Medallia is the best of the pack in the Customer Experience in Martech

Medallia Experience Cloud is a customer feedback management (CFM) solution that  

consolidates real-time data into a single platform that can be customized and scaled for  each unique business unit. To better understand the benefits, costs, and risk associated  with Medallia Experience Cloud, Forrester Consulting conducted a Total Economic  Impact™ (TEI) study based on interviews with six customers with experience using  Medallia Experience Cloud as their customer feedback management platform. This  summary is based on a full TEI study, which can be downloaded here. 

Based on the TEI analysis, a representative organization deploying Medallia Experience  Cloud has experienced a quick payback period with the following three-year financial  impact: $35.6 million in benefits and $5.1 million in costs, a net present value (NPV) of  $30.4 million and an ROI of 591%. Readers can use this representative organization to  understand the economic impact of deploying Medallia Experience Cloud and apply or  adapt it to their own situation and experience. 

Quantified Benefits 

The following risk-adjusted quantified benefits are representative of those experienced by  the companies interviewed: 

› Improved customer experience leading to an increase in net income of $20.1  million. Organizations were able to meet the needs of today’s customers by making  product and channel improvements informed by real-time customer feedback data from  the Medallia Experience Cloud. These improvements drove growth through an increase in  both customer retention and average basket size.  

› Operational efficiencies resulting in a savings of $13.8 million. Organizations were  able to improve organizational operations by aligning business and strategic initiatives  with the insights gained from the Medallia Experience Cloud. Additionally, call volume to  service desks was significantly reduced due to its enabling of organizations to  systematically identify and reduce customer pain points. 

› Cost avoidance of the previous solution. Organizations avoided the cost of running and  maintaining legacy solutions by moving to Medallia’s cloud-based platform.  

Unquantified Benefits 

Examples of additional benefits that the interviewed organizations mentioned as  significant but were not quantified for this study: 

› Faster closed loop cycle. Organizations were able to more quickly close the loop with  customers through preferred channels and recognized a positive impact on both  customer churn and employee morale. › A shift in overall organizational culture towards CX. Employee access to real-time  customer feedback information brings the customer experience to life and helps keep the entire organization focused on meeting customer needs and expectations

Organizations shared the following challenges prior to Medallia Experience Cloud: 

› Inability to provide meaningful CX insights. Surveys and other solutions provide  data points but do not facilitate the insights or analytics necessary to understand and  meet the needs of today’s customers. 

› Inability to effectively handle organizational scale. Legacy vendors and solutions could not reliably process the necessary volume of data quickly or effectively, preventing organizations from moving quickly to reduce pain points and incorporating  customer feedback into strategic initiatives.

› Develop actionable insights to improve CX and drive product improvements. A  VP of customer insights in the telecommunications industry stated: “We were able to  reduce the number of calls to our service desk, because we’ve addressed and  eliminated many of the reasons, the root causes, of why people were calling us:  technical reliability, product functionality, billing issues. This has categorically  changed the game for us.” 

› Effective scaling and flexibility. Medallia’s experience with global deployments and  large enterprises made the implementation and scaling an easy, collaborative  process.  

› Drive a shift in organizational culture. The ability for a single platform to collect all  CFM data, its accessibility to anyone in the organization, and the direct connection to  actions for closed loop feedback drives a shift in organizational culture towards  meeting and exceeding customer expectations. 

Composite Organization 

Based on the interviews, Forrester constructed a TEI framework, a composite  company, and an ROI analysis that illustrates the areas financially affected, covered in  greater detail in the full study. The composite organization has the following  characteristics:  

Description of composite. The composite is a global conglomerate with $9 billion in  annual revenue, growing at a rate of 2% year-over-year (YOY), prior to its investment in  Medallia. Its main revenue streams include membership fees and 750 retail stores,  along with other B2B and B2C lines of business (LOBs). It has 2 million total customers  and 18,000 employees, which includes 750 key accounts with 150 account managers,  along with 4,500 contact center agents.  

Deployment characteristics. The global conglomerate composite organization has  deployed the Medallia Experience Cloud for transactional and relationship surveys,  both internally-facing (employees) and externally-facing (customers). The composite  organization initially rolled out Medallia’s Best Practices Package for Retail to its 750  stores. For Years 2 and 3, the program expanded to cover the full enterprise, including  the 4,500 contact center agents and 150 key accounts. 

Economic Impact

› Increased income due to improved customer experience. Using customer feedback  obtained through the Medallia platform, organizations were able to make product  improvements leading to additional sales, and website improvements to remove pain  points and barriers to purchases. Organizations were able to improve overall NPS,  realized an increase in customer retention rate as well as increased average basket  size per customer leading to an increase in income of $20.1 million. 

› Operational efficiencies represent $13.8 million in savings. Unification of data  across the organization and throughout the customer lifecycle allowed organizations to  better define strategic initiatives, better focus resources on those initiatives and reduce  overall service desk tickets by analyzing customer feedback to reduce pain points. 

› Cost avoidance of previous solution. Organizations noted a total of $1.7 million in  cost savings related to licensing and management of previous CFM solution. 

Unquantified benefits. These are some of the benefits not quantified in the financial  analysis but were mentioned as significant. 

› Faster closed loop cycle. A senior director of customer insights in the retail industry  told Forrester: “Medallia’s closed loop feedback mechanism has proven to be  effective, along with the simplicity of the dashboards.” 

› A shift in organizational culture towards CX. Exposing employees to real-time  customer feedback promotes a deeper understanding of customer needs and  expectations, and enables organizations to introduce solutions that have a  meaningful impact on Customer Experience. 

Costs 

The composite organization experienced two cost categories associated with the Medallia  Experience Cloud investment. Over three years, the composite organization expects risk adjusted total costs to have a PV of $5.1 million. 

› Medallia Costs of $2.6 million. The organization paid Medallia for an annual software subscription, ongoing managed services, and implementation services for  initial and Year 1 costs. 

› Internal costs of $2.6 million. These include day-to-day management,  implementation costs, and training associated with the new platform

The costs could go up id the add-ons are utilized

The value of flexibility is clearly unique to each customer, and the measure of its value  varies from organization to organization. There are multiple scenarios in which a  customer might choose to implement Medallia Experience Cloud and later realize  additional uses and business opportunities, for example:  

› Ability to adapt the CFM solution to fit evolving needs. Medallia is willing to work  with clients to find solutions or benchmarks to unique business challenges. 

› A/B testing. The Medallia Experience Cloud allows customers to quickly A/B test  customer experience solutions or pilot business process changes before rollout.  

› Text analytics search. Changes in customer sentiment can occur quickly, and the text  analytics feature allows organizations to identify and adapt to unexpected developments. 

Financial Summary 

The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and  payback period for the composite organization’s investment in Medallia Experience Cloud. Forrester assumes a  yearly discount rate of 10% for this analysis. 

COURTESY: FORRESTER