Connecting CX to business value: Include business value metrics in your program KPIs

Most programs have some form of a value framework, which identifies the metrics that the program is designed to impact. CX programs typically focus on metrics like customer satisfaction (or NPS, CES, etc.), social media ratings, average wait or resolution time, and more. These are great ways to measure value created for customers.

What is often missing, however, are metrics that show value created for the business (i.e. cash flow). In my experience, this happens because CX leaders assume that value for customers is a proxy for value for the business. As discussed, this is an unreliable assumption.

What are relevant business value metrics

Customer Lifetime Value (CLV) is a fundamental driver of business value and highly relevant for a CX program. Let's break it down into specific metrics that a CX program might be able to influence:

• Customer acquisition: Digital conversion rate, sales win rate, # of referrals made per customer, etc.
• Customer spend: Purchase frequency, average contract value, share of wallet, etc.
• Customer retention: Customer churn rate, save rate, repurchase rate, etc.
• Cost to serve: Problem incidence, contact resolution rate, average handling time, etc.

These metrics can be highly sensitive to industry (e.g. churn rate and ARPU are great for a subscription business while a grocer might rely metrics like purchase frequency and average purchase value). But the categories (customer acquisition, customer spend, customer retention, and cost to serve) are reliable across industries.

Check out The Customer Centricity Playbook for a deeper dive into this topic.

What your value framework should look like

I care less about the visual representation (a table, roman columns, a pyramid, etc.) and more about the metrics you use and how they relate to each other:

Criteria for a good value framework:

1. Based on a small number of KPIs. While your program can likely influence many more KPIs, they lose their potency as you dilute the framework. Pick the 3-5 best ones.
2. KPIs are a mix of value to customers and value to the business. Value to customers might show up in metrics like customer satisfaction or time saved for customers. Value to the business shows up in customer behavior like churn and purchase frequency.
3. KPIs are specific to industry and company. Others in the organization should recognize your KPIs. If not, you either need to do some educating (if they are actually the right KPIs) or you need to better align with your industry and business model.
4. Company data exists to measure the KPIs. Sometimes you might identify the perfect metric but the data doesn't exist. Don't despair. Use the best available metrics and advocate for your organization to track or make available data that will allow for better decision making.
5. Evolves based on the actions you are driving. If your program isn't currently able to influence a certain metric, no matter how good of a metric it is, it shouldn't be part of your value framework. With that said, as the types of actions your program drives change, your KPIs can change with them.

In summary

Showing that your CX program is creating value for your customers is good but it isn't enough. Incorporate business value metrics to show how you are creating value for your business.