Connecting CX to Value

By Christophe Dhaisne, Head of Customer Experience, Kindred Group PLC

Christophe Dhaisne, Head of Customer Experience, Kindred Group PLC

Last November, I spoke at Forrester’s CX Europe 2018 conference in London about one of my favourite topics, and an area that we at Kindred Group have been focusing on: data driven CX and how to link CX to value.

The room was full of 300 attendees from across industries, so to kick off I asked everyone to stand. I told them to remain standing until I said a statement that wasn’t true at their company.

My first question was to ask whether they track their Net Promoter Score, or not. Unsurprisingly for a room full of CX practitioners, almost everyone remained standing.

I then fired my next question: “Assuming you are measuring NPS because you believe that this metric correlates strongly with customers loyalty, then keep standing if you have done the data analysis to back this up, and can prove that NPS is an effective barometer of your customers’ loyalty.” At this point, 80 percent of the audience sat down, which came as a shock to me. I could not refrain from challenging the audience: why are you measuring NPS if you cannot link it to loyalty?

I carried on: “Please keep standing if you understand which aspects of your customer experience drive your NPS.” Almost everyone else who was still standing then sat down. I kept going as I would be lying if I said I was not enjoying the game a bit, but also because I had not made my final point…“keep standing if you are able to calculate what a ten point improvement in NPS would be worth to your business.” This is the point where the only three people still standing were all members of my team. Just one percent of the audience!

I’m not telling you this to look smart, but rather because it reflects the harsh reality of most CX management programs: they fail to understand clearly what a superior customer experience is worth and exactly how it will generate value.

The problem is that if CX leaders are not able to quantify the economic value of improving CX, then their efforts (which inevitably involve challenging business processes, priorities, and investing in innovation) come with a very tangible cost, yet no clear financial benefits.

Building an unambiguous link between CX and business value is easier said than done. It requires a mix of hardcore analytical skills, diligent work, and patience

The risk therefore, is that such initiatives get stopped before they even really get started.

The good news is that by investing early in a scientific and analytical approach, most companies can prove the financial return of their CX efforts. I will now shed some light about how we are doing this at Kindred in three steps.

Step 1: To start, we analysed our data and established that NPS, amongst other high level CX metrics such as overall CSAT, was the best metric to measure customer loyalty.

Step 2: Once we demonstrated that our NPS drives loyalty, we focused on answering the next big question: what drives our NPS? To answer this question, we conducted Key Driver Analysis (KDA), a statistical analysis that tells you the derived importance between potential drivers and customer behavior. This provided us with a clear view of what matters to customers, where to focus, and a way to keep CX high on the list of strategic priorities.

Step 3: We built a model to calculate the return on CX: “The NPS Revenue Simulator”, an algorithm that estimates the value of improving the customer satisfaction at each touch point in Kindred’s Voice of the Customer (VoC)program. At a high-level, the NPS Revenue Simulator aims to answer four main questions:

1. Primarily, it looks at which drivers customers perceive as the most important. It does this by looking at which of the touch points within our CX surveys have the most impact on NPS— loyalty.

2. It then works out how much the estimated probability for a customer to be a promoter will increase if driver X, Y or Z improves. To put this simply, it works out which drivers will lead to customers becoming promoters.

3. Since we know that promoters have higher retention rates than detractors, the tool then looks at the impact an increase in the number of promoters will have on retention rates.

4. By looking at the estimated increase in promoters and the resulting ways in which retention is affected, the tool is then able to generate financial simulations based on hypothetical variations of the performance of different NPS drivers. Whilst this sounds complicated, it is simply looking at how changes to the score of a particular driver could affect retention and the financial benefit it would have for us.

That said, building an unambiguous link between CX and business value is easier said than done. It requires a mix of hardcore analytical skills, diligent work, and patience. And as a result, the temptation might be to skip these steps for the sake of speed. My advice to you: don’t. Take the time to build a robust business case for CX. It is the best way to fund your company’s CX efforts, secure buy-ins, and build momentum.