Customer experience is a business strategy with results-oriented goals and provides business benefit for an organization. So, we develop ways to communicate CX results. Customer satisfaction, loyalty, recommendation, effort - the list of customer experience results vary by organization. But usually the question comes from executives when the scores indicate issues or opportunities. The “what do we do about it” often appears quickly.
Customer experience practitioners are often challenged by executives to identify the ROI (return on investment) for a customer-centered strategy. They want to know “How much more are we going to earn if we raise our score by one point?” More tactically, they also want CX information to help answer the business questions such as “Why do customers stay with us?” or “Why don’t they buy more from us?.” So, our results become about both answering the business question and helping them understand how strategic metrics tie to maximizing the benefit of the customer relationship for the organization.
If you are tracking metrics, you are showing the customers’ reaction to your experiences. Measures and metrics differ. Measures (what is happening) help us see the customer’s perception, description of the interaction, and gain actionable insights provided by customer at particular touch points, such as number of times they call for support. They are key to looking at the components that make up our metrics. Metrics (the outcome of experiences) reflect attitudes, the influence of the experiences, and are generally less actionable. They are the result of the interactions, such as NPS.
So customer management models and scorecards must be equipped with ways of linking both measures and metrics to business earnings.
Using survey or other feedback metrics, such as NPS or customer effort score (CES), we can begin to identify other data and information which paints the story behind the impact of customer experience. To construct your business case and correlate customer indicators or metrics with business performance, we need to link the metrics and measures to real figures such as expenditures, revenue and profit, customer churn, drawn from your customer operational, financial or other interaction or relationship data.
What to do:
As a start, you can classify customers into experience driven categories such as detractors or promoters or highly satisfied or low satisfied or high trust or low trust. Next, extract the business indicators these customers and calculate them for each category average revenue, average cost, churn, etc. Lastly, analyze how these indicators behave in each category and compare behaviors across categories. Your results provide a view to determine the business impact of turning detractors in the promoters and thus justified necessary investments in projects or initiatives.
In addition, one of the overlooked benefits of customer experience practices to executives is to develop business cases around these measures and metrics around your customer experience improvements and action plans. For example, customers may give higher promoter scores as a results of changes to a website that makes it easier to use or provides better information. But it is hard to make the correlation between NPS and that action. Identifying the cost reduction of moving a customer from call center activity to the website can be linked to the change initiative as well as to your customer experience metrics. Building a solid business case before launching customer experience changes can help you one identify potential benefits and costs (the measures) associated with the project and to estimate the customer experience outcome (metrics) impact based on the previously discussed approach. A good place to start is to begin marrying your hard business case to customer experience. Put the business case for the experience change (reduced number of calls, increased sales) next to your emotional measures (ease of doing business metric) so that the executives start to see the correlation between the two. Executives are used to talking about business cases – adding another layer of the rich attitudinal and behavior with each touch point customer experience will help them see the correlation.
Listen to executives to understand their business question and current challenges. Focus your customer experience offer both the activities in the outcome measures and metrics on those challenges. For example reducing churn. If you are able to remove a pain point that may be driving customer defection, you should be communicating the business case of that change and the outcome measure our metric that have impacted the KPI. This builds the association of specific business benefit to the organization for customer experience driven changes, projects or initiatives
- Start with identifying measures of the experience throughout the entire customer relationship lifecycle. Establish baselines for costs to serve, number of contacts and any other information that tells you about the behavior and experience of that particular touch point.
- Cross-reference experience metrics with customer business information.
- Begin to demonstrate the customer measures beside the customer metrics so that executives can begin to see the correlation.
- Continue to show those correlations of measures and metrics such as spend by NPS category.
- Report back on the progress of measures and metrics as you launch and drive projects to improve the experience.
Return on investments can be talked about the executives as a result of the initiative you create your organization creates to drive additional purcharses, increased trust with customers reduces churn, or increase word-of-mouth. All which have to do with customer loyalty.
Lastly, ask yourself:
- Do we measure the experience from the customer’s perspective and what they value?
- Do we know, and communicate, both the experience measures and the outcome metrics?
- Do we link and demonstrate how the two are tied to provide tactical and strategic direction for customer experience changes?
Failing to link customer experience measures and metrics can leave gaps in executive and organizational alignment. Communicating measures and metrics (both actual and projected) and a detailed business case for change are useful for setting program priorities, allocating resources, and measuring performance.