The Total Economic Impact™ Of Medallia

Cost Savings And Business Benefits Enabled By Medallia

A Forrester Total Economic Impact™ Study Commissioned By Medallia, January 2025

Delivering strong customer experiences (CX) is a critical organizational objective for many top-level executives as it can directly contribute to the overall financial success and growth of their companies. Exceptional CX can lead to improved interactions with the customer, resulting in increased customer loyalty, engagement, advocacy, and, ultimately, increased revenues and lower operational costs.¹ Investing in CX technology can help organizations achieve these objectives, Medallia provides a holistic view of experiences across customers, employees, and the broader market as well as best-in-class analytics to drive actionable insights that organizations can use at scale.

Medallia is a customer feedback management (CFM) solution that helps organizations deliver on their brand promises by enabling organizations to collect, analyze, and act on customer and employee insights to improve experience and drive business results.

Medallia commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Medallia.² The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Medallia on their organizations.

3-year return on investment (ROI)

185%

3-year net present value (NPV)

$39.25M

To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed five representatives at four organizations with experience using Medallia. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a global, multibillion-dollar business-to-consumer retail organization that has multiple brands and generates $100 billion in global revenue.

Interviewees said that prior to partnering with Medallia, their organizations’ CX programs were difficult to scale, decentralized, and not aligned around a single metric of success like Net Promoter ScoreSM (NPS). Most importantly, the organizations were not able to derive or act on insights nor effectively create a culture centered around the customer.

Interviewees explained that their organizations’ investments and partnerships with Medallia enabled them to transform their global CX programs and gain measurable impact to revenue and cost savings when compared to their prior environments. Major benefits reported included aligning their global CX programs with clear ownership and accountability, driving more personalized actions with customers, continuously improving CX at scale, increasing NPS scores, improving employee productivity, reducing the cost to serve, and consolidating their previously decentralized environments to streamline their operations and reduce operating expenses.

Key Findings

Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:

A 30% increase in spend from personalized actions with contacted customers. The composite organization focuses on contacting customers after they provide positive or negative feedback regarding an in-store interaction. As a result, its NPS scores, customer loyalty scores, and the average spend of those customers contacted improved. Over three years, a 30% increase to the average spend of customers personally contacted is worth $30.5 million to the composite organization.
A $10.8 million increase in profit through continuous digital improvements. The composite organization prioritizes resolving pervasive digital issues that negatively impact revenue potential. As a result, the organization reduces cart abandonment and recognizes additional digital revenues. Over three years, the digital revenue recaptured is worth $10.8 million to the composite organization.
Deflection of customer service calls and a 5% to 7% reduction to callback rates. The composite organization resolves root causes of customer service calls, makes proactive changes to reduce friction at customer journey touchpoints, and provides more self-service options based on customer feedback. As a result, it resolves customer issues more effectively, and it decreases its callback rates by 5% to 7%. Over three years and a cumulative total of 1.2 million avoided contacts, the call center improvements are worth $2.4 million to the composite organization.
Ability to scale the CX team without adding additional headcount and the addition of almost 10,000 productive hours gained for web engineering teams. The introduction of Medallia to the composite organization provides productivity and efficiency to its CX team that’s the equivalent of adding the capacity of 17.5 headcount over three years without the additional cost of hiring. The CX team avoids manual efforts for data consolidation and reporting, gains efficiencies of scale with a single solution, and easily democratizes insights across the entire organization. The composite’s web engineering teams avoid 16 hours per web domain each month that was previously spent on discovery related to root cause analysis. Over three years, the productivity lift for these teams is worth $1.4 million to the composite organization.
Ability to consolidate legacy-environment tools and solutions into a single platform. With its Medallia investment and enterprise deployment, the composite organization quickly consolidates legacy tools and realizes cost savings, which offsets the Medallia licensing costs. Over three years and with the consolidation of five legacy systems, the shorter development cycle is worth $15.2 million to the composite organization.

“Having this platform allows us to quantify our performance as we continue our CX journey and focus on strategic customer obsession. We are investing where it matters because if it matters, we should see it in the bottom line.”

Head of customer experience, insurance

Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:

Improved CX and NPS metrics, indicating increased customer loyalty and acquisition. These improvements may drive revenue via higher retention, lifetime value, or customer acquisition. Interviewees said these are top benefits of Medallia.
Access to Medallia’s experts to help develop, guide, and execute CX strategy. The composite organization receives best practices from Medallia experts on improving its CX culture, establishing steering committees and new governance models, and showcasing ROI to executives throughout the course of its CX journey. It also partners with Medallia to create custom features to measure experiences that are unique to the organization.

Help from Medallia experts with in-depth analysis. The composite organization leverages Medallia CX leadership and advisory to better understand insights that drive customer experience, create connections with other data and systems, and evaluate customer journey components.
Ability of product owners to use CX insights to improve products and services. The composite’s product teams use Medallia insights to improve upon existing products and to create new customer-centric products.
Improvements to the lives of customers. An interviewed director of CX measurement and data analytics in government said their agency measures its success with a beacon metric called a “trust score,” and they cited an increase from 55% to 80% for its customers with Medallia. The interviewee said their agency also saved more than 3,000 lives, helped 22,000 customers in crisis, and saved nearly $800 million in technology savings over five years.

Costs. Three-year, risk-adjusted PV costs for the composite organization include:

Platform and services costs and a one-time implementation fee totaling $16.5 million over three years. The composite organization pays Medallia an initial implementation fee of $1.5 million and then pays annual subscription costs for the platform software and relevant services. Subscription costs are based on experience data records, which enables the organization to provide access to the platform to an unlimited number of employees.
Internal implementation labor and ongoing program costs totaling $4.7 million over three years. The composite organization dedicates $59,100 to internal labor to support the implementation of Medallia. Ongoing project costs include labor for platform administration and significant change management efforts, including training, additional CX leadership resources, and a recognition budget to drive cultural change.

Results. The representative interviews and financial analysis found that a composite organization experiences benefits of $60.48 million over three years versus costs of $21.23 million, adding up to a net present value (NPV) of $39.25 million and an ROI of 185%.

Key Statistics

Return on investment (ROI)

185%

Benefits PV

$60.48M

Net present value (NPV)

$39.25M

Payback

<6 months

Benefits (Three-Year)

Revenue growth from through personalized actions Revenue growth from through continuous improvements Reduced cost to serve Productivity lift Legacy environment consolidation savings

TEI Framework And Methodology

From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in Medallia.

The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that Medallia can have on an organization.

Due Diligence

Interviewed Medallia stakeholders and Forrester analysts to gather data relative to the Medallia platform.
Interviews

Interviewed five representatives from four organizations using Medallia to obtain data about costs, benefits, and risks.
Composite Organization

Designed a composite organization based on characteristics of the interviewees’ organizations.
Financial Model Framework

Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees.
Case Study

Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.

Disclosures

Readers should be aware of the following:

This study is commissioned by Medallia and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.

Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in Medallia.

Medallia reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.

Medallia provided the customer names for the interviews but did not participate in the interviews.

Consulting Team:

Veronica Iles

Drivers leading to the Medallia investment

Interviews

Role	Industry	Region	Revenue	Employees
Head of enterprise customer experience	Healthcare	US	$360 billion	300,000
Director of CX measurement and data analytics	Government	US headquarters, global operations	Not applicable	450,000
Head of customer experience and Head of customer voice and obsession	Insurance	US	$34 billion	18,000
Enterprise customer insights and strategy lead	Retail	US	$85 billion	284,000

Prior Environments

Interviewees shared that before adopting Medallia, their organizations’ CX environments fell into a broad range of program maturity:

The least mature organization was not doing any customer feedback collection or analysis.
One organization created a homegrown system and a survey tool for CX feedback collection and management.
The most mature organizations lacked a true CX function and relied tangentially on market research or customer insight approaches that did not apply CX insights operationally. Their CX approaches included several legacy systems and vendors, including multiple survey programs distributed and siloed across regions and business units.

Key Challenges

Interviewees noted how their organizations struggled with common challenges, including:

Decentralized customer feedback collection and management efforts were redundant and expensive. For the organizations that had more mature CX programs in place, it was costly to maintain and manage their scattered legacy environments for collecting and analyzing feedback. The interviewees noted that their organizations had multiple vendors relationships and several proprietary tools that all needed maintenance. The head of enterprise customer experience at a healthcare organization shared, “We had eight or nine different technologies that were expensive to manage.”
Inconsistent methodologies and fractured data definitions created challenges for consistent view of CX. Interviewees noted that without a unified data strategy or enterprise platform to manage CX feedback, their organizations were creating complexity, fragmentation, and siloes around their data. Efforts to gain a holistic view of CX or to report on trends was cumbersome if not impossible. The head of enterprise customer experience at a healthcare organization shared: “We leveraged multiple different methodologies and metrics without any kind of consistency. From a leadership perspective, it’s critical to use consistent messaging and language internally to have the same approach across the enterprise.”
The organizations lacked alignment around a beacon metric. The interviewees noted that without a unified, enterprisewide approach to CX, their organizations lacked alignment around the metrics that matter. This exacerbated the fragmentation between business units and regions, which independently decided what metrics, if any, they used to measure their CX efforts.
Legacy CX efforts did not enable the front line to act on feedback or close the loop with customers. Interviewees noted that their organizations struggled with acting on the feedback captured by legacy CX efforts. Sharing information was slow, and reporting lacked the companywide consistency needed to create useful global insights that could be leveraged across the organization. Adding to the problem, the information was only available to a small number of employees, often at the mid-operational level, missing opportunities to share insights with frontline employees who often have the power to act on this information. The head of enterprise customer experience at a healthcare organization shared: “I’m a big believer in driving action at the front line and closing the loop, which are the elements of operational customer experience management. So, another challenge was that those [legacy] technologies did not enable us to get the specific data that mattered to the frontline employees so they could act on it in real time and close the loop effectively.”
A lack of ownership and accountability for CX and unclear incentives for improving CX were barriers to becoming customer-obsessed. Interviewees noted that without clear leadership alignment around CX goals and metrics, their organizations struggled to create a company culture centered on understanding and improving the customer experience with the organization. A customer journey approach requires both a cultural and operational shift from focusing on listening and measurement in specific channels — such as the contact center or website — to looking at customer journeys that cut across organizational silos.³

