Are you driving using the rear-view mirror?

Here is a real life example of how the wrong KPI can blind a company from taking the right steps while the right KPIs deliver huge value.

Selling private investment portfolios is a serious business. They are high- value, long-term financial products. Selling investments is complex, expensive and heavily regulated. Profitability of these providers depends on scale - having as much money as possible in the ‘pot’ to invest. So, like most commercial businesses, investment firms want as many people signed up to their products as possible. There are two main ways to do this. The first route to customer growth is to sell as many investments as possible. The second ‘growth lever’ is to retain those customers once they have signed up with your firm.

‘Policy retention’ is the obvious measure here. For one of my financial services clients, ‘policy retention’ was their primary ‘retention’ KPI and was the focus of regular executive meetings.

The retention figures made for grim reading. Each month they watched as customers took their investment pots elsewhere. In fact it had got dramatically worse six months previously and continued to be terrible.

The unasked question was ‘How can we tell if a customer intends to leave before they leave?’.

The local improvement team did some fantastic investigative work, exploring the journey that dissatisfied customers made, before they transferred their policy to a rival. Their works showed that the last interaction unhappy customers had with our financial services firm was to call for a ‘valuation’ of their investment. Once the customer had the policy valuation, they would explore the market for ‘better’ policies and transfer their policy to a rival if they found something more attractive. The improvement team made a startling discovery. Once the team understood the customer journey for leaving, they changed the process They re-routed those valuation-request calls to call agents. Realising how important a proportion of those calls were to the business, they made sure the calls were handled by agents well trained in retention. Agents would politely probe customers to see if they were happy with their products. If the customer showed signs of dissatisfaction, the agents were trained to explore ways of retaining that customer.

The KPIs management needed to focus on also became clear. Management selected KPIs that included ‘Volume of valuation calls’, ‘Retention interventions’ and the success of those ‘Retention interventions’. The business had moved from counting the cost of policy transfers (a lagging measure) to managing the success of retention interventions (a leading measure).

By moving from lagging to leading and lagging measures, they had gone from driving the car just using the rear view mirrors to driving using the front windscreen as well.


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