What he wanted was a workforce that focused on tasks that added value, not just automatons who checked items off of a To-Do list. He was perpetually building an argument of the financial value our organization brought to clients, teaching us to do the same and challenging us to mercilessly cut non-value-adding activities from our workdays. For me, those meetings quickly turned from an anxiety-ridden, antacid-packed event to the realization that “heck yeah, I can monetize that!”
The strategy of always having on-hand dollar figures to prove my contribution to the organization and to my clients has served me well in every position I’ve held at every organization where I’ve been fortunate enough to be employed. And, it’s a strategy I don’t see used enough in call centers. Could this be why call centers are so often viewed as synonymous with cost centers? I certainly think so.
In February of this year, CRM held its quarterly users’ group meeting (named the Consumer Insights to Action or CIA group). One of the topics we covered was the importance of establishing an ROI on goodwill budgets. At a time when everyone’s budget is under scrutiny, we at CRM have been fielding more and more questions on the topic. We respond proactively by presenting a case study. The assumptions for this case study were as follows:
- This business partner handles 50,000 warranty claims annually.
- The average family owns 8 of this manufacturer’s products and replaces them, on average, every 5 years.
- The average retail price of this product is $76.
- The average customer / family will have a need for this product during 45 years of their life.
- Customer lifetime value = $5,500.
- This business partner’s annual goodwill budget is $1 million (above the warranty claim budget).
From the table above, customers whose claim was denied (not covered by warranty) but whose needs fell within goodwill guidelines reported a significantly higher Net Promoter Score (NPS) than the customers whose initial claim was covered. Assuming that 100% of the customers who were benefitted from the company’s goodwill policy will purchase from the company in the future (securing the lifetime value of $5500) and applying the percentage of all customers who fit into this outcome category, the $1 million annual goodwill budget has the potential to secure $9.5 of customer lifetime value.
On the other hand, the impact of saying ‘no’ to a customer has a devastating impact on an organization’s NPS (-64.2% in this example). Assuming that only 30% of those who classified themselves as detractors will actually defect, the cost of saying ‘No’ was calculated to be nearly $9.4 annually.
For this organization, the conclusion is that while the goodwill budget is generating an ROI of 954%, the potential exists to make better use of that goodwill budget. By spreading that same $1 million goodwill budget across a larger number of customers, the return on goodwill would outweigh the negative impact of saying ‘No’ to a customer. The data (particularly the customer comments collected during the post-call survey) further suggest that customer expectations regarding what the company’s warranty policy does / does not cover is misaligned with reality. The organization would benefit long-term by better educating their customers about their warranty policy / coverage and how these specifications compares to the industry standards.