Investment Objectives

The interviewees’ organizations searched for a solution that could empower them to:

Tie CX improvements to financial metrics. The interviewed CX leaders said they understood there was a need to articulate the importance of creating great customer experiences, but that they also knew they needed a way to demonstrate and justify the financial value of their efforts. The head of enterprise customer experience at a healthcare organization shared, “We were looking to measure how improving the customer experience materially changes financial outcomes in our businesses.”
Standardize a global CX program on a single platform. Interviewees noted that for their organizations to reach their CX program objectives, they needed to unify people, process, and technology. From a technology perspective, the goal was to select a single platform that could be used globally and throughout all levels of the organization.
Unite the organization with common CX language and a single beacon metric. Interviewees noted that with a singular and comprehensive technology platform, their organizations could focus on measuring and improving a single beacon metric and using consistent CX language. The director of CX measurement and data analytics at a government agency shared: “My perception is that [decision-makers] wanted a uniform methodology and system for creating surveys and other listening tools to gather trust and satisfaction data from [customers] in a systematic and uniform way. Uniformity and consistency allow for better decision-making, resource allocation, [and] understanding of [customer] trust and satisfaction without having to do interpretation every time new scores or trends are presented”. The most common beacon metric across the interviewees’ organizations was NPS. The head of customer experience at an insurance company shared, “NPS is our beacon metric, and then, from a transactional/journey angle, we use ‘ease of doing business’ as the other CX metric.”
Create a customer-obsessed culture. Interviewees noted that from a people perspective, the goal was to ignite a culture of consumer-centricity to continuously improve customer experiences. They said that identifying a technology solution that could integrate into their existing systems of work would empower their organizations to embed CX into their DNA to create long-lasting change while driving long-term growth. The head of enterprise customer experience at a healthcare organization shared, “As an enterprise, we want people to engage with us across multiple different channels and businesses, and if we don’t lead with consumer-centricity and delivering great experiences, why would they?”
Democratize CX data and insights. In the organizations’ prior environments, they shared CX insights only with small groups of users. Interviewees said that during research for a new technology investment, their organizations identified the need to democratize the insights organizationwide. More importantly, there was a need to share relevant insights that aligned with the employees’ roles within the organizations and to share that information with them in the systems they use every day. For example, frontline employees needed to be able to see their own personal customer performance scores and customer feedback, while managers needed to see the same information for their entire team.
Act on customer feedback. Interviewees said that a best-in-class CX program acts on customer insights in a timely and relevant manner. Therefore, a criterion for their technology investment in this area was that it must enable action at all levels of the organization, from the front line to executives. Actions also would need to drive closed-loop efforts. They also wanted a technology solution that would help connect operational data and consumer feedback to support solving systemic challenges using operational data and consumer feedback. The head of customer experience at an insurance organization shared: “Specifically, we talked about how we can better understand our customers and, through their feedback, identify root causes, gaps, opportunities, and process breakages. It was most important for us to enable the ability to take action on that customer feedback so that we could close those gaps and address those opportunities.”
Streamline CX team efforts. Interviewees noted that to scale their organization’s CX program, the technology investment needed to reduce data interpretation efforts, enable better and faster decision-making, and enable the ability to scale without significantly increasing CX team size.
Track performance over time and measure against competitors. Interviewees noted that as part of a robust CX program with clear initiatives and measurable outcomes, another objective was to use their organizations’ technology investments to tangibly track and report on program impact and contribute to a broader customer-centric cultural shift. Looking externally, the interviewees noted that their organizations would use performance metrics to benchmark against competitors as another measurement of CX success. The head of customer experience at an insurance organization shared, “Tracking our performance over time will help us measure by how much we are improving the customer experience across the business system.”

“We want to drive action in three core ways: One is getting data to the front line in our stores and call center so they can act, learn, and coach. Two, we want to solve systemic issues across our enterprise. And third, we’re really focused on building a platform of recognition at the intersection between colleague experience and customer experience.”

Head of enterprise customer experience, healthcare

Why Medallia?

After evaluating multiple options including maintaining the status quo and alternative customer experience management technology vendors, the interviewees cited the following reasons for selecting Medallia:

The platform’s enterprise scope and engagement opportunities for users. Interviewees noted that Medallia stood out for its ability to be an enterprisewide CX platform and they said it had the greatest potential to engage users at many levels across the organization. The head of enterprise customer experience at a healthcare organization shared: “Medallia had the enterprise scope at which we had to operate. I’ve got 300,000 colleagues to engage. We wanted to make sure that we could meet that scale.”
Medallia’s expertise with business unit and stakeholder needs. Interviewees noted that in order to have a successful enterprise approach to CX, it’s important to cater to the needs of each business unit. The head of enterprise customer experience at a healthcare organization noted that making the decision to select Medallia included representatives from across the business. They shared: “We had representation from every business unit. So, the biggest thing was [Medallia’s] expertise within groups like retail and health insurance.”
Ability to get data to the front line to drive action. The organizations wanted to proactively improve experiences for their customers, and interviewees said Medallia stood out for its ability to democratize data and get data insights into the hands of the right employees — from frontline to C-suite — to drive real-time action. The head of enterprise customer experience at a healthcare organization shared: “What stood out for us about Medallia was their ability to get data to the front line. If you think about where we wanted to drive action, we wanted it to get to the frontline users as much as possible because the data has to get to the people that matter quickly so they can make changes quickly. Medallia had that capability in a way that’s better than anybody else. They’ve been around for 20-something years, and it’s still the thing that they do better than anybody else, in my opinion.”
Proof of success at other big companies and long-term potential. Interviewees highlighted Medallia’s proven track record of creating enterprise CX programs at large global organizations as a reason for selecting the platform. They also noted the roadmap Medallia presented had long-term potential and opportunities to further enhance their CX programs as they matured.

“Medallia is a very solid platform for its functionality and scalability.”

Head of customer experience, insurance

“Customer experience is part of our global strategy. How we measure progress against that is by becoming top quartile on a promoter score. And the way we track Net Promoter Score is through a best-in-class, industry-leading solution: Medallia.”

Head of customer voice and obsession, insurance

Key Results For CX

Interviewees said Medallia enabled their organizations to take a programmatic view to improving CX across every aspect of their customers’ journeys. They explained that this enabled them to both make holistic continual improvements and address specific customers with targeted, closed-loop actions. They said Medallia aided these efforts by helping their organizations:

Discover CX issues and opportunities faster and at a higher rate. Medallia helped the organizations uncover opportunities for digital and frontline experiences.
Provide fast, insightful visibility for CX opportunities across functions. Medallia helped the organizations easily monitor and democratize CX insights from digital teams to CX teams and from managers to frontline workers.
Align more quickly and effectively to ideate and act on CX opportunities. Medallia helped cross-functional teams to more easily understand and communicate regarding CX insights to make data-backed decisions.

As a result of these benefits, interviewees’ organizations leveraged Medallia to take faster and more effective personalized actions and programmatic, continual change in response to CX opportunities.

Specific methods employed to improve scores included:

Empowering the organizations to cultivate customer-obsessed cultures with a single beacon metric for success.
Generating insights that helped the organizations reduce persistent areas of friction in their customer journeys.
Bringing visibility to pervasive issues that negatively impacted CX.
Enabling the organizations to resolve the root causes of issues more quickly than they could in their prior environments.
Bringing visibility to customer pain points shared via the contact center, resulting in new guide rails for service escalations to reduce hold times and improve customer experiences within the call centers.

Interviewees shared a variety of examples in which their organizations leveraged Medallia to improve CX and NPS. They said:

Medallia helped their organizations realize quick wins and then drive further results as user engagement with insights continued to increase. Interviewees said their organizations realized quick wins as they improved pain points for customers after implementing Medallia. The value from the solution then helped their organizations to continuously identify and act on insights to improve customer experience scores and NPS. As the interviewees’ organizations increased employee engagement with insights, they were able to drive greater improvements to CX and NPS.

The head of enterprise customer experience at a healthcare organization shared: “We’ve decided to use Net Promoter Score, and one of the things we look at is how frontline engagement impacts customer experience. If we have more usage of the [Medallia] platform, are people going to learn and perform better in their roles because we’re unlocking data that makes people better at their jobs? The answer is yes. We’ve done it, and probably more than we had even thought.”
NPS scores increased with program tenure. Interviewees said it was valuable for them to provide increasing NPS and CX scores to leadership as their organizations’ CX programs matured. The head of customer experience at an insurance organization shared: “As we think about general NPS levels of performance, anything between 0 and 50 is good because you have more promoters than you have detractors. Anything between 50 and 70 is great, and a score above 70 is world-class. [Before using Medallia,] the bulk of our business [lines] were within that good range. We have been seeing strong and steady progress across the business system, and we have certain pockets where we are now operating at that great level.”

“[Data] democratization has allowed us to give real-time access to folks so that they can see how their customer experience performance is with the intent for them to self-serve and take action in real time.”

