I’ve written before about what value NPS can provide to organizations and I thought it was worth talking about the other things that companies can measure, how effective those metrics are in painting a picture of a company’s performance and, better yet, how they can help predict future performance. In particular, I want to address the importance of understanding whether these metrics are really about the customer experience or rather about the company’s internal performance. (Knowing that too little of the former combined with too much of the latter can be problem.) In fact, there is an argument that the KPIs many companies use in compensation calculations can actually be harmful to customer relationships and ultimately company profit.
If you work in, manage or lead a contact center, you’ll be familiar with MTA (mean time to answer), AHT (average handle time), abandonment rate, Total Talk Time and others. Notice that none of the measurements tell the company anything about what the customer experienced, how the customer felt when the call ended, how likely the customer is to purchase more from the company or whether the customer even plans to remain a customer. Every one of those measurements is about the company, rather than the customer.
That isn’t to suggest that the metrics aren’t useful, since they do indicate efficiency and productivity, they help with scheduling, peak volume management and other important aspects of call center operations. However, if your company is truly customer-centric, or intends to be, these measurements must be only one part of your company’s measurement suite.
Starting with the assumption that every business is in business to earn profit, let’s work backwards to identify the things that drive that profit. In overly simplistic terms that means selling the product at a price that is higher than the cost to make it. The metrics above—MTA, AHT, Total Talk Time and so on-- are all about the cost part of that equation, so let’s look at the revenue side. Broadly that’s about selling to new clients (acquisition), selling more / different products to existing customers (up sell / cross sell) and keeping customers (retention). You should be measuring those things on a regular basis and identifying changes in rate to see where there are exceptions (good or bad) and develop corrective actions. But even that’s not enough.
Go further back on your continuum of measurements and think about what customer behaviors drive sales or retention. These are much more difficult to quantify but worth pursuing: Trust, Loyalty, Attachment, and Allegiance. These measurements are about your customers’ behavior toward your company. The more loyal a customer is to your company, for example, the less likely she is to consider your competitors when renewing the service or purchasing a new add-on that you sell. Similarly, attachment is how committed the customer is to you and your brand. More attachment means less shopping around with competitors and more buying from your company. The same applies for Trust and Allegiance, of course.
Working further back in the measurement blocks, we encounter the experience metrics. These metrics are about the specific transaction about which the customer contacted the company. NPS is pretty typical–after the interaction, the company issues a survey that asks a series of questions, one of which is, “How likely are you to recommend our company to a friend?” This survey will measure the customer’s immediate response the experience he just had. Similarly, Effort measures how much work the customer had to do to get his question answered or her problem solved. These two metrics measure something about the customer, not the company.
Working back even further, we finally get back to the operational metrics that most companies start with. Here we discover that some of the objectives in the contact center run completely counter to improving customer experience. Let’s take Total Talk Time, for example: getting a customer off the phone quickly may reward the contact center rep but if it’s a complicated problem, that doesn’t necessarily, make the customer happy. Frankly, there are times when keeping a customer on the phone longer will improve the experience, loyalty and the value of that customer to the company.
The trick for all companies is to find the path to value of the things they do measure and then trace those metrics forward to profitability. If the company knows which activities lead to loyalty and which levers to pull, it can adjust its behavior to improve profitability. Better yet, a continuous feedback loop will ensure that the modified behavior is delivering the intended outcome.
- Starting with the profit motive, work backwards in measurement
- Measure acquisition costs, cross/up-sell and retention
- Then look at Trust, Loyalty and Attachment metrics
- Next the experience metrics: NPS etc
- Finally, end with where most companies start: MTA, AHT, Total Talk Time, Average Handle Time and Abandonment rates
- Make sure the drivers of the performance are known and that the measurements are positively impacting desired outcome.
- Create a continuous feedback loop and adjust metric weightings accordingly.
Insurance Practice Lead
Jim has spent 25 years in financial services in a variety of roles from sales and relationship management to infrastructure product management. His knowledge of customer experience allows him to help clients leverage real time information management (decisioning) to improve customer relationships.