CX, Service Design, and Productivity: A Framework for Organizational Transformation

Why Growing Businesses Struggle to Understand Their True Cost-to-Serve

One of the biggest challenges that any organization can face as it matures is getting a very clear understanding of cost – cost to make, deliver, support the thing that you’re selling in the marketplace. As a startup or new company, you want to sell the hell out of said thing to validate that it’s valuable, people want it and will pay for it, and there are enough of those people to sustain this growth over time.

But eventually you’re selling things without cost context and you may start to look at things like profitability and wonder why the math isn’t math-ing fully.

There are so many questions:

• What’s our cost of acquisition? How much do we pay to attract & convert customers?
• What’s the average conversion/transaction cost?
• What’s the cost of our people selling the things?
• What’s the cost of supporting this product with operations & other internal staff?
• What’s the technology cost of running our operation?
• What’s the cost of delay – either in delivering value to the market or in even supporting customers?
• What’s our retention rate?
• What’s our lifetime value?

The list could go on. But these are all the right questions to be asking. And you usually have to start working backwards to understand how the organization is functioning to understand costs.

How Customer Feedback Connects to Service Design and Organizational Cost

As I built up the CX infrastructure at Coyote, I had the a-ha! moment where we were collecting all types of feedback, but soon I realized that the organization didn’t know how to absorb that into meaningful change. And simultaneously, we were really digging into cost-to-serve and trying to unearth what was contributing to cost.

I spotted an opportunity because we didn’t have a good framework of how customer feedback is a reflection OF service design which is a reflection OF organizational design which is a key component to calculating cost. I had to show the relationship between all these elements so that as we make strategic hypotheses, we could actually look at how productivity changes would affect service and in turn affect the customer experience. Or we could look at customer feedback, pinpoint a process or policy problem in our service design, and then reimagine a different way of working that would align with our business objectives but also make our customers happier.

The framework above has a couple of different parts but shows how all these topics relate to one another, almost as if to unlock one another and reinforce each other as the organization matures.

From the top, left to right, it’s helpful if your organization can agree upon core lifecycle phases that are collections of activities as it relates to the customer journey (e.g., bucketing things like initial contact activities, quoting or demos, then you move into sales & contracting, then post sale setup or engagement, and most everyone probably ends with a form of settlement/payment). I found that everyone roughly agrees on phases, but it’s important to make this simple, memorable, and to use nomenclature that isn’t too high brow. Spoiler: if you can get this right, this can also be utilized for employee onboarding and training later!

Layer 1: Experience (Voice of the Customer)

Then moving from top to bottom on the workstreams, we start with experience. It’s all your VOC data, support case/ticket data, any voice recordings, et al. You may just be starting with surveys, which is fine, but if you’re like my team, you see dwindling response rates and a lack of engagement from certain customer segments which means you have to find other means of understanding their actual sentiment & behavior to help you understand their delight and frustration.

Layer 2: Service Design and Process Mapping

Second is service or service design/service blueprinting, or whatever other like terminology you may use. It’s the process of making a literal map of your processes across the lifecycle, which can be overwhelming if you’re starting from scratch. This is where chunking up the work by phases helps make this more feasible to accomplish. Ideally, this should be in a flow diagram to start and you’ll soon find you’ve got processes embedded within processes embedded within processes. If you’re like my team, you found that there’s a ton of inconsistency, activities happening outside of any system of record, and duplicative work being performed by multiple departments or teams.

Fear not, we’re not trying to do anything but lay out how the business actually works and then can drill into asking objective questions like:

• Does the process support a good customer experience? What are we measuring or what should we measure (CSAT, NPS, etc.)? Is what we’re doing actually helping or making customers happy?
• Does the process reinforce our business objectives? Are we who we say we are? Are we moving toward who we want to be? (Handle times, error rates, SLA adherence, etc)?
• Does the process comply with all regulations? How much risk are we taking on?
• Can the process be measured for quality and quantity? How do we create visibility into consistency?

Again, you can spiral deep here with employee interviews, harassment of your data science team or BI folks, talking to customers, etc.

Layer 3: Productivity, Capacity, and Cost-to-Serve

Once you unlock service design, then you can really dig into productivity and understand:

• What are all the activities being performed in this phase?
• Who is performing them?
• How long does it take to perform each activity?
• How frequently does each activity take place?
• How do we define & measure these activities? What’s our data source?
• What’s our capacity?
• If tech, what’s our throughput? Is there a lag time? Error rates?

Again, the list can expand from there. But this is where you can really start to understand what people actually do in their jobs and if that work has high customer value or not, and if not, how can you find efficiency by improving their tools, introducing automation or other technology, or consider changing how your org is structured to make the flow of information through your business more efficient and create more visibility, transparency, not only for your internal teams but also your customers.

Frequently Asked Questions

What is a CX and service design framework?
A CX and service design framework maps the relationship between what customers experience, how internal processes and people create that experience, and the productivity costs that result. It gives organizations a common language for identifying which process changes will have the most customer impact – and which improvements will reduce cost at the same time.

What is cost-to-serve in customer experience?
Cost-to-serve is the total cost an organization incurs to deliver its product or service to a specific customer or customer segment – including sales, onboarding, support, and retention activities. Understanding cost-to-serve helps companies identify which customer segments are profitable, where operational inefficiency exists, and where experience improvements can also reduce expense.

What is service design and how does it relate to CX?
Service design is the practice of mapping out the processes, people, and technology that combine to deliver a customer experience. Where CX captures how customers perceive an experience, service design explains why the experience works (or doesn’t) by making backstage processes visible. You cannot improve the customer-facing experience sustainably without understanding the operational system underneath it.

Where should an organization start with CX and service design?
Start with a single lifecycle phase and a defined customer segment. Map what actually happens (not what the process doc says happens), align it with VOC data for that phase, and identify the two or three process changes most likely to reduce friction and cost simultaneously. Quick wins build credibility for the larger transformation.

---

If you want to talk through what this looks like for your company specifically, the first conversation is free. I’ll tell you honestly where you are in the build and what the most important first move is. Here’s an overview of how I work.