Use Metrics to Bolster Your Business Case
Learning objectives:
After completing this unit, you’ll be able to:
- Identify metrics that are appropriate for the C-Suite.
- Translate KPIs into business value.
- Explain the importance of retaining customers.
As you continue to move up in an organization, you will take on more financial responsibility. In this unit, you’ll learn how to use the financial metrics of your organization to get a deeper understanding of the business. You’ll also know exactly which numbers need your attention.
One of the big challenges of being in the C-Suite is the tremendous breadth of responsibility. Leaders don't always have time for details. They're looking directionally, thinking, “where do we need to go?” When you look at financials from a C-Suite standpoint, you're focused on things like sales, revenue, cost, profit, and margin. You're also looking at last year’s budget to help you forecast for next year’s budget. It's critical that you understand how the business is actually moving.
Identify Metrics That Matter to the C-Suite
Most C-Suite executives are focusing on output metrics rather than input metrics. They ask questions like, “what are the operational impacts of all those little components that we build?” They want to know how people see the brand. They focus on new products and services, plus competitor analytics.
As a new leader, you should focus on the output metrics in a C-Suite meeting. To establish some credibility early on, make sure that you address the interests of the C-Suite with data and analytics. The contact center world has such rich data, and that’s why it matters to the C-Suite. As someone with experience in the contact center, you’ve got customer insights that are of tremendous value to the C-Suite. You know how customers behave, you know what questions and problems they have. It's important to provide your new colleagues in the C-Suite with this type of information.
The C-Suite really wants to understand trends and use those trends to improve their business. As the leader of the contact center, here are some insights you should regularly provide to the C-Suite:
- Information on trends in contact center technology, and which technologies are currently implemented
- Reports on up-time and complaints from customers
- Major incident reports and resolutions
- Reports on revenue generation from the contact center, as with cross-selling and upselling
- Contact center costs and opportunities for improvement
When you can use data from the contact center to help provide detail in these areas, you will demonstrate your value.
Translate KPIs into Business Value
From a leadership standpoint, you need to make sure that you can translate key performance indicators (CSAT, AHT, NPS) into value drivers. How do you translate KPIs into things that really matter to the larger organization? Here’s an example using customer effort score (CES): when customer experience is disconnected, customers tend to be more dissatisfied and more likely to sever ties with a company. All of that translates into dollars lost—and that’s what you, as a C-Suite executive, should focus on.
A great leader needs to prepare for any unknowns that might hurt the bottom line. Consider the case of a large retailer: what happens if the applications underpinning the entire chain go down for a day, or worse, a week? You don’t have to be great at math to know the financial loss would get very big, very fast. When you're able to anticipate a variety of potential problems, you can make investments early on to mitigate any fallout.
Leaders often translate system downtime into the number of unproductive hours. But a system downtime is not about unproductive hours—that’s just one component. A crash like the one we’ve just described would negatively impact scores and cause the business to lose a lot of revenue. These numbers are what you need to quantify and demonstrate as a leader. Numbers allows you to articulate the investment needed to ensure that massive downtime doesn't happen.
Make your case for Investment
As a leader it's up to you to make the business case for continued investment in your vision. When you’re looking for the C-Suite to support you, talk about the competition. Show how the investment you want to make would give your business an edge in the market.
To position yourself for success, ask the tough questions before anyone else does. What is the return on investment for your contact center? How will the company at large benefit? How will you quantify that? The ROI calculation doesn't have to be perfect, it just has to help move the company in a positive direction. Then if asked, you’re prepared with an answer. You know the value that you bring.
Be sure to link investment to future strategic capabilities. Be sure you can illustrate how this investment is something the company can continue to build upon five years down the road. Often, in business cases, we're very much focused on what we can do for the customer right now. Challenge your team to think, for every new investment that you want to make, how is this going to impact the company in three years, or five years? What strategic edge will this investment provide down the road? The answers to these questions might be the difference between getting your business case across, or not.
Understand the Value of Each Customer
Customer retention is the heart of the contact center. Customers who remain loyal to the brand are considered the most valuable to the company. Why? With a strong affinity for the brand, long-term customers often generate higher sales than new customers. Long-term customers also buy more over time and tend to make larger purchases because they’ve already built up trust with the business. Leverage that to help make the case for strategic investments in the contact center.
It’s easier to think about customer value when you consider the variety of things that could go wrong. Let’s suppose your company got blasted on social media and your customer care department chose to ignore or lightly treat the issue. Not only could this be a publicity nightmare — it could cause a significant amount of customers to stop doing business with your company.
How do you calculate the risk to the brand? Let’s start with the immediate financial impact. In the example below, you have 50 customers contacting your company daily for three months due to this negative publicity that has not been diffused and/or addressed. Multiply those 15,000 dissatisfied customers by your customer lifecycle value and you can see how quickly your financials are impacted.
Example:
Average monthly revenue per customer = $100 per month
50 daily cases representing attrition = 1500 per month
Number of months of lower CSAT scores = 3 months
100 x 1500 x 3 = $450,000 in lost revenue in 3 months!
Next, consider your average customer lifecycle value (say for 3 years) for each of these lost customers over time, and the opportunity cost can easily climb into the millions.
Example:
1500 customers who churn per month = 4500 customers churning
Duration of incident related churn = 3 months
CLV Average Customer = $1800 over 3 years
Total Loss in CLV from one incident = $8.1 million
4500 x 3 x $1800 = $8.1M in customer lifetime value lost!
Now plug in your own metrics and it’s easy to make the case for investments that help retain customers.
Being great at finances is just one piece in the leadership puzzle. It’s not just about determining the KPIs and customer value, it’s also important to understand how the numbers connect to operations—and that’s what you’ll learn in the next unit.
