“Actions without insights are anarchy, but insights without actions is academic.”
-told me an industry veteran lately. “The sad thing” he said, is that most companies operate in a academic anarchy.
Insights leaders share a common pain. It’s hard to get leadership buy-in to act on insights.
Speak Senior Leaderships Language
The language of senior leadership is straight and simple.
- CFO is asking, “what will be the ROI of your proposed initiatives”
- COO is asking, “what does it mean for operational costs”
- CMO is asking, “does this grows revenue?”
Simple questions to which the insights team has no answer. This is the simple reason why they lack in power. Here are the three reasons what exactly insights teams miss.
Problem 1 — NPS is not a measure of revenue, profits or costs
Every insights professional is convinced his CX measure is correlating with behavior and bottom-line impact. But that’s not enough. The C-Suite needs to be convinced too. Even worse, they want to know “how much” it is linked.
Problem 2 — Customer topics are not directly telling you what to do
If your customers complain about the competency of personal, you can solve this with training, coaching, firing and hiring, addressing different customer segments or implementing specialist teams.
When you ask customers for feedback, they tell you what is bothering them. But this is only loosely related to what you should do. But only these actions and initiatives is what’s relevant to senior leadership.
Problem 3 — Decisions on actions are therefore largely guesswork
As a consequence, we have “academic anarchy”. Nobody can truly take an evidence-based decision as nobody provides a (well informed) estimation on the impact of actions on customer experience outcomes or its fiscal implications.
Insights to the Rescue
The newly assigned insights head of a swiss insurance brand was “naïve” enough to just do the obvious. She teamed up with the right external experts and implemented in months not years, what other brands dream of:
- She set up a system that makes the quantitative link between CX outcome to bottom-line outcomes
- She integrated the definition and planning of actions to quantify the impact and ROI of actions
- She decided to introduced an assessment scheme for actions/initiatives that enable decisions based on ROI, risk, and ease expectations
Insights need an update to drive change. Insights need to take ownership of the decision-making process to answer the questions senior leadership has.
This swiss case study is living proof that’s is doable — with ease.
The ADIM Framework
“adim” is the Turkish expression for “step-by-step”. For us it has the steps of first, defining potential actions, second, quantifying the effect on loyalty, then third, measuring the impact on the bottom line and finally structuring the decision making by putting the actions in an ROI-Risk grid.
1. ACTIONS: Manifest hypotheses how actions, initiatives will change the customer experience and perception in the raised topics
Internal stakeholders have opinions on what should be done — even before analysis. Jot them down and let them be defined in a granular way.
- Actions: Which actions or initiatives could we do to act on the hypothesis?
- Goal: Which customer perceptions (categories mentioned in the survey) would change and how much?
- Costs: What’s the ballpark investment of time and money?
- Risk: Is it easily done or is in unclear or risky to execute the initiative?
You may wonder if this exercise isn’t better of done after survey and analysis. Interestingly, doing it afterward leads to the fitting goal, cost, and risk estimation to purpose.
You may also think “isn’t that too much work”. If you treat it as a PhD thesis — yes it is. Otherwise, each item cost 10 minutes to define. Ball bark estimations are good enough at this point and will be challenged later anyways.
Also, doing the exercises beforehand leads to exciting gamification. Everyone should be allowed to set up his own initiative proposal and then …. Let the data and the customer speak.
2. DRIVERS: Driver analysis on customer topic to drive NPS
Now we need to understand the relevance and impact of what customers say (customer topics) and the impact on loyalty and respective outcomes.
All this is well explained in my article Predictive Qual . It’s a process that simply uses the data you already have.
When you are now think “ok, but we kind of have this already” then please take a look at this article. Way less than 5% of the corporation today do it the right way.
3. IMPACTS: Modeling to measure the unique impact of NPS on customer value, revenue, churn, and costs
At the end, nobody cares about NPS points. What counts are profits, revenue or cost figures. You need to build the link between the CX measure and fiscal measures.
It seems obvious how to do it. Just take a look at how much promoters buy more, churn less, and create fewer costs. If you try this out too often, it shows no correlation!
This is the lesson taught in the first-semester statistics class: spurious correlation does not prove causation.
Modeling helps as customer profile data typically help to clean out cofounding biases and to measure the true impact of NPS.
4. MATRIX: Tie it together in an ROI-RISK decision matrix.
Thru steps 1 to 3 we have it all to make informed decisions.
We can simulate the impact of hypnotized actions onto the bottom line (RETURN ON…). We have estimated the needed investment (… INVESTMENT) and defined the risk or ease of that action. This enables us to put everything in a decision matrix with this norm strategies:
- DO IT — High ROI, low risk
- EVALUATE — High ROI, medium risk or medium ROI, low risk
- WAIT — all other combinations.
All You Need To Know To Get Started
To gain leadership buy-in, you need to speak the language of the senior leadership. In other words you need to cater to their interests. These interests are called “revenue”, “profit” or “costs”.
Moreover, it would be best if you answered the very “simple” questions they care about “What should we DO” to cater our interest (=profit, cost, revenue,…).
To be convincing its not enough to present insights. This is not interesting! It does not directly answer the question posed.
To answer the question, we need to model the link quantitatively from action to result. The ARIM framework paves the way.
Dozens of enterprises are already applying ARIM with great success. Just like this Swiss insurance, that simply did it because it sounded to be the right thing.
Find out how it can work for you
More in-depth background gives our CX Analytics Masters Course — which is free for enterprise professionals.
Apart from this, I am always interested in an exchange with readers. Send me an email or ping me on LinkedIn — always love to have a professional conversation on CX and to answer question