Cost to Serve Analytics: Strategise for success: A practical roadmap for customer service efficiency

Cost to Serve Analytics

Strategise for success: A practical roadmap for customer service efficiency

© J. E. McNish 2024

Copyright design and patterns act 1988, all rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the copyright holder, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law.

Published by Aston Campbell Associates

British Library Cataloguing in Publication Data

A CIP record of this book is available from the British Library

ISBN 978-1-0686234-0-0

eISBN 978-1-0686234-1-7

Although every precaution has been taken in the preparation of this book, the publisher and author assume no responsibility for errors or omissions. Neither is any liability assumed from damages resulting from the use of this information herein.

First published 2024

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Dedicated to my parents and the pillars of strength who came before, and to inspiring future rising stars to shine even more.

As I begin sharing the insights contained in this book, I want to express my sincere gratitude to the people I have worked with while developing this approach and all who have contributed, advised and supported me throughout the writing and publishing process. Their valuable input and encouragement have been essential in shaping the content you are about to explore. It is with appreciation for their insights and guidance that I present this work, hoping it serves as a helpful resource for all who engage with it.

J. E. McNish

Who Needs This Book?

In today’s fast-paced and competitive world, leaders in both the public and private sectors are constantly challenged to deliver more with fewer resources. Balancing cost-efficiency while maintaining high standards of service and performance becomes increasingly difficult, especially when cost reduction efforts are met with new rounds of similar challenges, year after year.

Cost-to-Serve Analytics offers a strategic approach to not only meet current cost challenges but also prepare for those ahead. It is a comprehensive framework of free-to-use tools that you control, designed to augment your organisation’s internal workings in a way that continues to deliver benefits year after year. By adopting this approach, you can plan strategically, optimise resources, uncover the cost drivers for each product or service, improve decision-making, and drive sustainable growth—all without compromising quality or customer satisfaction.

This book is for anyone looking to move beyond intuition and guesswork and instead leverage data to make smarter, more informed decisions. Whether you’re a senior executive responsible for budgeting and strategy, a team leader seeking to streamline operations, or someone focused on improving services, this book provides the tools, insights, and frameworks to maximise your organisation’s efficiency and long-term value.

It will support your organisation to

Maximise long-term gains

Simplify complex operations

Measure ROI clearly

Achieve the delicate balance between cost efficiency and quality

Prepare for future budget cuts

Make data-driven decisions

Plan strategically

Mitigate risks effectively

Future-proof your organisation

Table of Contents

Foreword

Why I wrote this book

Cost to serve explained

1.0 What is the cost to serve?

2.0 Exploring your organisation’s cost to serve capacity

3.0 Business case considerations

4.0 Project guidance

5.0 Suggested project workstreams

6.0 Data management workstream: repositories, dashboards and calculations

7.0 Exploring your data

8.0 Appendices

Navigation Map

Every reader’s journey is unique. This map is designed to guide you directly to the content that meets your specific needs.

Curious About Cost-to-Serve?

What is Cost-to-Serve?

Origins and Background Section 1

Cost-to-Serve Implementation FAQs Section 1.1

Assessing Your Starting Point

Where Are You Now? (Maturity Model) Appendix 8.6

Choosing Your Approach Section 2.0

Building Your Business Case

Questions to help Sponsors Keep the Project on Track Sections 2.7 & 7.0

Business Case Suggestions Section 3

Planning a Cost-to-Serve Implementation

Roles and Responsibilities Section 3.7

Guidance for Product Owners/Project Managers Section 4.0

Guidance for Workstream Leads Section 5.0

Consolidating the Outputs

Combining the Outputs Section 6.0

Exploring Your Data

Tips for Maximising Value from Your Data Section 7.0

Real-World Examples

Case Studies Section 8.0

Foreword

There are various publications on activity based costing and cost to serve, but this one is geared towards empowering senior stakeholders to lead the initiative, project managers to implement it, and business managers to utilise cost to serve analytics capabilities to innovate, support, and inform decision making.

How often do you encounter cost-cutting measures that ultimately undermine customer satisfaction? This book is designed to support the systemic identification and quantification of end-to-end waste while advocating for cost transparency, streamlined processes, and customer experience design. By prioritising efficiency without compromising clarity in the customer journey, it benefits both customers and organisations alike. Reducing the need for customers to make contact ultimately increases satisfaction levels and drives down operational costs.

