The current global situation has already changed the simplest things in our world. People are behaving differently in stores, online, and in their homes. We are socially distancing, yet we need connection.

Some of us are working from home. Our routines are gone. Everything feels uncertain. Our families are at risk. Jobs are not secure. We need to figure out how to survive.

Right now, there is immense pressure to make sure our teams and customers are safe. Business as usual is unusual. Continuity is the priority. We need to look to the future.

Businesses that can truly deliver on customer needs during this difficult time will thrive.

Some of you are wondering where leadership's gaze will turn next.

The executive team are looking for three things:

1. How to get more revenue

2. How to drive down costs

3. How to prove their investment in CX

What value can CX add?

The customer experience team are working hard. SAT and NPS numbers are shifting. The customer journey is mapped out. The Voice of the Customer program generated new knowledge. But that was before the coronavirus. Now, everything looks different.

Expect your leadership to ask: What value can CX add?

This article outlines how you can respond.

Customer Experience drives up revenue in 5 ways

1. More customers

2. Faster conversion

3. Better margins

4. Greater loyalty

5. Customer referrals

Customer Experience crunches cost in 5 ways

1. Shortcuts support

2. Culls complaints

3. Reduces returns

4. Lessens liability claims

5. Protects against regulators

Proving value is a communication issue

Right now, the organisation needs direction and evidence on how to act.

Initiatives need to have a bottom line impact. To show this, you need to speak NPV (a CEO's language), not only NPS (or customer experience language). A Net Present Value (NPV) analysis helps you decide and communicate the best among a portfolio of competing initiatives. When you can show how CX adds direct value to the bottom line, you increase your power at the leadership table.

How an NPV helped the customer experience team prove value in an insurance company

The customer experience team in an insurance company needed budget for an underwriting work bench (UWB), a system that tracks the progress of a claim, much like the CRM system used in marketing and sales teams.

The Chief Experience Officer needed to prove that the new system would not just be an overhead. It would create a financial return. They asked us to help create a business case for the new system.

When we investigated the experience of someone recovering from an income protection event, we learned two important insights:

1. People recovered faster when they believed they were going to recover

2. People recovered faster when they were regularly prompted to do something to promote their recovery

The new system could help a claims manager encourage the client to take recovery actions more regularly; congratulate them for positive activities towards recovery; and use their progress as proof they could get better. All of this could be automated. Understanding this, we turned our insights into numbers.

We looked at the most common claims that people were recovering from and the average time it took them to recover. We compared that to what the medical profession had published in claims guides as to the time that was needed. The current claims averages were longer than what should be expected across the board. If having the UWB reduced the difference in claims by 10% (a conservative figure) we worked out what the value would be in $ to the insurance company. We then constructed that into an NPV, or Net Present Value, analysis.

The NPV proved that the new system was valuable. The Chief Experience Officer got the budget and rolled out the system.

Net Present Value Analysis

Net Present Value analysis combines four things in a spreadsheet into a single number at the bottom. The bottom line. This single number is the NPV. It is an estimate of the extra cash a business expects to get from making an investment. The reason it is only an estimate is because it is a forecast about the future.

Four factors combine to create an NPV:

1. Outlays

2. Revenues

3. Risk

4. Time

Each factor should be shown in an analysis as numbers.

Whether on not the NPV is compelling and gets funded depends on several factors:

1. Are the revenues big enough?

2. Are the outlays small enough?

3. Is the risk small enough?

4. Is the time between outlays and revenues quick enough?

5. What else is competing for the funds needed to make this investment?

Perhaps the most surprising thing about an NPV: it is designed to make investment decisions easy. It all comes down to just one number at the bottom.

If the number is good enough, leadership will have confidence in the initiative and budget will be approved.

An NPV helps you prove CX investments and increases your power at the leadership table.

Why CapFeather?

We help mature firms find new and sustainable opportunities by looking beyond the immediate horizon.

Customer strategy and innovation is paramount in a fast changing environment.

While your team excels at business right now, we help you design the path for its future success.

CapFeather is the vanguard for strategic consulting in a volatile, uncertain, complex, ambiguous [VUCA] world. With presence in Australia, the United Kingdom and North America, we have global reach.

Over 20 years of senior advisory, our people have worked on more than 200 projects to deliver bottom line growth and new revenue through product and service innovation - achieved though compelling customer
relationships.

Contact the authors

Dr Robert Dew
robert.dew@capfeather.global

Cyrus Allen
cyrus.allen@capfeather.global

Sarah Daly
sarah.daly@capfeather.global