Measuring Voice of the Customer ROI: Which metrics are right for you?
Any business with a VoC programme needs to have a set of metrics in place to maintain investment and demonstrate to employees that VoC isn’t a box ticking exercise. But which metrics should you use?
Although Voice of the Customer (VoC) programmes are widely acknowledged to be a key component to improving the customer experience, it’s not enough to just set up such a programme and assume it’ll help your business succeed. With tight budgets, even for well regarded programmes, it’s critical to measure and demonstrate the link between the Voice of the Customer and return on investment (ROI).
Any business embarking on a VoC programme needs to have a set of metrics in place to maintain investment and demonstrate to employees that VoC isn’t a box ticking exercise. But which metrics to use? There’s more to ROI than increased revenue, so you need to be selective to ensure you use the metrics that really do reflect how your company operates.
Understanding business issues
At the start of any VoC programme, you have to understand the business issues involved to ensure the programme will support overall business objectives. This understanding will guide the decision on which metrics to use.
For example, a client recently stated that they were looking for ‘Raving Fans’ of its business and services. By definition, a ‘Raving Fan’ speaks highly about the company, often referring it to family and friends.
That made it very easy for the organisation to make the move from measuring Overall Satisfaction as its main metric to using Net Promoter Score® (NPS), which actually measures the likelihood someone might ‘Rave’.
Before any metrics can be implemented, it’s essential that everyone involved in the programme is on board. To engage internal stakeholders you must align with their business goals.
If you are successful in identifying relevant business objectives and building a programme that provides actionable insights to support those objectives (increase revenue, reduce costs, increase cross sell, increase customer-centricity, etc.), you will have a programme that makes it easier for stakeholders to make business decisions and do their jobs more effectively.
Stakeholders will only be truly engaged when they hear what impact the programme will have on bottom line revenue and cost.
What’s more, you can’t simply align ‘theoretically’ – you have to prove it by defining success criteria up front and capturing hard, factual ROI data at regular intervals. Stakeholders will only be truly engaged when they hear what impact the programme will have on bottom line revenue and cost - even more so when a large client is saved via a hot alert process, first call resolution metrics are increased by improving the product knowledge of employees, or share of wallet among promoters is increased because you’ve identified the additional needs of the most profitable customer segment.
Linking loyalty metrics to financial KPIs
This leads us into how to link loyalty metrics to financial objectives and KPIs. It’s essential to begin by ensuring that major financial metrics and segmentation models are included with respondent data prior to collecting the feedback. Often called ‘upload or background’ variables, they may also identify data such as tenure, lifetime value, revenue, purchase behaviour and other demographic data that can be used to analyse customer segments and behaviour alongside feedback.
With this type of data, you can easily segment the value of the happiest customers, as well as the value of those who are least satisfied. Better still, feedback data can tell you what would make the ‘unhappy’ customers ‘happy’ again, and models can be run to see the financial impact of that change.
Established VoC metrics
Experienced VoC practitioners use a wide range of proven metrics, all of which have specific benefits within different VoC programmes. The choice of metrics used will have a measurable impact on the overall success of the programme, so must be considered carefully. Popular options include:
- Net Promoter Score (NPS) –This is the metric that measures if someone is willing to personally vouch for a product or service to a friend, family member or colleague. It is very popular as an overall metric, especially in relationship surveys, because it is easy to explain, understand and calculate, and there are known industry benchmarks by vertical (assuming standard question wording and placement is used). The need to align scores and methodologies (especially those that are easy to understand) has led to the development of metrics such as Transactional NPS (TNPS) and Net Satisfaction, which applies the same calculation to the Overall Satisfaction question.
- Overall Satisfaction (OSAT) – Once regarded as the major metric in a VoC survey, OSAT by itself has been used less as the major metric in relationship surveys. This is because it is not considered a strong enough driver of future financial performance. However, this metric is still used widely in transactional surveys to hone in on the specific channel or interaction being measured.
- Customer Loyalty Index (Straight or weighted average of OSAT, Recommend, Continue to Use and/or Buy Again, Ease of Doing Business) – A traditional measure of loyalty that is still used although not as widely as it once was, due to the complexity regarding the need to weight individual questions and the growing need for shorter surveys.
- Customer Effort Score (CES) – This metric is particularly suited to the call centre environment or business areas dealing with problem resolution. Generally, the audience in question will have had to exert some effort to get an issue resolved or task completed, and the less effort they have to expend, the better. For this reason, CES can be a very good measurement and predictor of satisfaction with a call centre transaction or issue resolution. However, one of the challenges with CES is that the scale often does not match other scales in a survey, making it harder for internal stakeholders to understand and align with other metrics.
Softer metrics for engagement and loyalty
It is also important to consider implementing a range of ‘softer’ metrics that can help drive customer engagement and long term loyalty.
To do this, you need to understand the customer’s journey through the interaction or experience that is being measured, self-assessing which of these have the biggest impact on the customer’s total perception of their experience and listing the ‘attributes’ of the impact moments and interactions.
For example, if you were trying to understand what drives engagement in a retail store experience, you might start by listing the experiences customer have in the stores (i.e. greeting, store look-and-feel, employee interactions, product choice, and check-out experience).
Knowing the major interaction points in the store, you need to list out what attributes of each interaction you believe to be important, such as professional, friendly staff; a speedy check-out process; appropriate product availability; etc. The number of underlying metrics will be determined by importance and how long you want your survey to be. Once in the field and collecting data, the drivers can be further prioristised through a Key Driver analysis to see what is really driving the key metric.
Bringing it all together
It’s clear that for a VoC programme to provide measurable Return on Investment, it takes much more than a list of metrics. The consideration given to the choice of metrics used and the way in which you engage others to buy into the programme are equally critical components to success.
What’s more, if a range of other KPIs and financial indicators to measure alongside feedback are not brought in at the start of the programme, the likelihood is it will be difficult to accurately assess returns.
The key is in the detail and much of this needs to be looked at in the planning phase. So, before you start building your list of metrics, stop and think. What is the business trying to achieve and what rewards are you expecting to reap? Only then can you start to put the metrics in place that will help you realise your goals.
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Stacey Nevel is a customer experience professional with 20 years of experience managing customer and employee feedback programmes. She has a background in CX feedback measurement and management within client-side financial services companies and for last 12 years with vendor-side CX technology and consulting providers. Her role as VoC...