The background to this book began when Jacqui and I collaborated on a project that played a crucial role in shaping the initial versions of the Local Government Service List (LGSL). The LGSL serves as a comprehensive catalogue of the services that Local Government in England and Scotland provide to the public. The project’s success led to an invitation from the then Improvement and Development Agency (IDeA), now known as the Local Government Association (LGA), to collaborate with other organisations in developing a unified list for England. The list was subsequently nationally adopted, received significant international interest, was used to benchmark progress on national and commercial agendas, and was adopted by the community and its partners.

In tandem, Jacqui led a project to assess costs associated with public-facing services provided by a large organisation, aligning services with the LGSL and customer profiles, and chaired the London region’s eGovernment group. The group took a keen interest in the project outcomes. Subsequently, Jacqui facilitated collaboration among the partners Porism (a technology partner), the IDeA, and Experian (who contributed their Mosaic segmentation data). The program received partial funding from the Department of Communities and Local Government, with additional contributions from participating organisations. We both worked on the customer profiling project which, aligned with local objectives, benchmarked service delivery costs, access channel usage, and service take-up by access channel and segmented customer profiles. These experiences laid the groundwork for the work presented here.

The outcomes of this work (Aston Campbell Associates) are acknowledged and cited in various publications, including the 2009 HM Government document ‘Putting the Frontline First: Smarter Government’, the ‘Champion for Digital Inclusion: The Economic Case for Digital Inclusion’ report, the review of infrastructure in the public sector in Scotland, the Government Digital Efficiency report from November 2012, and presentations at events such as the Parliament and Internet Conference 2010 and Race Online 2012/PWC.

Since then, Jacqui has been actively involved in assisting organisations in understanding and optimising service delivery. This book encapsulates her experiences, providing a rationale for conducting cost to serve exercises and offering checklists of essential considerations. Intended as a practical guide, it aids in the application of theory, presenting templates, formulas, and examples for hands-on implementation.

Sheila Apicella, Assistant Director Local eGovernment Standards Body 2003–2004, Principal Consultant and Project Lead IDeA 2004–2007.

Why I wrote this book

Imagine being the conductor of an orchestra, not just appreciating the music, but possessing a deep understanding of each instrument, enabling you to harmonise their individual sounds and create mesmerising symphonies of innovation. This is what happened the first time I designed and completed the exercises contained in this manual, it fuelled imaginations, unlocked insights and released the potential for so much more.

Having an analytical edge is like owning a weapon that provides powerful advantage, fuelled by data-driven insights. It is about possessing the ability to extract meaningful conclusions from complex information, empowering smarter decisions and strategies. This edge allows one to uncover hidden patterns, foresee trends, and derive actionable solutions from the vast array of available data. It is not just about collecting information but transforming it into valuable knowledge that guides precision, efficiency, and innovation, setting the stage for impactful and informed leadership.

Having worked in a range of strategic transformational roles during my career, I recognised that without knowing the cost to serve, managers often have little choice but to make tough decisions when faced with making cuts, because the dashboards at their disposal have too few dials. Therefore, management may frequently decide on cuts without being able to estimate the impact on the overall business.

This book empowers organisations to project manage a cost to serve initiative from deliverables to benefits realisation, with support for quality and repeatability considered. It culminates with a balanced scorecard designed to give management more dashboard dials with which to make informed choices. Decisions that will have the biggest impact on efficiency savings, customer experiences and staff morale.

Cost to Serve Analytics is a practical manual designed to help large service organisations to track the cost of delivering each service. It addresses the never-ending need to reduce costs and enhance quality by demonstrating how to quantify the expenses associated with delivering each service. It provides leaders with guidance, KPIs, and dashboards, project managers with implementation guidance, and business managers with the insight necessary for making informed decisions related to service delivery.

I wrote this book because I could not find any publications that practically dealt with building a repository of cost-to-serve knowledge, from a service management perspective. This book is not designed to do the thinking for you, rather it is intended to help you think. I imagine that there are several ways one could approach this, and this is the one I used in 16 organisations. If it helps, you can change all or parts of this to suit your circumstances, as long as your approach and the assumptions made are robust, defendable, repeatable, auditable, and recorded.

This text approaches the subject through the lens of senior leadership and project management rather than traditional finance and accounting. It is