This new case study on citizen experience and ‘failure demand’ provides a strong argument for the investment in technology for better public sector services.
by Dave Worsell
Over the years I’ve written several blogs attempting to quantifying the value Government organisations can derive from the adoption of new technology. It’s always been incredibly tricky and unsurprisingly there’s no simple answer.
Most private sector organisations measure the success of an initiative through easily-quantified metrics like sales, revenues, and margins. But in the public sector, it’s much, much harder to demonstrate value: measures such as efficiency gains and cost avoidance are much harder to measure, especially given the multitude of external factors such as adverse weather, political direction and national and global events, all of which can impact the delivery of public services at the drop of a hat.
During a recent conversation it dawned on me that perhaps I’d been thinking about things the wrong way—perhaps it is much easier than I thought if you measure the right thing in the first place. Clearly, transaction volumes are always going to be difficult to control in the public sector, whereas as failure demand is in the most part avoidable and easy to measure. Reduce failure, and you quickly reduce costs.
First a quick definition: failure demand is additional or unnecessary demand created by a failure to do something, or a failure to do something right for a citizen. Failure causes citizens to seek alternative routes in to the organisation and to demand additional support to get what they need. Almost inevitably this requires extra resources and the use of more expensive customer service channels. Failure demand is costly and frustrating to both citizens and public sector staff, and it is entirely avoidable.
“Demand caused by a failure to do something or do something right for the customer”
The innovative team at Croydon Digital gathered a number of important metrics as part of their 2019-2024 Digital Strategy, which provides valuable insight into how a UK unitary authority serves citizens. Their work derived estimates of online and offline service volumes, the approximate channel mix, and—crucially—the estimated volume of failure demand. By extrapolating their research with some conservative assumptions and industry best practice, I felt that it might be possible to construct an ROI model that outlined the case for the introduction of Citizen Experience (CitX) tools.
My approach is outlined below, illustrating how I interpreted the data and the assumptions I made. I’d welcome feedback to improve the model, especially if you disagree with my conclusions or have additional data to share.
The CitX Return on Investment (ROI) model
Croydon has a population of 388,563 people based on recent ONS figures. The Croydon Digital team estimated an average number of 3.5 transactions per resident each year, giving an estimated 1.36 million transactions that need to be served online and offline. The team calculated that 75% of these transactions were completed online (c. 1.02m) and the remainder (c. 340k) were served through offline channels.
Croydon Digital also estimated that 25% of all online transaction failed, causing citizens to seek alternative means to resolve their issues. This is failure demand. Due to the more complex nature of offline transactions, I anticipate failure demand will fall broadly in line with industry call centre averages of 40%-60%, so let’s go with the middle ground for now.
So, what does this mean? For Croydon, the total volume of failure demand is approximately 425k transactions per annum. These are transactions that could have been avoided completely if the online or offline services got right the first time.
Croydon Digital also published their estimated channel costs, which means (with a few simple assumptions concerning their channel mix) it is relatively easy to estimate what failure demand could be costing Croydon Council.
* I’ve estimated this based on my previous experience as MD of GovDelivery UK, where we found that the cost to service via email typically falls somewhere between telephone and face-to-face. Obviously this can vary significantly based on the complexity of the query.
* I’ve estimated the channel mix based on prior experience. Croydon Digital stated 75% of their transactions are digital, leaving the remainder split between telephone, face-to face and email.
Lastly, I’ve assumed failure demand interactions will usually involve a switch from an online channel to an offline channel/s that requires human intervention, such as a call centre. Using the same ratio to estimate the failure demand channel mix, I estimate that failure demand is costing Croydon Council an estimated £1.85 million per annum to service.
Remember, Croydon is one of the leading Digital Councils in the UK (if not globally), and their understanding of both failure demand and citizen experience is advanced. Many councils don’t collect or publish this data, and are potentially unaware of the huge scale of the problem. Kudos to Croydon Digital for being proactive and highlighting the issue.
The role of Citizen Experience
Citizen Experience tools have the potential to help public sector organisations reduce failure demand by capturing citizen (and employee) feedback and using the insight to identify points of failure. By understanding the citizen experience, user sentiment and levels of frustration, service improvement can be focussed in the areas where it’s needed the most.
While it is unrealistic to assume all failure demand can be eliminated from a process, even modest improvements will deliver a significant cost saving. Private sector organisations claim that the introduction of Customer Experience (CX) tools have led to an increase in sales revenue of approximately 140%. Using this as a benchmark, it is not unrealistic to assume introduction of CitX in the public sector can reduce failure demand by between 10%-20%.
These conservative figures translate to savings of between £185k and £290k for a council like Croydon. That’s significant, and easily justifies the investment in the technology several times over.
Dave Worsell is founder of @IneoDigital and @digikind, and an investor at @hellolamppost_ He’s also helping @TarmacDev grow in Europe. You can say hello on Twitter at @dworsell
*Sign up for the comms2point0 eMag*
The comms2point0 eMag features exclusive new content, free give-aways, special offers, first dibs on new events and much, much more.
Sound good? Join over 3k other comms people who have subscribed. You can sign up to it right here