Underlying business reality are numbers. The board make investment decisions based on them, your KPIs are based on them, and leadership constantly focuses on improving them. In short, there is a cult of constant returns. If we have 95% satisfaction, let’s get to 96%; if we increase call centre quality by 10% then we are going to get a rise in satisfaction by 2% which is going to lead to more sales, isn’t it!
This constant push for higher scores, in some cases is true and fair, but what if your Math is an illusion? What if, life doesn’t work like that, rather than constant rises, in fact what if what really happens is that ‘things reach a plateau’, then a tipping point. Think about it, you spend more and more money on call centre quality or anything else, but this push to move your scores on quality by 10% has the reverse effect, or no effect at all. You aim to increase CSAT scores from 8 to 9 out of 10 on average but they stubbornly resist.
A Curvilinear relationship
Here, increases in call centre quality predict increases in CSAT up to the tipping point, above which CSAT starts to decline. This maybe because expectations change or because too much is being done, the effect is to reduce overall satisfaction. Today the company has room to grow from the average up to this point only.
I believe that what is missing in most ‘business Math’ is an account of human behaviour. Importantly, by bringing human psychology into the picture this radically alters our Math. For instance, when you go shopping to your favourite store you may score 9 out of 10 on a first visit, but on your 20th time it’s an 8 out of 10. That doesn’t mean it’s any less attractive, it just means that human behaviour is such that you cannot feel great a buzzed about something all the time, unless you are on drugs, and nor would you want to. All measures are subject to the human requirement for homeostatic regulation. What’s important is that an optimal point has been reached, a plateau, beyond which is a tipping point: a point of no or negative returns in the current experience or where the experience needs to express fundamental ‘new expectations’ at least for a short while before a new tipping point is reached.
For sure, linear returns can be achieved in many businesses, partly because firms have often not smoothed out the failure points in an experience (the dissatisfiers) – in psychology terms losses often speak louder than gains – but the point is by knowing where your tipping point is, you are much more likely to focus on expenditure where it matters.