Head of customer experience, insurance

The organizations grew their customer-centric cultures by democratizing customer feedback. Interviewees said democratizing CX insights across their organizations empowered conversations at all levels about how to provide great customer experiences. For example, they explained that frontline employees and their managers held informed coaching sessions and conversations around discrete interactions, and entire frontline employee teams adopted CX insights into their daily routines.

The enterprise customer insights and strategy lead at a retail organization shared: “I’ve seen managers use [Medallia data] for direct coaching conversations with associates. And managers will use the information at their morning huddles and call out which departments or individuals had a great day from a customer-experience perspective. It’s a very integrated part of their daily routines.”

“Frontline employees look at data related to them. They’re using it to learn and get better. A supervisor will look at their team’s data and use it to coach on improving different aspects of the experience.”

Head of enterprise customer experience, healthcare

Managers embedded CX feedback into their daily routines. The enterprise customer insights and strategy lead in retail shared that their organization combatted these challenges by ingraining CX results and feedback into the daily norms and behaviors of managers. They shared: “The store managers have a three-stop shop that they look at every day. First, they look at sales for yesterday. And then they go into their fulfillment metrics. Then, they go into the [Medallia] VOC dashboard and see, ‘Oh, the red bubbles are my unhappy customers.’ They read what’s going on and figure out if something needs to be done right away. They look at how they are trending and drill into which department in the store is having an issue. Medallia has become part of their workflows, and the expectation is that if something comes in, they should be aware of it, and they should act on it. It is so powerful.”
Having automated alerts in real time enabled faster solutioning. In the prior environments, sharing customer feedback was delayed and sometimes took weeks to be disseminated to frontline employees and their managers. This hindered employees’ ability to effectively respond to feedback or resolve the issues quickly. But interviewees said with Medallia, dashboards and automatic alerts surface relevant insights in near-real time, enabling teams to act in the moment. The head of customer experience at an insurance company shared, “Teams individually can set alerts so that if a performance threshold falls below X, they receive an automatic alert.”
Using insights and analytics allowed the organizations to understand how staffing and enablement impacted the experiences customers were having in their physical locations. Interviewees said their organizations used Medallia insights to identify pain points that were not directly connected to customer interactions. For example, the head of enterprise customer experience in healthcare said their organization gleaned a connection between dropping NPS scores at an individual location with turnover in that store’s leadership. This correlation enabled the organization to shift hiring and promotion practices to reduce leadership attrition and improve the experience of frontline employees. The interviewee shared: “[With Medallia,] we tied the NPS experience scores at a store level, and what we found is that a lot of the experience issues for employees were tied to leadership turnover. Emphasizing leadership stability and stopping leader attrition has helped us improve the retail experience. Medallia helps us figure out if we are hiring the right people and if we are identifying the right internal talent to promote.”

“A program of this size can reduce friction for the customer in lots of different ways. These are real barriers to what you want the customer to do or what the customer wants to do that has an impact on future potential visits.”

Enterprise customer insights and strategy lead, retail

Composite Organization

Based on the interviews, Forrester constructed a TEI framework, a composite company, and an ROI analysis that illustrates the areas financially affected by the Medallia investment. The composite organization is representative of the interviewees’ organizations, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:

Description of composite. The global, multibillion-dollar business-to-consumer retail organization has multiple brands and generates $100 billion in global revenue through both in-store and online sales. It has an operating margin of 4.5%, the average value per transaction is $105, and customers make a purchase from one of the organization’s brands an average of once per month.

Deployment characteristics. The composite deploys Medallia globally across the enterprise, including four business lines and their support centers. The composite gathers solicited feedback through post-interaction and digital feedback surveys and through unsolicited text and speech analytics captured from customer service inquiries and website behavior through digital experience analytics. The composite also takes advantage of Medallia’s video feedback capabilities.

CX program characteristics. CX is a strategic pillar of the composite organization, and its cross-functional CX team is part of a larger enterprise customer experience team that also includes design and journey teams. Before adopting Medallia, there were 10 employees on the cross-functional CX team, including representatives from IT, customer service, marketing, digital, product management, operations, and customer success. The CX team is responsible for CX strategy, voice-of-the-customer (VoC) programs, CX measurement/metrics, CX vision, customer research, and creating a customer-centric culture.⁴ With the investment in Medallia, the organization hires one additional CX leader to work closely with Medallia and oversee the new program. In the following year, two more resources are added to support change management and adoption.

Application of CX insights and data users. Medallia insights are available to all employees, and 50% are actively engaged at least weekly in some capacity. Medallia users include the CX team, data analysts, executives, frontline employees, and employees in customer service, legal, marketing, and IT. The organization uses Medallia insights for both inner- and outer-loop learnings and action.

Key Assumptions

$100 billion revenue
200,000 global employees

Quantified benefit data as applied to the composite

Total Benefits

Ref.	Benefit	Year 1	Year 2	Year 3	Total	Present Value
Atr	Revenue growth from personalized actions	$8,783,539	$12,400,290	$16,361,494	$37,545,323	$30,525,841
Btr	Revenue growth through continuous improvements	$6,378,749	$3,192,918	$3,231,900	$12,803,567	$10,865,813
Ctr	Reduced cost to serve	$820,125	$984,150	$1,148,175	$2,952,450	$2,421,556
Dtr	Productivity lift	$444,427	$594,771	$698,771	$1,737,969	$1,420,568
Etr	Legacy environment consolidation savings	$3,750,750	$7,501,500	$7,501,500	$18,753,750	$15,245,347
	Total benefits (risk-adjusted)	$20,177,590	$24,673,629	$28,941,840	$73,793,059	$60,479,125

Revenue Growth From Personalized Actions

Evidence and data. Organizations leveraged Medallia to empower frontline workers and service agents to quickly act on customer feedback with closed-loop efforts. Interviewees’ organizations built new processes empowered by actionable insights from Medallia to respond to customer feedback; responding to customers who provide feedback is a critical activity in a successful VoC program.⁵ Closed-loop efforts by frontline workers using insights from Medallia ultimately helped drive revenue for the composite organization.

“Medallia has been a really effective tool. I firmly believe that closing the loop has helped our employees. They love to get real meaningful feedback and have a dialogue with the consumer about what happened. Managers can leverage it in their coaching conversations, and the frontline employees like that it creates a level of transparency about how they’re doing with the consumers. No one shows up wanting to do a bad job. This helps them get better.”

Head of enterprise customer experience, healthcare

Most CX programs close feedback loops with individual customers on a one-to-one basis (e.g., by calling or emailing individual customers). ⁶ Interviewees noted that when CX teams and frontline employees worked together to better understand customers’ feedback, their organizations gained better understanding of the feedback’s drivers. These efforts also improved employee experience, job satisfaction, and employee engagement. For example, the head of enterprise customer experience at a healthcare organization shared: “If I get a survey that says: “[Your company] sucks [and] you guys are the worst,” that doesn’t help me. But when the employee closes the loop, they’re able to translate the consumer experience into our language. The employee can [tell the CX team], “Well, the issue was with this policy,” and that has enabled us to be more effective in driving solutions.”

30%

Revenue growth from personalized actions attributed to Medallia

Modeling and assumptions. Based on the interviews, Forrester assumes the following for the composite organization:

The composite organization focuses on contacting customers after they provide positive or negative feedback regarding an in-store interaction. The calculation for this figure is the number of in-store customers times the annual number of transactions times survey response rate times contact rate.
- The composite organization has 75 million customers who transact in a store an average of 12 times per year.
- The composite’s survey response rates are 3% in Year 1, 4% in Year 2, and 5% in Year 3, and they improve each year due to enhancements to feedback-gathering processes.
- The composite’s contact rate is 85% in Year 1, 90% in Year 2, and 95% in Year 3, and they improve each year due to greater engagement from frontline employees and higher levels of adoption of closed-loop practices by frontline employees, managers, and call center agents. Personalized outreach becomes more efficient over time with the help of templates, best practices, and AI capabilities.
The composite organization measures a 30% increase in average customer spend for purchases that follow a personalized contact in response to survey feedback.

Prior to the Medallia investment, the average transaction value for all transactions was $105. The incremental value of a contacted customer is an additional $32.
The composite organization has a 4.5% operating margin.
The composite organization makes several technology investments aimed at improving the customer experience, makes significant changes to its policies and procedures, adjusts its business strategy, and faces macroeconomic factors that contribute to changes in customer behavior. Because of these variables, the composite organization attributes 30% of the revenue growth to Medallia.

30%

Average increase in spend post-closed-loop interaction

Risks. Forrester recognizes that these results may not be representative of all experiences and the benefit will vary between organizations depending on:

The size and type of organization, including the type of product or service sold, the number of customers, the average value per transaction, the average number of customer transactions, etc.
The organization’s desired scope and scale of personalized actions or closed-loop efforts. Some organizations may choose to focus on a subset of feedback (e.g., negative remarks) while others may choose to respond with personalized outreach for a broader range of feedback. Not all customers will respond the same way to closed-loop contact.
How effectively the organization can connect data and apply, scale, and act on CX insights organizationwide.
How effectively and how quickly the organization can activate and roll out any personalized contact or closed-loop programs and whether or not the organization starts with a single touchpoint (e.g., post-transaction surveys) and then scales efforts to other customer journey touchpoints.
The organization’s CX culture, adaptability, and appetite for process change. The financial outcomes will correlate with how effective training and change management efforts are for employees who leverage the insights for inner- or outer-loop improvements.
Effective creation and adoption of customer-centric policies and procedures related to personalized outreach and closed-loop efforts.
The amount of attribution the organization credits to the Medallia investment, which depends on other investments and strategies that simultaneously impact customer experience outcomes. Organizations may attribute more or less of the impact to the Medallia investment, which would increase or decrease the impact of the ROI calculation.
The company’s overall operating margin.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $30.5 million.

