The new world of digital KPI’s
February 19, 2020 - Enri-k Salazar
For many years KPIs (key performance indicators) in mobile operators were fairly static. While the traditional measures of ARPU, net adds, CAGR and churn rates are still very critical, there are a new set of KPIs that digital service providers are using to monitor the performance of their business, and implement actions – in real-time.
The digital world is evolving at a high speed, and this means that service providers can no longer think that the same traditional KPIs alone will be enough to manage and optimise their organisation during this digital evolution. Traditional KPIs must continue to be tracked, but also augmented with new digital KPIs so the service provider captures timely, accurate and complete relevant information for decision making and value maximisation.
Market place conditions are very dynamic and market offers need to be numerous and launched in very short timelines to be relevant. And even when launched, very quickly and often thereafter these offers need to be updated and evolved at a very fast pace. Clearly a capability of moving fast and in short time frames become critical components for success. Measuring KPIs in long terms alone is no longer an option. New, more meaningful digital KPIs must emerge to enable the tracking of success in short periods. Service providers need to react to these measures and modify, change and continually adapt as they move along their transformation path.
The challenge in establishing and measuring digital KPIs is that they are new and different – and what creates real value from those KPIs is both the correct timeliness factor in gathering such results and, importantly, the deciphering of all the data collected into meaningful values that enables and arms the executives for fast decision making.
At a high level there are two categories of Digital key performance indicators (KPI’s) that are most relevant for measuring and monitoring the effectiveness and success of a service provider’s digital strategy. The first category measures the engagement and relationships with its customers and are classified as Experience KPIs. The second category measures the service provider’s ability to deploy targeted services that customers will want to have access to. These are called Effectiveness KPIs.
In each category, monitoring success and effectiveness in being digital requires new measurements and targets, different from the ones that would traditionally be used operationally by service providers, but instead ones that must constantly evaluate their digital maturity and efficiency capabilities to determine how much digital value they are providing to their customers, while trying to find ways to move up the Digital maturity scale.
- The Digital Experience KPIs – for customer engagement, value and profitability
- The Digital Effectiveness KPIs – for measuring the operational effectiveness and success of being a digital service provider
Examples of the first category are largely customer/externally driven and include customer usage metrics that reflect the convenience, value and frequency of services being used. It reflects customer satisfaction and requires comparison to alternatives available to the customer. It also reflects the profitability and growth of the service provider’s digital capability and channels, as well as service availability and other quality metrics that support the 24x7, instantly responsive, social and community engagement and online characteristics of the Digital Service.
KPIs such as Net Promoter Score (NPS), Customer Satisfaction Scores (CSAT), Average Response Time (ART) & First Contact Resolution (FCR) are common for service providers to evaluate their performance in their customers experiences provided. Notwithstanding, service providers are now enabling the use of data to make these standard KPIs more relevant to their business. For example, measuring churn rate as a measure of the number of individuals or items moving out of a collective group over a specific period. By definition, if a business is tracking churn rate, it means customers have left. It appears the business is tracking the problem after it happened and there is nothing they can do about it. Instead of tracking churn rate, service providers have now engaged in using machine learning to predict churn by understanding and influencing the customers lifecycle. service providers have now the opportunity to avoid churn all together. Instead of tracking churn, which is the present negative final result, service providers should be focused on tracking their positive future, which is influencing the customer lifecycle so they are able to provide a far better customer experience that is worth their customers staying in the business for.
Using analytics and machine learning to enhance KPIs for influencing the customer life cycle is becoming normal with many digitally mature service providers, especially to improve to improve its customer service by using virtual assistants and chat-bots.
Machine learning is only as good as the data it uses to learn from and this is driving many service providers to look at how data collection and management needs to be handled for digital and 5G services. There’s a move to data management solutions that perform massive real-time processing and refinement of data and are built on micro services, Open Source technology upon which standard, supported and road mapped data management applications and solutions can be created or modernised. New real-time data solutions are used to “prime the pump” the data for machine learning algorithms to help in the decision-making process and provide responses with accuracy and in real-time.
The second category of KPIs are more internally focused – and are often a simpler set of cross departmental/organisational KPIs that reflect the service provider’s capabilities to identify, target and deploy attractive services. Typically, these are simple measures reflecting:
- Effectiveness of customer education and customer habituation
(End result of digital engagement)
- Trial conversion rates, including customer investment
(Investment from customer in trying service/experience)
- Improved predictive analytics to foresee market changes and customer demands
The key metrics that matter for the future of service providers can be driven by real-time exposure of the data, both customer and network, focusing on the customer engagement and the operational efficiency of the network.