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VOC ROI: The Return on Investment of Voice of the Customer

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At the Forrester Customer Experience Forum last month, Forrester announced the winners of its first-ever Voice of the Customer Award: Experian, Progressive and Vanguard.  Unlike the other two winners, Vanguard in its award application quantified the financial benefits of acting on the Voice of the Customer in detail.

Vanguard’s attention to voice of the customer significantly affects our business results. In the past two years alone, issues identified through listening to both our clients and our crew [employees] have resulted in approximately $6.9 million in cost reduction or avoidance in our Retail business:

• $2.6 million from process efficiencies
• $1.1 million from improving the asset transfer process
• $1.0 million from improving fulfillment of literature
• $0.9 million from improving our problem resolution efforts
• $0.9 million from document management improvements
• $0.4 million from improving transaction processing quality and efficiency

In our Institutional Retirement Plan Services (IRPS) business:

Client identified issues with interactions including plan contributions, loan repayment and beneficiary designations led to a multi-year initiative to overhaul and improve workflow. While the project is not yet complete, it has already resulted in cost savings of approximately $1.3 million. Anticipated savings in 2009 exceed five times that amount [$6.5+ million].

A separate project in our IRPS business focused on e-delivery:

Clients told us they wanted less mailbox clutter, more information available online and for Vanguard to decrease their impact on the environment. Vanguard began providing electronic statements, confirmations, notices, and newsletters as well as multi-media learning. As a result, we saw both a decrease in customer complaints and reduced or avoided approximately $6.5 million in costs.

So from acting on the Voice of the Customer that’s a total savings of $14.7 million in 2007 and 2008, growing to at least another $21.2 million in 2009. While bottom-line savings are important, top-line growth is even better:

Since 2005, the voice of the customer program has identified numerous opportunities for our phone representatives to better meet the needs of both clients and prospects. Acting on voice of the customer data, one retail business unit developed new training programs to focus on client identified opportunities for our representatives to improve, revised the quality measures that are part of representatives’ performance evaluations to reflect client-critical factors, and adjusted monitoring processes so that supervisors could review the entire client experience, not simply one call. Due to these and other changes made in this business area, client conversion rates have improved by 32% since 2005. This translates into a 94% increase in new assets from these clients.

Obviously, for competitive reasons, Vanguard does not release all the details on its spending on Voice of the Customer or what the top-line impact was of its near-doubling of new assets. While this makes it impossible to generate a true ROI for Vanguard VOC efforts, it presents as full a public picture of the sound economic reasons for investigating in Voice of the Customer initiatives as we’ve seen.