Staying On-Budget Won’t Impress Your Customers According to New Data
“I need them to be on-time and on-budget”, is a typical response of senior leaders at most organizations when asked what they’re looking for from their outside consultancies. These staple metrics are often heralded as the gold standard of large projects. Even the U.S. White House, in the second paragraph of its website for its feature legislative initiative, “Building a Better America”, promises to “get the job done on task, on time, and on budget.” Time and cost have been coupled forever, but only one tends to affect the viewpoint of stakeholders when judging the outcome of projects and the people that manage them.
Some quick, relevant background: my firm captures Voice of Customer (VOC) feedback from thousands of enterprise customers per year, asking them a series of questions about their satisfaction with the services of their digital agencies or consultancies. The resulting VOCalis Score is an optimal customer satisfaction metric: a 0–100 grade based on 40 data points of feedback. It’s like the Net Promoter Score, but the VOCalis score is much more actionable since one can transparently see all of the [correctable] factors that go into the metric. Our score has a very strong correlation with NPS (r=0.94), which means we have nearly perfectly dissected the unconscious factors that influence a customer’s 0–10 NPS answer.
Last week, we were doing some data analysis, updating our benchmarks with all of the 2021 feedback data. We ran correlations between all of the individual data points and both the NPS and the VOCalis scores to find any patterns and influences. It turns out that the correlation between NPS and most individual data points, or answers, in our survey have a moderately positive relationship (r = 0.5 to 0.8). This makes sense if you think about it. By and large, if you feel positively about one aspect of a project, e.g. whether your expectations as a stakeholder were managed appropriately or whether the communication was effective, you likely feel positive about the overall project. The opposite is also true. The degree of strength in those relationships will vary from one topic to the next, but the sentiment is generally related.
But, this is where it gets interesting with the intertwined notion of “on-time, on-budget”, two elements that have always been joined at the hip, but in reality are quite far apart. The relationship between on-time delivery and NPS is one of the strongest correlations among all the factors we assess (r = 0.76), yet the relationship between on-budget delivery and NPS is prettymuch non-existent (r = 0.21). That latter point is me burying the lede, so it bears repeating: there is almost no relationship whatsoever between an agency’s ability to stick to a budget and the customer’s ultimate satisfaction and loyalty.
Based on these insights, if an enterprise customer tells DCG that an agency or consultancy they work with ran way over budget, but that they were very good at meeting all of their deadlines, that customer is very likely to tell us that they would recommend the agency to others. Even more importantly, they are likely to give the agency even more business. However, if the consultant missed their deadlines but did a great job adhering to the budget, it’s much more likely that the customer will be very unsatisfied overall.
We are not inferring causation here, but the point is that the two metrics don’t go hand-in-hand as they don’t hold equal weight. In fact, on-time delivery (a very strong indicator of loyalty/satisfaction) and budget adherence (no relation to loyalty/satisfaction) should no longer be tied together in any context moving forward outside of the fact that they’re both easily measurable.
Should engagement leaders continue to focus on their budgets? Of course! But should a Procurement Manager judge all vendors based on whether or not they adhered to their budgets? Not if they want to keep their best consultancies in the mix. Likewise for an ageny, if a client budget is overrun, it’s not worth losing sleep over. It’s much more important to deliver value and get things done right and on-schedule. Those are far more critical to maintaining satisfied stakeholders.