At Pacific Consulting Group (PCG), we hear this often.
“We’ve been measuring our customer experience for years, but the numbers aren’t changing! Why not?”
This is a frustrating pain point for many of our clients, and there are a number of possible solutions that you can employ to help your company move the needle.
While gathering and analyzing data on your customers, metrics or KPIs are a great starting point, but measurement of “what is” alone doesn’t lend itself directly to promoting customer happiness or retention. This is especially true when your measurements focus on the past instead of being forward-looking.
Measurement is a Retroactive Process
Many of our clients calculate their key measure, such as Net Promoter Score (NPS), prior to gathering insights, designing solutions, and implementing their strategy. They put measurement on the front end when it should actually come on the back end of your customer experience improvement cycle. After all, it is, by definition, a retroactive measure – How did I serve my customers yesterday?
At a bare minimum, useful and innovation-promoting customer experience data needs to move from measure tracking to diagnostic indicators. Rather than using “how did I do yesterday?” as your tracking measure, reframe that question to “what must be done well in the future?”
Keep in mind that measurement is an internally-facing exercise, unlike innovating and improving, which have a direct impact on customers. Once you’re able to add a diagnostic element related to future customer needs, then you can take the next step of innovation and improvement to that future.
The measurement to customer insights process looks something like this:
If your entry point into the circle is measurement, there are forces – such as analysis paralysis, bar chart-centric prioritization, and Powerpoint report-as-performance-driver – that can stagnate the organization in the scores.
Rather, shift your mindset around NPS-type measurement surveys as something you do after you’ve innovated or enhanced the service experience and offerings. That way, the point of measurement is to determine whether those changes worked or not. By focusing your starting point on compelling customer insights about tomorrow, you’re more likely to cross the bridge into design and innovation. You compare yourself to the gap your customers will feel tomorrow versus the gap in perfection yesterday. For example, customer journey maps, if focused on underlying value, emerging expectations, and engagement drivers, will lead you into tomorrow’s gaps. Today, most journey maps reveal where the experience is strong and where it is lacking, which again is a “yesterday” story. Your journey maps would be even stronger and more conducive to feeding innovation if they also revealed opportunities to increase customer value and nudge customer behavior – but that is for another article.
There’s nothing wrong with measures – businesses must have them! But if you mistake it for the first step on the road to innovation and improvement, you’ll slow yourself down.
What You Measure is Critical
When you do measure, you’ll be much more effective and relevant in your customer experience program if you measure what already matters to the business. This is the way to avoid the question later of “how do I prove ROI?”
Take a capstone project in school as an example. A school might assign you a capstone project at the end of the year that involves deep research and culminates in a final product, presentation, or performance.
Similarly, think of a customer experience capstone metric in your business that represents your business’ ultimate performance metric (what people are deeply motivated to improve and will make a difference for the business).
Try to resist the urge to measure each and every metric that contributes to your business goals because more does not necessarily mean better. Instead, try to narrow your measures down to the 1-3 customer behaviors that you want to influence, and make sure the measures you use are precise and actionable. Focusing on the metrics that matter most is a game-changer for many organizations. Choosing can be difficult because it means excluding something that you know is somewhat important, but strategy is about well-placed bets, and customer experience success depends on having a good strategy.
Examples of Identifying Capstone Measures According to Desired Business Outcomes
If the ultimate business outcome you want to achieve is keeping your customers year after year, then your capstone measure might be the rate of customer retention. Once you’ve identified customer retention as your capstone measure, then consider sub-measures that feed into your capstone measure.
If the most important business outcome you want to achieve is growing new sales as quickly as possible, then your capstone measure might be the number of new customer sign ups per year. From there, you can determine the specific behavior you want. For example, if a certain amount of time on your website is linked to customer sign ups, then work on that website experience and build in nudges that lead to sign ups.
If you own a bank that has customers coming in the door every day, and the ultimate business outcome you want to achieve is keeping your customers for their lifetime, then your capstone measure might be customer lifetime value, or the average profit per customer over time.
As you can see from the examples above, there are two simple steps you can take to identify what to measure:
Step 1: Make sure your CX capstone measure is tied to your ultimate business outcome.
Step 2: Make sure your other measures reflect the specific customer behavioral outcomes that feed into your capstone measure. This provides some focus for where customer experience insights are most worthwhile.
MORE MEASUREMENT IS NOT NECESSARILY BETTER! Remember to resist the temptation to measure too much, as that can keep you mired in measurement and slow you down. Even though it can be so easy to measure anything and everything given our customer management systems these days, you need to be purposeful with your measures.
How to Get Measures Right Using Business Outcome Planning
Before doing any research or conducting a single survey, your team needs to answer the following key questions as part of a CX strategy business outcome planning exercise:
- What are the executive team’s chief goals?
- What kinds of behaviors do you want to see among your customers?
- Which of your customers’ current behaviors do you want to change?
Translating metrics into customer behavior requires finding the actual behavior change you want, which can be challenging. You have to first be very clear and specific on what your goals are so that you can then be very clear and specific on the actual customer behavior you want to change.
For example, wanting more customers to renew with you or wanting fewer customers to not renew with you is not the same thing. Many businesses think that retaining at least 90% of customers and losing no more than 10% of customers represent the same strategy, but they don’t. In the first case, the customer behavior you’re interested in is the act of renewing, and in the second case, the customer behavior you’re measuring is not renewing. This is important because the point at which someone thinks about renewing might be a different part of the overall experience compared to the point at which the customer starts thinking about not renewing.
Recently, we visited with one of our clients that sells insurance. Most of the company’s executives cited improved customer retention as the reason for gaining customer insights and improving the customer experience. On the other hand, it was clear that there was a significant bogey in terms of growth in the number of policies that the company had to achieve. Of course, both customer acquisition and customer retention are important, but in this case the ultimate business outcome – the goal that no one could ignore – was related to aggressive growth. The business outcome discovery process had teased out that growth was the capstone measure.
As you can see from the example above, interest in improved customer experience turned out to be closely related to sales. By speaking with the executives at your company or paying attention to what they’re talking about, you’ll come to understand what really drives the business and what difference customer knowledge, customer insights, and customer experience can make toward helping your business reach its desired outcomes.
Once your team has pinned down a business outcome imperative, you can determine the specific customer behavior(s) you want to measure. Do you care most about signing up new customers? Keeping the customers you already have? Maximizing value out of a customer over the course of the customer’s lifetime? Be very clear and specific about what it is your business needs most.
Then, create a detailed customer journey map to find the exact point during the customer’s journey when that particular customer behavior actually starts to occur. We’ll dive deeper into this topic in a future article.
As you can see, while obtaining customer experience metrics is an important and necessary step to take, it is not measurement that leads to achieving your outcomes. Set a relevant capstone outcome measure for your CX efforts. Identify the specific customer behaviors that drive that capstone measure. Get the customer insights that help you design the experience that will spur those behaviors. Have a great measurement system to determine if you were successful. Outcome-Behavior-Insights-Innovation-Measurement is the cycle that puts measurement in the best place to lead customer happiness.
To learn more where we have applied this in the past and how we can help you achieve outstanding results, email us at businessCX@pcgfirm.com.