Revenue Growth From Personalized Actions

Ref.	Metric	Source	Year 1	Year 2	Year 3
A1	Customers contacted post-feedback from store interaction	Composite	22,950,000	32,400,000	42,750,000
A2	Average increase in spend post-interaction	Interviews	30%	30%	30%
A3	Average value per transaction	Composite	$105	$105	$105
A4	Operating margin	Composite	4.5%	4.5%	4.5%
A5	Attribution to Medallia	Interviews	30%	30%	30%
At	Revenue growth from personalized actions	A1A2A3A4A5	$9,759,488	$13,778,100	$18,179,438
	Risk adjustment	↓10%
Atr	Revenue growth from personalized actions (risk-adjusted)		$8,783,539	$12,400,290	$16,361,494
Three-year total: $37,545,323			Three-year present value: $30,525,841

Revenue Growth Through Continuous Improvements

Evidence and data. Organizations leveraged insights from Medallia to improve a range of digital experiences, such as improving the checkout process or streamlining the process to join loyalty programs. The speed of insights was critical to deploying faster remedies to friction points along digital customer journeys. Interviewees noted that their digital teams were able to see when an experience was creating frustration (e.g., an “add to cart” button not working or a payment field rejecting credit card information), which led to excess cart abandonment rates and lost revenues. With Medallia, organizations’ digital teams were able to prioritize experiences that were creating the most common issues and the most severe negative consequences and to address them more quickly than they could in their prior environments.

The enterprise customer insights and strategy lead at a retail organization shared: “When we first launched [our loyalty program], the way a customer identified themself was to download the app, then go into the wallet on the app, and then scan a QR code at the register. It wasn’t really designed with the customer at the center. Within 18 hours of launching the program, we already had thousands of customers who had given feedback. I said, ‘What are we seeing and what can we learn?’ [The VoC leader] quickly identified friction points. [For example,] the average person who was really excited about joining the program … didn’t realize they had to download the app. So, really, really, quickly, we could take this feedback and make changes.”

“[Medallia] was really powerful in terms of reducing friction for the customer.”

Enterprise customer insights and strategy lead, retail

Modeling and assumptions. Based on the interviews, Forrester assumes the following for the composite organization:

The composite organization quantifies improvements to its digital experience by using its reduced cart abandonment. Digital experience improvements could also improve other metrics such as engagement or conversion that are not quantified for this study.
The composite organization’s e-commerce experience has over $23 billion in revenue opportunity from abandoned carts from their owned site and mobile application.
The digital team uses Medallia insights to focus on resolving areas of the website and mobile experience that create friction for visitors. Not all areas of the website or mobile application have a direct impact on CX, nor can the website team focus on all domains initially. The percentage of web domains that apply Medallia insights to improve customer experience is 38% in Year 1, 43% in Year 2, and 50% in Year 3.
The digital team targets addressing root causes of experience issues that drive cart abandonment. With the resolution of friction points, the organization estimates that 12%, 5%, and 4% of the cart abandonment revenue opportunities are addressed during the three-year investment period. The largest resolution takes place in Year 1 as the digital team addresses persistent issues, meaning fewer issues arise in later years. This effect does not compound annually because Forrester expects the composite to eventually find and remediate a significant portion of CX issues with the improvements in later years derived from newly introduced issues with the digital channel.
The composite organization makes several technology investments aimed at improving customer experience, makes significant changes to its policies and procedures, adjusts its business strategy, and faces macroeconomic factors that contribute to changes in customer behavior. Because of these variables, the composite organization attributes 30% of the revenue growth to Medallia.
The composite organization has a 4.5% operating margin.

$316 million

Additional digital revenue from improved CX attributed to Medallia

Risks. Forrester recognizes that these results may not be representative of all experiences and the benefit will vary between organizations depending on:

The organization’s e-commerce characteristics, including the type of product or service sold online, the number of digital customers, the average value per digital transaction, the average number of digital customer transactions, etc.
The organization’s web and mobile application conversion and cart abandonment rates before the Medallia investment and the capacity for improvement with CX optimization. A more nuanced analysis might be used to measure the impacts on mobile conversion separately from web conversion, which typically have significantly different conversion and abandonment rates than desktop.

The organization’s approach to root cause analysis and investment into ongoing improvements, as well as the ability to effectively drive systemic change based on the insights Medallia provides.
How effectively and how quickly the organization can connect data and apply and scale CX insights across multiple website and mobile application domains.
The amount of attribution the organization credits to the Medallia investment, which depends on other investments and strategies that simultaneously impact customer experience outcomes. Organizations may attribute more or less of the impact to the Medallia investment, which would increase or decrease the impact of the ROI calculation.
The company’s overall operating margin.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $10.9 million.

Revenue Growth Through Continuous Improvements

Ref.	Metric	Source	Year 1	Year 2	Year 3
B1	Abandoned cart opportunity	Composite	$23,333,330,000	$23,333,330,000	$23,333,330,000
B2	Percent of web domains that apply Medallia insights	Composite	37.5%	42.5%	50%
B3	Abandoned cart opportunity addressable with Medallia insights	B1*B2	$8,749,998,750	$9,916,665,250	$11,666,665,000
B4	Digital experience issues resolved using insights from Medallia	Composite	12%	5%	4%
B5	Reduced abandoned cart rates for resolved experience issues	Interviews	50%	53%	57%
B6	Attribution to Medallia	Interviews	30%	30%	30%
B7	Additional revenue from improved digital experiences attributed to Medallia	B3B4B5*B6	$157,499,978	$78,837,489	$79,799,989
B8	Operating margin	Composite	4.5%	4.5%	4.5%
Bt	Revenue growth through continuous improvements	B7*B8	$7,087,499	$3,547,687	$3,591,000
	Risk adjustment	↓10%
Btr	Revenue growth through continuous improvements (risk-adjusted)		$6,378,749	$3,192,918	$3,231,900
Three-year total: $12,803,567			Three-year present value: $10,865,813

Reduced Cost To Serve

Evidence and data. Because interviewees’ organizations used Medallia insights to improve various areas of customer experience, one measurable outcome was cost savings from deflected call volumes in customer service centers. Interviewees shared several examples of how Medallia insights drove a reduced cost to serve, including:

Bringing visibility to pervasive issues that were receiving a high volume of customer service calls and enabling the organizations to address the root causes. Interviewees noted that before using Medallia, their organizations were unable to prioritize which feedback cases to address first based on a lack of holistic data. They could not confidently say which issues were causing customers the most pain or most significantly hurting business outcomes, which resulted in a scattershot approach to issue resolution. Interviewees shared that after investing in Medallia, their organizations were able to prioritize resolving both the most persistent and consequential experience issues, which reduced call volumes.

The head of enterprise customer experience at a healthcare organization shared: “We can see the digital experience feedback and understand what we need to fix. For example, we saw an issue where a customer sent a message and received a long-running spinner. Customers did not know if the message sent or not, so they were calling to make sure that their message was sent. We were able to fix that issue and brought the calls on that page to literally zero.”
Reaching out proactively to customers to avert known pain points and deflecting related calls. With Medallia, interviewees’ organizations were able to identify and improve experiences that created persistent friction in customer journeys (e.g., new customer onboarding or self-service discovery) and reach out proactively to avoid creating poor experiences. As a result, customer service calls related to those pain points decreased.

The head of customer experience at an insurance organization shared: “Some of the feedback that we’ve captured through our formal solicited program has informed actions at the business-system level. If we know this is a year-over-year area of friction, instead of getting better at answering those calls, we can be more proactive and reach out to the customers in advance to share the information.”

“The operations team is looking [at Medallia] for the top drivers and root causes of [customer service] calls and at how to intercept and stop those calls.”

Head of enterprise customer experience, healthcare

Increasing the understanding of customer service call drivers and creating cross-functional solutions. Interviewees noted that they used Medallia to identify trends in feedback related to specific customer journey touchpoints and that it empowered their organizations to make data-driven business changes to provide better experiences at key points. This reduced calls related to those touchpoints. Interviewees noted that after the Medallia investment, their organizations were able to more granularly connect customer feedback to business decisions. For example, marketing departments were able to identify when spikes in service calls were due to unclear customer communication.

The head of enterprise customer experience at a healthcare organization shared: “The experience data helps us understand which communications are leading to calls. We’ve been looking at if [how and what we communicate] is driving people to call. We’ve looked at high frequency callers, and we can see that there is a population of people who prefer to call us a lot for the first 10 months and then they learn how to work with us and then they stop calling. It has helped us [drive improvements] with the customer onboarding experience.”
Identifying areas in which customer experience was negatively impacted and empowering the organizations to create targeted self-service options, thereby deflecting call volume to self-service. Interviewees said a simple way to deflect calls is to identify areas where customers are contacting customer service for an issue that could be resolved without the help of a live agent. They said their organizations used these insights to create a self-serve experience to help customers fulfill their goals.

The head of enterprise customer experience at a healthcare organization shared: “The other thing we’ve been looking at is calls for self-serviceable reasons. In the survey feedback, when you understand the intent of the consumer, you’re able to ask, ‘What stopped you from doing it online?’ and then fix it.”

“People who have bad experiences call us more. They file more grievances. They are costly. If we can deliver great experiences up front and really meet that consumer standard, then we’re going to see reductions in cost because they’re going to engage with us via self-service and it’s going to be way more cost-effective.”

