this is it. Getting insight into your customers’ thoughts and opinions about your brand and products? You can’t put a value on information like that. And unfortunately this is closer to the truth than you’d think.
Because according to recent research by Forrester, while businesses are satisfied that their VoC programmes are driving improvements in the customer experience, they are struggling to convert this into the metric that matters most – pounds and pence.
In a blog post detailing findings of The State Of VoC Programs 2012 research, Forrester’s Adele Sage wrote: “Our most important finding was that customer experience professionals aren't getting the value they could be from their programmes. Specifically, we asked how valuable their programmes were in improving customers' experiences and how valuable they were in delivering financial results. It turns out that VoC programmes help companies improve the customer experience; we saw more respondents getting that kind of value. But firms struggle to connect the dots to financial value.”
This presents numerous problems, not only to those who are championing VoC and are seeking to secure more resources, but to the customer experience cause in general.
“It can make all of the Voice of the Customer and customer experience stuff feel like a fad – we might care about the customer and what’s right for the customer but if it doesn’t also feel like it is something that is good for the business too then it is going to seem temporary or just the latest thing the CEO cares about, as opposed to feeling like total sense that by having a better experience people are going to be more loyal and we’re ultimately going to have a more profitable business,” Sage tells MyCustomer.com.
“Most people realise instinctively that a better customer experience is going to be a good thing. But it is much harder to make the leap to actually quantifying in what ways it is actually a good thing and that the improved experience is also good for the business. A lot of companies don’t know how to do it or haven’t done it, and they are relying on gut feeling that improving the customer experience is the right thing to do – but they don’t necessarily know how that translates into value.”
Gartner rates VoC as the strategic investment for the next three to five years, forecasting an annual growth rate of +35%. But the success of these projects is dependent on it being embraced by the organisation, and so demonstrating its value to the business is critical to ensure buy-in.
So how can businesses prove the business value of their VoC programmes?
One way that Sage recommends is by tracking the results of service recovery efforts. Service recovery is a common direct action resulting from a VoC programme. Any complaints or bad survey scores can trigger the need to follow up with a particular customer to resolve their issue. And because this scenario is one-to-one businesses are able to more easily track what happens as a result of trying to save that customer relationship.
Sage explains: “If somebody says they are so unhappy that they are never going to buy a product from you again, if you then do something to save the situation then there are a couple of things you can do. You can ask them afterwards if you successfully solved their problem, but also are they now potentially willing to buy another product in the future. And you can track them over time to see if they do, or you can identify if there is churn and if they threaten to leave and go to a competitor whether or not they end up staying. And that becomes quantifiable based on the value of the customer or the size of the contracts.”
Adding up all the service recovery efforts and the results is one proven way to demonstrate value, with Forrester reporting that the likes of Pitney Bowes have used this to great success. Another approach is to link customer feedback to loyalty and revenue, thereby measuring the value of an improved customer experience.
“It is essential that VoC programs are able to correlate movements in customer satisfaction (measured by whichever metric) to gains in commercial KPIs such as average spend, share of wallet, account profitability, retention, acquisition,” recommends Keith Schorah, founder of SynGro.
In The State of VoC Programs 2012, Forrester outlines how Adobe Systems found that when it combined historical purchase and upgrade data with survey data it found that it could demonstrate that customers with the highest feedback scores also had the greatest lifetime values. The report concluded that these linkages “help maintain momentum for customer experience efforts and project the financial returns associated with changes in customer perceptions”.
A further way of putting a number on VoC’s contribution is to add up the value of the improvement projects that have been initiated by the programme.
“VoC will be uncovering a whole bunch of problems, and the various groups within the company that are fixing the problems should be doing some kind of business case and ROI modelling of what the results are for the fixes,” says Sage. “So for instance, adding content to the website that allows people to get information so that they no longer need to call the contact centre will lead to a significant cost saving. And you add up the cost savings from that project with the cost savings from other projects and the additional revenue driven by improved experience based on other projects. All of these incremental improvement projects will give you a sense in which the feedback you’re getting from customers is contributing to the bottom line.”
One example of an organisation that has followed this path is Sprint. Its customer experience team traced the root causes of problems that customers were calling to complain about, in bid to reduce the large numbers of calls that its contact centre was receiving from unhappy customers.
“Sprint established that the problem was that it had way too many plans that customers could sign up for and so they were singing up for plans that didn’t meet their needs because they were confused,” says Forrester analyst Harley Manning. “Rather than just staff up the call centres, [CEO Dan] Hesse decided to greatly reduce the number of plans. Recently he gave his annual report to the shareholders and in his speech he highlighted two interesting facts – one is that Sprint how has the highest customer satisfaction score in the ACSI of any wireless service provider, whereas before it was by far the lowest, and secondly the company now saves $1.7bn per year from reduced contact centre costs.”
Even then, there can be some disagreements to resolve regarding attribution, says Sage. “The reaction is usually that if the VoC team isn’t actually fixing the projects then how do they get to claim any responsibility for the outcome. So you have to share the attribution – and the reason for that is that they probably helped to uncover the problem in the first place so the folks who ended up fixing it never knew it was a problem or they helped to uncover the problem faster or showed that it was more significant than the other team had realised. So the team that actually fixed the problem absolutely gets credit for fixing the problem, but the other team gets to share the credit because they helped to identify the problem in the first place.”
But the hope is that once VoC programmes are able to demonstrate their hard commercial contribution to the business, there will be greater buy-in, support and appreciation for their initiatives with the company. And that really would be priceless.