April 2020 | Point of View

It's possible: Cut costs and improve CX at the same time

It's possible: Cut costs and improve CX at the same time

When cost-reduction efforts include a focus on CX, they can achieve transformational improvements in customer satisfaction and loyalty, positioning your organization to survive an economic downturn – and thrive in a recovery. That’s because, in many cases, a poor customer experience is rooted in processes and technology that are inefficient, outdated, or redundant – if not all three. Fixing those processes to improve the customer journey eliminates inefficiencies and increases operational flexibility. The results are tangible: lower costs and happier, more engaged customers and employees, translating to faster sales growth.  

This is a critical insight for business leaders guiding their organizations through times of distress or unstable markets. In downturns, cost reductions become necessary for organizations in nearly every industry. However, the companies that not only survive the downturn but also emerge stronger will be those that can get leaner and more agile while simultaneously forging deeper customer loyalty and capturing market share. In fact, companies that strike the right balance between cost containment and strategic investment in growth have the highest probability – 37% – of coming out ahead when the market rebounds. 

Fixing Business Processes Can Improve CX – and Reduce Costs  

Most business leaders recognize that cost-reduction efforts typically begin by scrutinizing business processes to identify inefficiencies. What they may not realize is that many of these processes are the same ones they’d likely overhaul in a CX transformation. The key to creating mutual benefit for internal and external stakeholders is taking a digital approach to process optimization. 

Over time, especially during periods of growth and prosperity, inefficiencies creep into almost any organization. Individuals solving for siloed problems, redundant work across departments, and the perpetuation of paper-based processes that could (and should) be shifted to digital are all common to businesses of all sizes.   

Those inefficient processes also are often the root causes of a substandard customer experience. For example, we worked with a large health plan that had seen its NPS drop steadily over several years, as low as -39.  

To raise that number, the health plan asked us to revamp its provider experience. Our research revealed that providers needed more transparency in their interactions with the payer, creating visibility into onboarding status and data accuracy, and streamlined provider onboarding procedures that cut down on manual processes and siloed systems. To get at that information and to create the visibility providers needed, we had to replace the business architecture and associated processes and reduce the total number of required business processes from 24 to three.  

We approached the project seeking both quick wins, such as a revised communications strategy and data entry simplification, and with long-term planning. The result: hundreds of millions in cost savings – and NPS among providers doubled in less than two years.  

Using a Customer Focus to Gain Internal Buy-In 

Every digital project inevitably collides with internal politics. Transforming processes means changing how people work. Employees take pride in the work they do and when they hear it may be changing, their reaction could be to take the proposed change as a personal affront and to meet it with caution, suspicion, or even hostility.  

Overcoming those initial reactions and gaining buy-in from all the people impacted by process improvements is essential. Without full team support, initiatives to cut costs through digital process improvement are unlikely to achieve their potential. The best way to gain that support is to show the team that the changes are not about addressing flaws in their individual work or processes.  

Framing the changes in a customer-first context shifts the focus from the processes and the people who perform them and places it on improvements for the customer. That not only helps remove the emotion from the project, but also can help galvanize the team: Few will argue with the idea of doing what’s best for the customer.  

When CX stands in as the “why” behind cost-containment projects, these initiatives are more likely to gain immediate internal buy-in. That will translate to a fast start and quick wins – early achievement of the goals that demonstrate impact and solidify support from the C-suite to the front line.  

Freeing Employees Up for Higher-Value Work  

Your employees play a crucial role in helping the business operate efficiently and delivering a great customer experience. Therefore, their experience – how enabled they are to do their jobs – is an important aspect to consider. Much of the cost savings derived from designing a superior customer experience results from manual task automation. Solutions like robotic process automation (RPA) can apply specialized software to repetitive and structured activities previously performed by employees. The software can perform tasks – copy/paste, mouse clicks, screen navigation, web services, and database access – exponentially faster and it can execute them 24 hours per day, seven days a week. It also reduces cost by eliminating expensive errors inherent in manual tasks like data entry and by increasing productivity, enabling an organization to grow without hiring.  

Regardless of how an organization chooses to automate processes, freeing employees from repeatedly performing menial tasks can create opportunities for engaging with customers’ more sophisticated needs. This elevates customer service while empowering the entire organization to spend less time on low-value tasks and focus on initiatives that improve the customer experience; the team is more empowered to engage customers in ways that create higher satisfaction and build emotional connections to the brand.  

The aforementioned health plan had been manually collecting hundreds of data points from providers; that required dozens of employees contacting providers to track down the information – and often led to multiple employees asking providers for the same information multiple times. Automating that data collection not only cut down on providers’ dissatisfaction with being asked for the same information several times, it also freed those employees to shift to coaching providers on becoming more efficient and effective in their operations.  

Unlocking Data to Create Superior Experiences  

Organizations embarking on cost containment projects might not realize they are sitting on a gold mine of important CX data embedded in everyday internal processes. But, identifying the data you need to efficiently run the business is equally as important as identifying the data you could use to create better customer experiences. If you organize your cost-takeout initiatives and process improvement work with a customer-first lens, you will also be unlocking key customer experience data. 

Most of what differentiates a good customer experience from a bad one is how the organization applies its data – and its knowledge of the particular customer – in a given interaction. Are you asking the customer for the same information multiple times in an interaction when the answer is already in your data? Are you using data to innovate on new ways to provide value for your customer? Unlocking data enables you to be transparent and provide new value that customers expect. 

For example, Barclaycard was struggling to deliver the desired experience to their customers due to their product-centric operating model. West Monroe helped them shift to a customer-centric operating model by developing a framework to capture key customer journey data and tie it to underlying value stream maps and the internal processes required to deliver those experiences. By using data to align customer experience with internal operations, they were able to improve top- and bottom-line performance, resulting in a 15% increase in customers and a 15% reduction in operational expenditure. 

Taking a look at the data behind customer-facing and internal operating processes can help identify pain points on either end, draw conclusions about correlation, and quickly pinpoint areas to improve upon.  

Getting Started in Six Steps 

Applying a customer-first lens to your upcoming cost reduction initiative won’t require more than a few weeks and will deliver significant value by way of increases in customer engagement – as well as the cost reductions you were seeking.  

Getting started – and successful execution – begins with six key steps: 

  1. Apply customer research and human-centered design methodologies to create personas and future-state journey maps to guide strategy and prioritization:
    • Personas will help you put yourself in the shoes of your customer and re-orient your cost takeout initiative with a customer-first lens
    • Journey maps will help you think about the future and how your customer could and should be engaging with your organization in this newly process efficient world. The most important thing you can do in this activity is connect the customer journeys to your process and technology. This will help make these journeys actionable.
  2. Assess the business’s existing work streams to understand the impact to your customers and bottom line if optimized. 
  3. Map your business architecture to the new experiences you expect to create, prioritizing value delivered to your customers and the processes you are able to automate.
  4. Benchmark current costs and use operational data to make customer journey maps and process-improvement decisions rooted in financial impact.
  5. Start the change management process early, using a customer-first lens to gain consensus and align all stakeholder groups around creating a better customer experience.
  6. Process efficiency and customer experience improvement can come in small and large forms. Focus on executional planning that can get you short-term wins to drive value of the program while planning longer-term programs in parallel.

Finding the right balance will set organizations apart 

Business leaders looking to cost-reduction projects to help their organizations through an economic contraction have an opportunity to solve two problems at once. By viewing cost-reduction through the lens of customer experience, they can produce significant cost savings and drive higher customer satisfaction. That will boost sales growth and put the business in position to seize market share coming out of the downturn – positioning it for a return to prosperity as the market recovers. 

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