Head of enterprise customer experience, healthcare

Using Medallia’s listening capabilities to reduce the need for managers to perform randomly sampled quality assurance sessions and empowering data-informed coaching of service agents, improving call center metrics such as first-call resolution rates. Interviewees said that without a listening tool like Medallia, call center managers conducted randomly sampled quality assurance reviews of calls to provide feedback to customer service agents. They said this practice became more efficient with Medallia because the platform automatically flags calls for review based on various quality criteria, which saves managers time and enables them to provide better coaching to their agents.

The head of customer experience at an insurance organization shared: “Through listening posts, [contact center managers] are able to assess the quality of their reps’ service and provide them with individual based feedback. In the absence of these mechanisms, they would need to be listening to more of the quality control calls.”

“Because we provide better service and are able to answer their issue, they call back less frequently. From all these different things, we have seen a material reduction in digital call after rates and expenses related to repeat calls.”

Head of enterprise customer experience, healthcare

Modeling and assumptions. Based on the interviews, Forrester assumes the following for the composite organization:

Prior to the Medallia investment, the composite organization received 22.5 million customer service calls each year, and 30% were repeat calls.
With Medallia, the composite organization resolves persistent issues driving calls, puts new escalation procedures in place that improve its customer experience, and proactively improves experiences for customers. As a result, the composite avoids 5% of repeat calls in Year 1, 6% in Year 2, and 7% in Year 3.
The average cost per call is $9.
The composite organization makes several technology investments aimed at improving its customer experience, makes significant changes to its policies and procedures, adjusts its business strategy, and faces macroeconomic factors that contribute to changes in customer behavior. Because of these variables, the composite organization attributes 30% of the revenue growth to Medallia.

5% to 7%

Reduction in repeat call rate

Risks. Forrester recognizes that these results may not be representative of all experiences and the benefit will vary between organizations depending on:

The overall size of the organization’s customer service department, including the number of customer service calls and the number of customer service agents.
Contact center metrics before the investment in Medallia, including time to resolution and repeat call rates.
How effectively the organization can connect data, apply, scale, and act on CX insights organizationwide.
The organization’s CX culture, adaptability, and appetite for process change. The financial outcomes will correlate with the effectiveness of training and change management efforts.
The average cost per call, which is determined by the type of agents and whether they are onshore, offshore, inhouse, or outsourced. It will also be impacted by the organization’s industry and the complexity of calls received.
The amount of attribution the organization credits to the Medallia investment, which depends on other investments and strategies that simultaneously impact customer experience outcomes. Organizations may attribute more or less of the outcomes to the Medallia investment, which would increase or decrease the impact on the ROI calculation.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $2.4 million.

Reduced Cost To Serve

Ref.	Metric	Source	Year 1	Year 2	Year 3
C1	Customer service calls	Composite	22,500,000	22,500,000	22,500,000
C2	Percent of total service calls that were repeat calls before Medallia	Composite	30%	30%	30%
C3	Repeat calls before Medallia	C1*C2	6,750,000	6,750,000	6,750,000
C4	Reduction in repeat call rate	Interviews	5%	6%	7%
C5	Avoided repeat calls with Medallia	C3*C4	337,500	405,000	472,500
C6	Average cost per call	Composite	$9	$9	$9
C7	Attribution to Medallia	Interviews	30%	30%	30%
Ct	Reduced cost to serve	C5C6C7	$911,250	$1,093,500	$1,275,750
	Risk adjustment	↓10%
Ctr	Reduced cost to serve (risk-adjusted)		$820,125	$984,150	$1,148,175
Three-year total: $2,952,450			Three-year present value: $2,421,556

Productivity Lift

Evidence and data. Interviewees said two groups of employees realized productivity improvements because of their Medallia investments: CX and engineering teams. They shared the following examples:

Medallia helped CX teams avoid manual data consolidation and reporting, and it expedited insight creation and communication. Interviewees noted that creating consolidated CX reporting across their organizations was previously challenging and required a significant level of manual effort. They noted that with Medallia, CX teams reduced or eliminated the amount of data consolidation required to create reporting and find important information. The head of customer voice and obsession at an insurance organization shared: “Without [Medallia], obviously, [insights] would not be [in] real time, and a lot of people would be trying to get all that data, analyze it, put together reports, and then [distribute] to a large crowd. That takes a lot of time. Now, all of this is in real time and self-service, which makes it so much more efficient.”

“From a productivity standpoint, I give Medallia a lot of credit for being an intuitive tool that allows you to pull together [reports] and get an understanding of what’s going on with your customer without going to different places and without a big on-ramp of understanding.”

Enterprise customer insights and strategy lead, retail

A single enterprise tool provided efficiencies of scale. Interviewees said that in their organizations’ prior environments, there was redundancy and inefficiency as individual regions or business groups attempted to glean CX insights through individual methods. With Medallia, these individual business units centralized efforts on the single platform.

The director of CX measurement and data analytics at a government agency shared: “When people wanted a survey, they had their own rudimentary customer experience measurement system, including electronic hard copy. There are economies of scale by them using [Medallia] as opposed to having to hire additional staff to develop or execute their own systems.”
Democratized insights removed the CX team as middleman and enabled agile teams to act faster. Interviewees noted that by providing access to relevant and timely customer feedback to individuals organizationwide, CX teams were able to shift from being information keepers to performing more action-oriented work. They created personalized dashboards that provided relevant insights based on role. This resulted in a productivity lift for CX teams and faster time to market for actions taken by digital teams.

The head of customer experience at an insurance organization shared: “My [CX] team wants to get out of the way so we provide access to our tech agile teams that support many different experiences and can solve a problem at the fastest rate. Real-time dashboards are specifically tailored to the things each of those teams manages so that they do not need to fish for the information. The experiences are displayed [and] they can track how they are performing, view the customer’s sentiment, and have access directly to verbatims. We make it as easy as possible for them to move faster.”

Engineering teams used insights from Medallia to identify areas that created poor digital CX. Interviewees noted that with Medallia and its integrated digital replay capability, their organizations reduced their discovery times and engineers gained the ability to see performance errors in real time, take control quickly, and fix issues.

The enterprise customer insights and strategy lead at a retail organization shared: “An example of productivity [lift] for digital [is] a customer comments to say, ‘Every time I try to check out, it declines my card.’ And the engineer says, ‘Oh, there’s no way that’s happening,’ because if they can’t replicate the error, it didn’t happen. Historically, they wouldn’t take those comments seriously and would assume it was user error. But as Medallia is integrated with our session replay system, suddenly the engineers can see exactly what happened that triggered the customer’s comment. Our digital leadership team has been very excited to see that connectivity. It’s a productivity [lift for the engineers] because it reduces discovery and investigation time dramatically.”

“It’s a small team, but we easily would need to be 60% larger — if not more — if we didn't have Medallia as we think about the business system, the number of partners we have, the frequency with which things are happening, and the volume of feedback.”

Head of customer experience, insurance

Modeling and assumptions. Based on the interviews, Forrester assumes the following for the composite organization:

Prior to investing in Medallia, the composite’s CX team had 10 employees. In Year 1, the team grows to 11 employees and then to 13 employees in years 2 and 3.
To achieve a similar enterprise scale CX program, drive cultural shifts, and achieve NPS improvements without Medallia, the composite organization would need to add additional capacity to its team at the rate of 50% in Year 1, 55% in Year 2, and 60% in Year 3.
In Year 1, the composite organization recaptures 80% of the value related to the CX team’s productivity lift as members gain efficiencies of scale with the platform while growing their feedback capture. The composite recaptures 85% of the value in Year 2 and 90% in Year 3.
The average annual burdened cost for a CX team member is $85,000.
The composite organization has several front-end web and mobile domains of which approximately 50% directly impact the customer experience. Over three years, 15,17, and 20 of these domains are included under Medallia’s purview, and engineers receive feedback insights related to customer experience on those domains.
Before using Medallia, engineers manually processed and interpreted customer feedback related to the digital experience. This discovery process took place over 16 hours each month per domain to identify which areas of the web experience were creating pain. With Medallia, this discovery period is eliminated.
The burdened hourly cost for an engineer is $52.

16 hours

Avoided discovery time per month per web domain

Risks. Forrester recognizes that these results may not be representative of all experiences and the benefit will vary between organizations depending on:

The size and maturity of the organization’s CX team. Existing skill sets will determine how steep of a learning curve the CX resources will face and impact the additional capacity that they are able to realize.
The burdened costs of CX and engineering resources. The size and type of company, location of the employees, and employee seniority factor into the burdened cost of the resources.
The scope of the digital experience, including how many customer-facing web domains there are and how significantly each impacts customer experience.
How effectively the organization can connect data, apply, scale, and act on CX insights.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.4 million.

Productivity Lift

Ref.	Metric	Source	Year 1	Year 2	Year 3
D1	CX team members	Composite	11	13	13
D2	Additional FTE required without Medallia managed services	Interviews	50%	55%	60%
D3	Productivity recapture	Composite	80%	85%	90%
D4	Average annual burdened cost for a CX team member	TEI Standard	$85,000	$85,000	$85,000
D5	Subtotal: CX team lift	D1D2D3*D4	$374,000	$516,588	$596,700
D6	Engineering web domains managed	Composite	15	17	20
D7	Monthly avoided discovery time per web domain (hours)	Interviews	16	16	16
D8	Average hourly burdened cost for an engineer	Composite	$52	$52	$52
D9	Subtotal: Engineering lift	D3D6D7D8 12 months	$119,808	$144,269	$179,712
Dt	Productivity lift	D5+D9	$493,808	$660,857	$776,412
	Risk adjustment	↓10%
Dtr	Productivity lift (risk-adjusted)		$444,427	$594,771	$698,771
Three-year total: $1,737,969		Three-year present value: $1,420,568

Legacy Environment Consolidation Savings

Evidence and data. For the organizations that had more mature CX programs in place, it was costly to maintain and manage their scattered legacy technology environments. The interviewees noted that their organizations had multiple vendor relationships and several proprietary tools that needed maintenance. With the Medallia investment and enterprise deployment, their organizations were able to consolidate legacy tools and drive cost savings that offset the licensing costs of Medallia.

