What do all companies have in common regardless of their industry? Customers.
Customer success is a function that may be owned by specific relationship managers or even internal escalation groups.
Based on the past articles in this series, we know that a company focused on achieving operational excellence is a proactive approach to continuous improvement. In the area of customer success, we see this measured through the growth of the company and the retention of their existing clients. However, just because a company is experiencing high growth does not mean it’s focused on operational excellence.
When a company is focused on operational excellence, processes will be in place to continually enhance the needs of their clients. Like all areas within operational excellence, there is a continuous dialogue between clients, customer success, and operations to continually improve all aspects of client interactions. But you can’t manage what you can’t measure--so how can you gauge the success of these efforts?
Customer success should be measured by a net promoter score, client retention, revenue growth, and escalation. As a guide, make sure you understand each of these metrics correctly:
This metric is a way to gauge the likelihood to recommend a company or service using a survey question. The traditional NPS scale is a scale of 0-10 with a positive result being a 9 or a 10. In order to calculate your net promoter score, count the instances where a client rated you as a 9 or 10 minus the instances where they rated you a 6 or less. Take that the result divided by all surveys to get your NPS score.
15 Surveys with 9 and 10 answers
5 surveys with 6 or below answers
25 total surveys surveys
Resulting in an NPS of 40% of (15 - 5 = 10, 10 / 25 = 0.4)
Why This Matters: Gainsight gives four main reasons why NPS matters and they are all related to customer success. They point out that 9’s and 10’s promote, forgive, renew, and expand. These all tie right back into the two core elements of customer success: growing your company and retaining existing clients.
This metric is a percentage of clients who remain with the company within a given timeframe. There are a lot of people who argue that this metric would only apply to companies who work on a subscription-based model or ones that have a product that is consumed in a rather expedient manner. This matters even more so for customers who make irregular large purchases and is especially applicable to the automotive and real estate industry.
How many people do you know that will only purchase a single brand of a car? In the course of a lifetime, five moderately priced cars are $180,000 (data from Experian shows the average price right now as $36,000).
In that same lifetime, compare that to toilet paper. According to SupplyTime, the average American spends $10 per month on toilet paper and according to the World Bank the average life expectancy is 78.7 years in the U.S.. Simple math says 78 * 12 = 936 months you are alive … now you’re not even buying toilet paper every month you’re alive-- but let’s just say you were--936 months * $10 per = $9,360 spent on toilet paper in your life. This isn’t even one-tenth of what you will spend on purchasing cars in your life.
Why It Matters: In an article by Invesp, their CEO Khalid Saleh found that it costs 5x more to get a new customer than to retain an existing one. Retaining your customers is key to performing at a high level of operational excellence.
This metric is typically measured as the increase in money that a customer spends with a company. It can be calculated using either currency increase or a percentage increase as compared to the previous measurement period.
This metric is the number of escalations per client in a given timeframe.
Why it matters: If we look at escalation as a situation in which we did not resolve the customer’s issues on their first contact, it becomes immediately evident why escalations matter. CallMiner, a company that specializes in speech analytics, found that companies who leverage speech analytics are 23 points ahead of those who don’t. Additionally, they point out that for every 1%, you can improve first contact resolution and save $276,000 in operating costs. That means that for every 1 point, you are saving over a quarter of a million dollars-- and that doesn’t include how many customers are retained versus lost.
Take time to explore the other articles in this series on operational excellence in order to help you paint a full picture of how your company can approach operational excellence.
In the next segment in this series, we will take a dive into workforce management and investigate how it applies across every industry and vertical; not just call centers.