Rajesh Subramaniam MD & CEO, ResultsCX interview with BCG on Customer Experience

Summary

The conversation explores the evolution of the customer experience (CX) and the services industry, particularly the shift towards value-based models post-pandemic. It discusses how CX has transitioned from a cost center to a revenue driver, emphasizing the importance of partnerships and co-investment in outcomes. The dialogue also touches on the challenges of implementing value-based models, the need for measurement tools, and the strategic role of procurement versus business drivers in adopting these models.

Takeaways

• 🚀 The conversation focuses on the evolution of the services business, particularly the rise of value-based models and pay-for-performance post-pandemic.
• 🌟 Customer experience (CX) has shifted from being a cost center to a revenue accelerator, with a greater emphasis on driving customer retention and lifetime value.
• 📈 There's an increased expectation for service providers to co-invest and share risks, with a focus on measurable outcomes like revenue growth and customer retention.
• 🔍 The pandemic has accelerated the need for more sophisticated measurement tools to assess the effectiveness of CX and service delivery.
• 💡 The conversation highlights the importance of partnerships and co-creation in the success of value-based models, moving away from traditional vendor-client relationships.
• 📊 The discussion points out the challenges in aligning procurement and business objectives within client organizations, especially when it comes to value-based pricing and outcomes.
• 💼 The script emphasizes the need for service providers to understand their clients' industry verticals and pain points to tailor value-based models effectively.
• 🌐 The conversation underscores the importance of trust and long-term partnerships in implementing value-based models and the role of patience in realizing their benefits.
• 🔄 The script discusses the transformation required within service provider organizations to adopt value-based pricing, including changes in risk management, sales, contracting, and finance.
• 🌱 The importance of starting with value in every client interaction and taking a long-term view of the impact delivered is highlighted as a strategy for success in value-based pricing.

Q & A

How has the pandemic accelerated the shift towards value-based models in customer experience (CX)?

The pandemic has led to a significant acceleration in the shift towards value-based models in CX. During lockdowns, customer behavior and expectations changed, leading CX to be viewed not just as a cost center but also as a driver for revenue and customer retention.

What is the current expectation from clients regarding value-based models?

Clients now expect partners to co-invest in value-based models, with measurable benefits defined. They are looking for higher revenue numbers or better retention numbers, indicating a shift from just cost arbitrage to a more strategic partnership.

How has the role of CX evolved from being a cost center to a revenue driver?

CX has evolved from being a cost center to a revenue driver as companies now see it as a way to not only deliver acceptable service levels but also to drive revenues and retain customers, thus increasing the lifetime value of customers.

What are the challenges faced when implementing value-based models?

Implementing value-based models can be challenging due to the lack of robust measurement tools and the ability to accurately measure outcomes. Additionally, there can be a timing mismatch between the delivery of services and the realization of outcomes over time.

Why is it important for service providers to adopt a value-based mindset?

Adopting a value-based mindset is crucial as it allows service providers to participate in businesses they wouldn't otherwise be part of, creating optionality for higher margins if the business is managed well.

How does the conversation around partnerships change when discussing value-based models?

The conversation shifts from transactional relationships to strategic partnerships, focusing on co-creation of value and shared risk. It emphasizes the importance of trust, long-term impact, and the ability to endure and manage the inherent risks involved.

What does the speaker suggest as a starting point for companies looking to adopt value-based models?

The speaker suggests that companies should start by understanding their current data organization and customer journeys, as this will drive value. They also emphasize the importance of having systems in place that enable measurement of outcomes.

How does the concept of 'skin in the game' apply to value-based models?

'Skin in the game' refers to the idea that partners should be willing to invest upfront without changing the budget, and then share in the gains as value exceeds the baseline. It implies a willingness to take on risk and be rewarded for delivering measurable outcomes.

What are the implications of value-based pricing for service providers' sales incentives?

Value-based pricing implies that the incidence and recovery of value are not synchronous, which can disrupt the traditional quarter-to-quarter sales incentives. It requires a shift in how service providers predict, forecast, and manage their portfolios.

How can service providers demonstrate the value they deliver to clients?

Service providers can demonstrate value by starting conversations about the impact and outcomes of their services, taking a longer-term view, and showing clients how they are genuinely impacting the business over time.

What role do partnerships with consulting organizations play in the adoption of value-based models?

Partnerships with consulting organizations can help evangelize the value-based model, provide insights across industry segments, and bring an ecosystem of solutions to solve complex business problems, thus playing a critical role in the adoption of these models.