Consolidated legacy tools for CX measurement and management. Interviewees noted that their organizations decommissioned legacy tools that different regions and business units were using for CX measurement and management. This drove cost savings related to licensing, maintenance, service costs, and any related infrastructure costs. These cost savings helped offset the investment in Medallia, and the enterprise platform became the singular tool used across the organizations in less than two years. The head of enterprise customer experience in healthcare noted that their organization needed to run tools in parallel for a year to ensure a seamless transition. They shared: “What took a long time wasn’t because of Medallia, it was because we had a parallel test on our [legacy] platform versus Medallia just to make sure we understood the baselines. The whole thing took about a year to switch off.”
Avoided further technology purchases and redundant process creation. Interviewees noted that in addition to decommissioning existing tools and solutions, the Medallia investment and enterprise deployment enabled their organizations to prevent individual business units from making additional technology investments related to CX measurement and management. The director of CX measurement and data analytics at a government agency shared: “[Medallia] mitigates the necessity of local facilities having to purchase, implement, and execute their own measurement systems. It negates the necessity of local staff having to query their own [customers] or create their own evaluation systems because they can leverage an existing customer experience measurement, management, and evaluation system.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following for the composite organization:

Prior to investing in Medallia, the composite organization had five legacy CX measurement tools. The number of tools aligned with the individual business units and regions that were exploring CX measurement independently.
The average annual run cost of each tool was $1.7 million including licensing, services, and maintenance costs.
In Year 1, the composite organization decommissions approximately 50% of the legacy environment and related costs. In Year 2, the composite consolidates the remaining legacy environment.

Risks. Forrester recognizes that these results may not be representative of all experiences and the benefit will vary between organizations depending on:

The number of legacy CX tools in the organization’s prior environment and their individual licensing and maintenance costs. Hidden technical debt may increase the run costs of the legacy program and therefore provide an opportunity for greater savings. Hidden technical debt may include other tools and solutions that are not known to IT or additional maintenance costs that are not accounted for.
The organization’s ability to effectively consolidate and decommission legacy technology, which will depend on company culture, appetite for risk, and how well the organization adopts and uses the platform and processes. Organizations may need to adhere to contractual terms and conditions of legacy tools or run systems in parallel, which would slow the rate of consolidation.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $15.2 million.

Legacy Environment Consolidation Savings

Ref.	Metric	Source	Year 1	Year 2	Year 3
E1	Legacy experience measurement tools in the prior environment	Composite	5	5	5
E2	Average run cost per legacy experience measurement tool	Interviews	$1,667,000	$1,667,000	$1,667,000
E3	Rate of consolidation	Composite	50%	100%	100%
Et	Legacy environment consolidation savings	E1E2E3	$4,167,500	$8,335,000	$8,335,000
	Risk adjustment	↓10%
Etr	Legacy environment consolidation savings (risk-adjusted)		$3,750,750	$7,501,500	$7,501,500
Three-year total: $18,753,750		Three-year present value: $15,245,347

Interview Spotlight

How A Government Agency Uses Medallia To Improve CX

Former US President Biden’s 2021 President’s Management Agenda (PMA) directed the US government to focus on three key areas, one of which was CX.⁷ The director of CX measurement and data analytics from a government agency shared how their agency used CX insights to better deliver on its mission of providing stakeholders with an easy, intuitive, and personalized experience when interacting with the agency.

Taking Action To Improve Lives

With Medallia, the agency captures feedback from stakeholders and incorporates that feedback into policies, programs, processes, and practices. The interviewee shared: “We’re identifying pain points [and] opportunities for improvement [and] understanding operationally what is working well and not working well, what [customers] are happy about, and where there are opportunities for quality and systems improvement. We’re leveraging the data to make sure that the operational units responsible for whatever [feedback] dynamics are being expressed that need improvement receive that data and are taking action to understand those trends and make systems or design or operational changes to address those needs.”

Tapping Into Medallia’s Expertise

The interviewee said their government agency partnered with Medallia to create custom features to measure experiences that were unique to their not-for-profit organization, like trust, lives saved, and other mission-related metrics. The interviewee shared: “When we needed help to identify better ways of interpreting or analyzing [unstructured] text comments, compliments, concerns, and recommendations, we used Medallia’s sentiment analysis and algorithms to review free text for crisis and identified emerging concerns and key trends and themes from the data. [Medallia has] allowed us to take the raw data and be more strategic about interpreting what it means.“

Metrics That Matter

While interviewees from for-profit organizations said their companies used NPS as their beacon metric, the government agency measures success with a trust score. Since using Medallia, its trust score among customers increased from 55% to 80%. The agency also measured saving more than 3,000 lives, helping 22,000 customers in crisis, and saving nearly $800 million in technology over five years.

Forrester’s Perspective On Government CX

There is a significant gap in desired behaviors between government customers that report happiness over frustration. It’s much easier for government agencies to effectively deliver on their missions when customers comply with agency directives, use the programs from the agency, and advocate for the agency. ⁸ Forrester research found that happiness is the emotion that best evokes customer behaviors that drive mission performance, while frustration is most likely to suppress those behaviors. Among customers who feel happiness, 81% plan to comply with the agency’s directives, 65% plan to opt into more additional programs from the agency, 76% plan to seek expertise from the agency, and 82% plan to advocate for the agency. In contrast, among customers who feel frustrated, just 27% plan to comply with the agency’s directives, 13% plan to opt into more additional programs from the agency, 19% plan to seek additional expertise from the agency, and 9% plan to advocate for the agency.

“It’s very consistent with our mission to understand the voice of the [customer] and to measure those perspectives and take action to improve their lives."

Director of CX measurement and data analytics, government

Unquantified Benefits

Interviewees mentioned the following additional benefits that their organizations experienced but were not quantified for this analysis:

Improved CX and NPS metrics, which indicates increased customer loyalty and acquisition. Improving these metrics indicates higher customer loyalty and acquisition, and interviewees said they believe this influenced improvements to customer retention, lifetime value, and new customer acquisition. This benefit was a top priority for interviewees, but they could not report on specific revenue increases directly attributable to NPS. Forrester did not quantify this benefit for the composite organization, but Forrester and the broader CX industry consider NPS to be an important indirect driver of revenue.⁹ NPS can connect to revenue by quantifying the benefit of increasing NPS by calculating the benefit of moving detractors or passives to promoters. By analyzing detractors, passives, and promoters separately, companies can identify areas for improvement and focus on strategies that will increase customer loyalty and ultimately drive revenue growth.

Interviewees shared that with Medallia:
- CX leaders linked improvements to NPS with measurable financial impacts. The interviewed CX leaders said measuring improvements to NPS and connecting NPS to business outcomes was a mandate for their organizations. The head of customer experience at an insurance organization shared: “After leadership defined CX as a strategic pillar, we set an [NPS] baseline and then started working very, very closely with our finance and our marketing analytics partners to connect the value of gaining an incremental NPS point. We were able to connect the value of driving the right level of experience to bottom-line impact. It was internal validation that really helped us talk up CX in business terms. Business leaders have finite resources, and they need to make decisions on whether to spend resources on revenue-generating initiatives, expense reduction, or in this case: CX prioritization.”
- Medallia platform technology contributed to improving CX outcomes. There is a critical interplay between people, process, and technology for any investment, and interviewees shared that although Medallia technology made significant contributions, the investment would not have driven the same impact unless their organizations also made consequential changes to their processes and cultures.
  
  When the head of customer experience at an insurance organization was asked to estimate how much of their organization’s NPS change was related to the Medallia investment, they shared: “The Medallia technology [is] required, but it doesn’t drive the result by itself. We have to make sure that folks across the company are connecting insights to real work, planning, and prioritizing. The tools aren’t going to do any of that; those are human decisions.” Interviewees estimated that 30% of their organization’s measurable outcomes are directly attributable to the Medallia platform.

“We have quantified a correlation between NPS growth and new business growth. Having quantified that, we can comfortably say that given a 125% NPS growth in the last two years, there’s a direct new business growth and bottom-line impact. The platform is a key enabler of our success.”

VP head of customer voice and obsession, insurance

Financial Modeling Note On NPS

Interviewees said the most significant financial benefit of Medallia on their organizations was through improvements to NPS scores and a corresponding increase in customer loyalty and revenue. However, despite the importance of these metrics, this benefit is not quantified for the composite organization because interviewees could not report the revenue increases directly attributed to observed NPS and CX score improvements.

Instead, Forrester measured two specific methods of revenue growth with clearer attribution to Medallia. Though NPS is excluded from the ROI calculation for the composite organization in this TEI analysis, it is important that readers consider overall revenue growth from retention, enrichment, and advocacy driven by NPS and CX metrics in their business cases when evaluating the impact of Medallia for their own organizations.

