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The iceberg that’s killing so many customer conversion rates

4 minute read, posted on 12/10/2018, by Peter Mullen

customer conversion

An HBR study concluded that customers with whom you strike an emotional connection create double the lifetime value for a brand. So what would raising your net promoter score (NPS) by 30 basis points mean to your business?

The price of customer conversion – especially as it comes to right-shoring – determining your ideal combination of nearshore/offshore/onshore capabilities, frequently comes up in client conversations.

Inevitably, the focus is on the sales number for the month and the price paid to achieve it. But, just like an iceberg, it’s not what’s above the surface that is the most important.

Instead of focusing on what’s visible, you need to get under the waterline to truly drive value.

The thing about Icebergs

The eye is always drawn to what sits above the surface – and in this case, it’s the amount you are paying, how many customers are converting, and how they combine to achieve your results for that month:

Infographic displaying an iceberg where above-the-line metrics such as Sales, Price, and Results are visible above the waterline, symbolizing their observable impact on business.

In this world it’s pretty simple – the numbers that matter are those that contribute to your result for the month (or the quarter – or year – depending on your horizon). In this context, it’s entirely normal to ask yourself:

“If I can pay X for a 30% conversion rate in one location, why would I want to pay 2X for the same conversion rate in the elsewhere?”

To which the answer is quite simple – you wouldn’t.

But would you pay 1.5 X for a 50% conversion rate? 

Or more importantly – what value do you place on avoiding the opportunity cost that comes from missing the chance to build a lasting relationship or close a sale in this increasingly competitive environment?

Instead of focusing solely on the above-the-line metrics, you need to give time and attention to the value drivers that deliver you the lowest OVERALL COST, and the BEST POSSIBLE outcome.

Which means going below the waterline to find what is really driving value for your customers – and for you. In that world, the picture looks more like this:

Infographic displaying an iceberg of Above the Line Metrics and Value Drivers, symbolizing their observable impact on business.

Why should you care?

Broadly speaking, two factors sit below the water line which fundamentally alters the trajectory of your top-line metrics:

Hidden Cost and Quality of Experience

Hidden Cost is driven by aspects like agent turnover, poor training, and poor processes and the detrimental impact that this has on the customer experience you deliver.

But fundamentally, it is the opportunity cost of not building a relationship with a customer – and letting someone else do so.

Quality of Experience is driven by emotionally engaged agents, who can connect with your customers – proven to drive repeat business and higher lifetime value.

Think about that HBR study – what if we raised your NPS 30 basis points? Not only would your conversion rate go up, so would the amount of repeat business, customer loyalty, and revenue generated over the years.

Within your industry, think about the compounded customer goodwill and recommendations you could garner with just your vendors & partners alone.

So the next time you find yourself in a conversation about price, make sure you are really thinking about cost – and the hidden value drivers beneath the surface. That’s where you’ll find the right outcome.

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