Sunday, October 25, 2015

How do YOU Measure Customer Experience?

Building a customer-centric organization requires consistently digging deeper and having both strategic and tactical level CX metrics in place.
Digital is the age of customers. Thus, Customer Experience Management is key to the success of every forward-looking business. It is not just important, it is vital for growth, development and to make sure you stay in business, Both retaining a customer and winning a new customer are very important to every business’s surviving and thriving. To quote Drucker, “You can only manage what you measure.” How do you measure Customer Experience effectively, though?

How do you measure success? This is what the Key Performance Indicator driver is supposed to measure. It begins and ends with what will satisfy the client. The unfortunate part is that a balance must take place between what the customer values (mostly intangible) and what executive leadership needs to see as an outcome (P&L). Customer Service function in most companies is a support function, running support functions and infrastructure can be very expensive (P&L). Support is a compromise between client perception (Psychology). Organizations must find ways to make a support center (Cost Center) look and run like a Profit Center (P&L), and this is where the focal point of measurement and how to define the best KPIs. Then C-levels (particularly, CFOs, CIOs, and CEOs) are a pretty unfashionable and explicitly non-trendy group - They want to see the numbers and make an informed decision on where to invest across the Customer Experience and how much to invest with what expected return. The key is to find metrics that really work.

Net Promoter Score (NPS) is the closest thing for leadership teams who want to see a link to the bottom line. Customer centric people don't need the numbers to convince them. The small group that is actually getting NPS to work well finds it helps them hone their approach really well. There are many examples of where, by using it properly (which most companies seem to find too hard to do), it has helped companies choose and then execute superbly successful strategies. But many of organizations still have not realized that their attempt to cut costs in that way is actually reducing their profit. NPS, if properly executed, can deliver valuable input. However, it's most useful for fixing the "as-is" - and it's the wrong tool for trying to define a game-changing "to be."

The actual indicators are very specific and depend on what their customers are looking for. At a high level though, for instance, if the value is determined to provide to their customers is significant improvement in their staff's ability to sell more products/services after a training course and then seeing that improvement sustained and improving over time, they will work out that they should be tracking/ ensuring that success right up to leadership level. The key thing is to work out what customers are really looking for. The impact they want from the product/ service that will make all the difference. What specific elements make a really enjoyable/ great experience for them.

Customer Equity is the right measure of Customer Experience success. Customer Equity looks at the lifetime value of customers, the cost to attract new customers and the cost to retain customer over a given outlook period. It maps the customer lifecycle (horizontal) across the company contacts (think of each contact as a sensor captured at some company system, phone, POS, web site, sales call). The view you saw would represent the number of customers that successfully move from stage to stage - so customers don't actually buy something until contract, nor pay for something until collection. They also do not show up in call center until repair or support. So key points include - a) each contact has a cost and potential revenue component b) a customer only generates revenue at one point unless they start other needs based experience - multiple needs roll up to an enterprise(customer). Customer Equity equates very closely to a company's market cap. or shareholder equity. NPS also measures success in terms of Customer Equity. At the end of the day, it is about the dollar value of customers and the financial benefit of your organization. Customer equity does this well.

Unless one defines a target customer experience, it’s difficult to measure it. How do you measure Customer Experience - attrition is part of the answer - but customer entrants, exits and customer flow across customer life stages is credible, measurable, and understandable; Effective measures span the enterprise and expose operational, product, service, marketing and brand gaps. The customer-related information provides insights to where customer flow (experiences) cease and provides a high level of drill down to specific stages in the customer experience. If you enhance the model with attributes about the contact's objectives, massage, treatments, etc. you provide more detail regarding why customers do not proceed to purchase or why customers call the call center, etc. You can apply expected lifetime value to customers for each cell, so it is designed to be analytically rigorous and suitable for modeling and reporting to finance, regulators, Board, etc.

Building a customer-centric organization requires consistently digging deeper and having both strategic and tactical level CX metrics in place that keep a pulse on the inner workings of the business. It is extremely challenging to strike the right balance between short-term profitability and long-term prosperity: While some companies could increase profit on the short term, to lose a customer-centric approach will impact the bottom line in the long run.


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