Access to Medallia’s experts to help develop, guide, and execute CX strategy. Medallia brings CX expertise to organizations that partner with it, and this comes in many forms, including implementation and managed services, education and enablement, strategic analytics and advisory and research services. Interviewees noted that their organizations utilized guidance from Medallia while creating their CX programs and throughout the course of their CX journeys. They also partnered with Medallia to create custom features to understand experiences that were unique to their organizations.

“Medallia brings us what other organizations are doing, even if it’s in another industry. There’s real value in [Medallia] offering an objective, external view of what is best in class.”

Enterprise customer insights and strategy lead, retail

Help from Medallia experts with in-depth analysis. Interviewees also said there’s value in partnering with Medallia to better understand insights, create connections with other data and systems, and evaluate customer journey components. The head of enterprise customer experience at a healthcare organization shared: “One of the key areas [Medallia experts] helped us with was looking at the different ways that we can tie our consumer experience surveys to the survey that the government reimburses us on for Medicare. The other area they helped us with was looking at the components of patient experience. [A Medallia expert] helped me think through the holistic patient experience, like why the NPS score with the provider is high but [that] it’s all these other ancillary things like billing and finding an appointment which is where the experience falls apart.”

“The whole point is we don’t just want raw data. We want information. We want actionable data trends that the field finds valuable. That’s the strategic value of a company like Medallia."

Director of CX measurement and data analytics, government

Ability of product owners to use CX insights to improve products and services. The interviewees from the insurance organization noted that their company’s product teams use Medallia insights to improve upon existing products and create new products. The product team is able to better design customer-centric products and services to bring to market. The head of customer experience at the organization shared: “Our business partners are the folks that drive products. They are in close connection with customer feedback to help integrate those learnings into their decisions as they think about new features of existing products, new products or channels, and how to better deploy products in channels so that we can drive the right customer experience.”

Forrester’s Perspective

How Employee Experience Impacts Customer Experience

Employee experience contributes to customer experience by improving employee engagement, satisfaction, and productivity.¹⁰ When employees have a positive EX, they are more likely to provide high-quality service to customers, leading to better CX. This is because a strong EX can result in higher work quality, productivity, and ownership among employees, while a poor EX can lead to lower work quality, lower productivity, and less cooperation. Good EX is connected to improving job satisfaction, retention, and employee loyalty. By investing in an EX function and strengthening the collaboration between CX and EX functions, organizations can create a culture that supports both employee and customer needs. This includes providing employees with the necessary information, technology, and talent strategy to support customers effectively. Additionally, adopting structures that support immediate progress and fostering collaboration between CX and EX teams can further enhance the connection between EX and CX.

Flexibility

The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Medallia and later realize additional uses and business opportunities, including:

Adopting best-in-class practices and pursuing continuous innovation opportunities. Interviewees noted that Medallia experts expose the art of the possible by sharing best practices and exciting developments from other organizations. The enterprise customer insights and strategy lead in retail said their organization found value in being exposed to best-in-class behaviors from organizations outside the retail industry and identifying that customers don’t have great experiences in a vacuum. The interviewee shared: “Medallia is really excellent at pushing their clients to continue to innovate with experience measurement. They also serve as a good reminder that a customer is a person, and the experience they have at [a company] that delivers a really excellent experience is going to carry over. People are having experiences every day, and if you want to be recognized, then you have to open your aperture.”
Adopting additional offerings within the Medallia platform to extend CX measurement into new channels. Interviewees said the Medallia platform has a robust feedback capture mechanism, enabling organizations to collect signals from both direct and indirect feedback like chat logs, social reviews, operational data like CRM, HRIS, POS, and ERP data, and observed behavior like digital experience data and market and competitive intelligence. Interviewees noted that there is opportunity to expand their organization’s CX signal capture to more channels as the CX program matures. The head of customer experience in insurance shared: “Right now, our voice-of-the-customer program is primarily based on solicited feedback, and we are not yet very effectively listening to the customers where the customer serves that feedback: calls, chats, social, [and] other channels of feedback. Now, we are in the process of expanding and leveraging capabilities within the Medallia platform so that we can capture and make sense of holistic customer feedback.”

Experimenting with generative AI use cases. Interviewees said Medallia is partnering with their organizations to explore use cases powered by generative AI (genAI), like automatic experience summarizations and AI-assisted closed-loop feedback responses. These use cases have the potential to reduce the time and resources needed to understand customer feedback themes and to close the loop with a customer in an empathetic way. The head of enterprise customer experience at a healthcare organization shared: “We’ve been working with Medallia on [gen AI] use cases and different ways to think about leveraging AI. We’re testing a couple of different capabilities with them in our call center.”

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).

Quantified cost data as applied to the composite

Total Costs

Ref.	Cost	Initial	Year 1	Year 2	Year 3	Total	Present Value
Ftr	Medallia subscription	$1,638,450	$5,796,054	$5,950,527	$6,263,400	$19,648,431	$16,531,166
Gtr	Internal implementation labor and program costs	$65,010	$1,743,500	$1,930,500	$1,930,500	$5,669,510	$4,695,878
	Total costs (risk-adjusted)	$1,703,460	$7,539,554	$7,881,027	$8,193,900	$25,317,941	$21,227,044

Medallia Subscription

Evidence and data. The Medallia subscription includes several components, including a one-time implementation fee and service and platform costs. The platform fees are based on the volume of experience data records (EDR), which include all data associated with a discrete interaction between an end customer or employee and a company. Interviewees said that because subscription costs are not user-based, this fee structure promotes sharing feedback and insights broadly across the organization. The services component of the subscription includes technical services, strategic services, and support services. One interviewee said their organization chose to use a third-party professional services firm to provide ongoing services.

Modeling and assumptions. Based on the interviews, Forrester assumes the following for the composite organization:

The composite organization pays a one-time implementation fee of $1.5 million.
In Year 1, the composite pays $4.4 million for its platform subscription. This cost increases in the following years to $4.5 million in Year 2 and to $4.8 million in Year 3.
The composite organization uses services from Medallia, and the services subscription costs $869,000 each year.

Risks. Forrester recognizes that these results may not be representative of all experiences and the cost will vary between organizations depending on:

The volume of EDR the organization has and any year-over-year growth in EDR volumes.
The level and provider of contracted services.
Contract terms and any discounts negotiated.

Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $16.5 million.

Medallia Subscription

Ref.	Metric	Source	Initial	Year 1	Year 2	Year 3
F1	Platform subscription	Composite	$0	$4,400,140	$4,540,570	$4,825,000
F2	One-time implementation fee	Composite	$1,489,500	$0	$0	$0
F3	Managed services	Composite	$0	$869,000	$869,000	$869,000
Ft	Medallia subscription	F1+F2+F3	$1,489,500	$5,269,140	$5,409,570	$5,694,000
	Risk adjustment	↑10%
Ftr	Medallia subscription (risk-adjusted)		$1,638,450	$5,796,054	$5,950,527	$6,263,400
Three-year total: $19,648,431			Three-year present value: $16,531,166

Internal Implementation Labor And Program Costs

Evidence and data. Outside of the Medallia subscription and one-time implementation costs, interviewees noted their organizations also paid internal labor costs for implementation, had dedicated resource time for ongoing management of the platform, and invested time and financial resources to change-management efforts.

Interviewees shared examples of program costs, including:

Internal labor for implementation. Interviewees’ organizations incurred internal labor costs related to their Medallia implementations. They dedicated internal resources to partner with the Medallia implementation team, including technical IT resources, an executive sponsor, one or several project managers, and analysts. The enterprise customer insights and strategy lead at a retail organization provided some advice for organizations considering implementing Medallia: “To get the full value of the platform, it behooves you to think ahead and get out your crystal ball. Think about all the potential needs you might have. Because once you have the tech teams involved to set up these data feeds, you want them to include as much as you possibly can. It’s always easier to set it up that way to begin with rather than trying to add it later.”
Ongoing platform administration. Depending on the size of the CX program, interviewees’ organizations had varying levels of resources dedicated to the ongoing administration and maintenance of Medallia. These employees worked on continual enablement and CX program roadmap development, and they supported root-cause analytics and reporting.

The director of CX measurement and data analytics in government said their agency had a larger support team: “There’s a federal team that is 13 people strong, and then there’s a contract team supporting us that has 15 to 25 people helping with survey, development and configuration, change requests, data analysis, data reporting, etc.”
Change management. Interviewees’ organizations took many approaches to change management, but they each identified that change management was a vital component of making sure their Medallia investments would be successful. Examples of change management efforts included:
- Providing ongoing user training and office hours. Interviewees shared that their organizations offered both formal training sessions and self-serve learning options to employees to get comfortable with the Medallia technology. Short videos were a popular method of disseminating useful information. By empowering employees with the knowledge of how to use and interpret Medallia insights, the organizations increased engagement with the platform and therefore had better performance and outcomes.
  
  The head of customer experience at an insurance organization shared: “We’ve created assets that help us tailor the type of support based on the needs of the different users. My team conducts consistent office hours for folks whenever they have questions. We also make ourselves available to large groups and offer 1-hour dedicated training sessions. We have created very quick and simple self-serve videos. So, there [are] many different ways. Out of the [around] 5,000 users we have, close to one-third of them come in and visit [office hours] once a quarter.”

“We provide demos for the stakeholders that we develop surveys for, explain how to access [Medallia], how to navigate their way through the dashboards, [and] how to pull data and analyze it.”

Director of CX measurement and data analytics, government

Placeholder
- Adding dedicated CX resources. Although not required, some interviewees’ organizations chose to add additional resources to support their CX transformation efforts. Change-management efforts also included adding a small number of resources to the CX team responsible specifically for driving the success of the Medallia investment. These resources focused on creating training materials (like the videos previously mentioned) on how to access and interpret the data. They also evangelized success through newsletters and conducted external education campaigns to consumers through podcasts and whitepapers.
  
  The head of enterprise customer experience at the healthcare organization shared: “Somewhere between five and six FTEs are focused on training users on the platform. We’ve leaned in heavily to video usage. They also produce a newsletter that has about 65,000 opens, including our CEO. And we do a fair bit of external communications through a podcast and white papers. I’m a big believer in the fact that if you’re not telling consumers what you’re doing, they’re not going to know.”
  
  Forrester research shows that broad communication about how an organization acts on feedback helps show its current and prospective customers that the organization values customer feedback.¹¹
- Providing recognition and positive reinforcement to drive culture change. Interviewees said that in order for the Medallia investment to drive the most impact across the organization, it’s key to make sure employees engage with the platform and take action on the insights. Interviewees said that to facilitate this culture shift, their organizations use several ways to motivate employees, from giving gifts to tying compensation to performance.
  
  The head of enterprise customer experience in healthcare said their organization uses Medallia Voices, a mobile app focused on executive engagement and frontline recognition: “We spend a lot of time on recognition. We leverage Medallia Voices heavily, and we send kudos boxes out to employees who have delivered amazing experiences. With Medallia, we are able to capture video feedback to highlight when someone’s delivering an amazing experience because consumers leave videos.”

“We spend way a lot of time talking about what’s wrong. We don’t really ever celebrate when people do it right, and the reality is people do it right a lot. We are really focused on celebration and making sure to reinforce [positive outcomes].”

Head of enterprise customer experience, healthcare

Modeling and assumptions. Based on the interviews, Forrester assumes the following for the composite organization:

The composite dedicates internal labor to support the implementation with Medallia. The internal labor costs total $59,100.
With the investment in Medallia, the composite hires one additional CX leader to lead and oversee the new program. In the following year, two more resources are added to support change management and adoption.
The average burdened annual cost for a CX resource is $85,000.
The composite approves a change management budget to support recognition efforts.

Forrester’s Perspective

Strategies For Incentivizing Change

Employee rewards for CX can include bonuses for frontline employees and their managers, as well as for senior executives.¹² Additionally, organizations can publicly recognize employees for their CX performance and offer awards and access to professional development as incentives. Forrester research advises that tying performance to financial bonuses can be risky and may not always be the most effective strategy. Instead, organizations should focus on creating a customer-centric culture by connecting loyalty initiatives to employee experience, providing employees with the necessary tools and training to support consumer loyalty, tying employee performance measurement and recognition to CX and loyalty, and setting customer-first priorities.

Risks. Forrester recognizes that these results may not be representative of all experiences and the cost will vary between organizations depending on:

The organization’s size, number of data sources, and integrations into the Medallia platform.
The number of surveys created during implementation.
The number of languages and countries implemented.
Prioritization and customer readiness for a CX transformation.
The amount of time and effort the organization dedicates to planning, deploying, and testing the Medallia solution.
The number of internal resources involved with implementation.
The cost of the implementation resources.
The chosen change management approach and resulting expenditure, including recognition budgets and additional headcount.

Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $4.7 million.

Internal Implementation Labor And Program Costs

Ref.	Metric	Source	Initial	Year 1	Year 2	Year 3
G1	Internal implementation labor costs	Composite	$59,100	$0	$0	$0
G2	Team headcount growth to support CX program	Interviews	0	1	3	3
G3	Average burdened annual cost of a CX resource	Composite		$85,000	$85,000	$85,000
G4	Change management budget	Composite	$0	$1,500,000	$1,500,000	$1,500,000
G5	Subtotal: Change management and ongoing platform administration	G2*G3+G4	$0	$1,585,000	$1,755,000	$1,755,000
Gt	Internal implementation labor and program costs	G1+G5	$59,100	$1,585,000	$1,755,000	$1,755,000
	Percent of web domains that apply Medallia insights to improve customer experience	↑10%
Gtr	Abandoned cart opportunity impacted by Medallia CX insights		$65,010	$1,743,500	$1,930,500	$1,930,500
Three-year total: $5,669,510			Three-year present value: $4,695,878

Consolidated Three-Year Risk-Adjusted Metrics

Cash Flow Chart (Risk-Adjusted)

Total costs Total benefits Cumulative net benefits Initial Year 1 Year 2 Year 3

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. Forrester assumes a yearly discount rate of 10% for this analysis.

These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.

Cash Flow Analysis (Risk-Adjusted Estimates)

	Initial	Year 1	Year 2	Year 3	Total	Present Value
Total costs	($1,703,460)	($7,539,554)	($7,881,027)	($8,193,900)	($25,317,941)	($21,227,044)
Total benefits	$0	$20,177,590	$24,673,629	$28,941,840	$73,793,059	$60,479,125
Net benefits	($1,703,460)	$12,638,036	$16,792,602	$20,747,940	$48,475,118	$39,252,081
ROI						185%
Payback						<6 months

Appendix A: Total Economic Impact

Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.

Total Economic Impact Approach

Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.
Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”

PRESENT VALUE (PV)

The present or current value of (discounted) cost and benefit estimates given at an interest rate (the discount rate). The PV of costs and benefits feed into the total NPV of cash flows.
NET PRESENT VALUE (NPV)

The present or current value of (discounted) future net cash flows given an interest rate (the discount rate). A positive project NPV normally indicates that the investment should be made unless other projects have higher NPVs.
RETURN ON INVESTMENT (ROI)

A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs.
DISCOUNT RATE

The interest rate used in cash flow analysis to take into account the time value of money. Organizations typically use discount rates between 8% and 16%.
PAYBACK PERIOD

The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs) equal initial investment or cost.

The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations in the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.

Appendix B: ENDNOTES

¹ Source: The ROI Of CX Transformation, Forrester Research, Inc., February 7, 2024.

² Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.

³ Source: Colleen Fazio, Joana de Quintanilha, Rusty Warner, Medallia + Thunderhead Is A Boost For Brands On The VoC Maturity Journey, Forrester Blogs.

⁴ Source: Get Ready To Recruit Your Extended CX Team, Forrester Research, Inc., August 2, 2021.

⁵ Source: Answers To The Top 10 Questions About Closing The Loop With Your Customers, Forrester Research, Inc., April 11, 2022; How To Build Your Voice-Of-The-Customer (VoC) Program, Forrester Research, Inc., January 28, 2022.

⁶ Source: VoC And CX Measurement Teams Struggle To Lead Change, Forrester Research, Inc., March 13, 2024.

⁷ Source: The US Government Tackles Interagency Cooperation To Improve CX, Forrester Research, Inc., November 30, 2023; Design, build, and manage government service delivery for key life experiences that cut across federal agencies., Performance.gov, July 2024.

⁸ Source: The US Federal Customer Experience Index Rankings, 2024, Forrester Research, Inc., June 17, 2024.

⁹ Source: Net Promoter ScoreSM (NPS) Essentials, Forrester Research, Inc., June 7, 2024.

¹⁰ Source: Build The Right Bridge Between EX And CX Management, Forrester Research, Inc., June 20, 2023; Forrester’s CX Index Hits Historic Low In US, Forrester Research, Inc., September 20, 2024; Forrester’s CX Index Hits Historic Low In US, Forrester Research, Inc., September 20, 2024.

¹¹ Source: VoC And CX Measurement Teams Struggle To Lead Change, Forrester Research, Inc., March 13, 2024; Answers To The Top 10 Questions About Closing The Loop With Your Customers, Forrester Research, Inc., April 11, 2022.

¹² Source: How Ending CX Bonuses Boosted CX Scores And Profitability For Volkswagen Group Australia, Forrester Research, Inc., July 21, 2020.

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© Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies.

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Executive Summary

Key Findings

Table Of Contents

Key Statistics

185%

$60.48M

$39.25M

<6 months

Benefits (Three-Year)

TEI Framework And Methodology

Due Diligence

Interviews

Composite Organization

Financial Model Framework

Case Study

Disclosures

The Medallia Customer Journey

Drivers leading to the Medallia investment

Interviews

Prior Environments

Key Challenges

Investment Objectives

Why Medallia?

Key Results For CX

Composite Organization

Key Assumptions

Analysis Of Benefits

Quantified benefit data as applied to the composite

Total Benefits

Revenue Growth From Personalized Actions

Revenue Growth From Personalized Actions

Revenue Growth Through Continuous Improvements

Revenue Growth Through Continuous Improvements

Reduced Cost To Serve

Reduced Cost To Serve

Productivity Lift

Productivity Lift

Legacy Environment Consolidation Savings

Legacy Environment Consolidation Savings

Interview Spotlight

How A Government Agency Uses Medallia To Improve CX

Unquantified Benefits

Financial Modeling Note On NPS

Forrester’s Perspective

How Employee Experience Impacts Customer Experience

Flexibility

Analysis Of Costs

Quantified cost data as applied to the composite

Total Costs

Medallia Subscription

Medallia Subscription

Internal Implementation Labor And Program Costs

Forrester’s Perspective

Strategies For Incentivizing Change

Internal Implementation Labor And Program Costs

Financial Summary

Consolidated Three-Year Risk-Adjusted Metrics

Cash Flow Chart (Risk-Adjusted)

Cash Flow Analysis (Risk-Adjusted Estimates)

Appendixes

Appendix A: Total Economic Impact

Total Economic Impact Approach

PRESENT VALUE (PV)

NET PRESENT VALUE (NPV)

RETURN ON INVESTMENT (ROI)

DISCOUNT RATE

PAYBACK PERIOD

Appendix B: ENDNOTES

ABOUT FORRESTER CONSULTING