Customer experience: don’t lose sight of the forest for the trees!
Watch KPI’s overload ….
The concept of “customer experience” was born at the end of the 90s with the book by Pine and Gilmore “the experience economy” (the founding article HBR dates from 1998) and has been steadily increasing its influence since then.
These authors suggested that it is no longer a matter of offering products or services, but rather experiences that make it possible for customers to distinguish a brand from its competitors, and thus create a stronger engagement.
The customer experience is defined since then as the trace left in the customer’s mind by all the interactions that the he/she may have had with the brand or company during his purchase or consumption journey. By redefining a conceptual framework seen through the eyes of the customer, Pine and Gilmore were able to highlight the emotional aspects involved in the purchase decision. By inviting brands to create memorable experiences, they have also inspired new levers of enchantment (such as retail-tainment, as staged by Khiel’s or Abercrombie…) unexplored at that time by historical “customer relationship” players (CRM).
The digitalization of customer journeys and the proliferation of measurement opportunities have led Mar-Tech players to establish “customer experience” as the new Grail of performance. Joined by new entrants (Start-ups in feed-back management, AI, retail platforms…), they have all developed an increasing number of tracking tools and performance indicators (Key Performance Indicators or KPIs). While everyone is claiming to offer a solution for improving the “customer experience” (or CX), the inflation of metrics is now more and more confusing. Is it better to track the “Net Promoter Score” (Number of enthusiastic customers recommending the brand deducted from the number of detractors) or the “Consumer Effort Score” (measurement of the level of effort perceived by the customer during a transaction)? Should satisfaction be measured immediately after each interaction or later in a more holistic survey? The over-mediatization of tools ends up casting doubt on what the CX concept really means. However, it remains central in terms of business: it is the customer experience that builds loyalty and recommendation.
The crux of the problem: the polysemy of the term “experience”
A transmitter/receiver duality:
Used by everyone without distinction, the word experience has several meanings, which in fact describe distinct realities according to each other’s frames of reference. Behavioral sciences and system theories can help us clarify the concepts and associated metrics.
System theories applied to communication (Palo-alto) tell us that the experience “designed” by the brand and the one “perceived” by the customer do not belong to the same reality. Each one is constructed by different people : the brand director and the customer, even if the brands usually think they are in control of the experience. The salesperson may think he has delivered a good “selling ceremony” by closing his sale, and yet the buyer has lived his “buying experience” as long and tedious… Because the interpretation of a message in context often deviates from the sender’s intention: each deserves its own description. This is the only way to render both sides of the experience: the reality of the staff, and the one of the customers. One is like the seal and the other like the imprint left in the wax seal, and they do not overlap perfectly. This is precisely within these “experience” gaps that the opportunities for progress for the brand are nestled.
A journey / result duality:
Behavioral sciences (Kahneman) tells us that experience referring to a succession of events is not equivalent to the resulting overall experience you will remember. For example: the memory of having a good holiday is not an average of your daily satisfaction. It is more related to a few emotionally significant moments (Peak-end-rule), or an implicit comparison with other recent holidays (Availability biais). Similarly, the branded experience cannot be reduced to a “user experience” as it contains a lot of memorized emotional dimensions. For example: in the context of a mail order purchase, if you received your order with a damaged package, you may legitimately be dissatisfied. But if the after-sales service sends you back the item within 24 hours without asking you for anything in return: perhaps your experience of the service will leave you a great lasting impression. It is therefore this memory of being well treated at a key moment of the journey that will remain the main driving force behind your loyalty. This experience is the one that will also build the reputation for the brand. Thus, measuring event-based satisfaction (hot-state) makes it possible to quickly fix a problem jeopardizing the relationship, while measuring the trace left (cold-state) makes it possible to better predict future consideration for the purchase, particularly in relation to competing alternatives. However, exceptional satisfaction mainly comes from the brand’s ability to meet implicit expectations, and create surprise. Expectations that the customer can never express a prirori in a questionnaire! So, designing a service that delivers enchantment requires a combination of empathy, creativity but also behavioral knowledge. And the magic of creating unforgettable “moments” is that they help customers forget about little bumpy ones.
Understanding Customer Experience (CX) 360° with relevant metrics.
To better manage all the dimensions, I have proposed to our teams at BVA a conceptual framework that illustrates the contribution of each of the measures based on 2 axes:
– The business horizon: either day-to day improvements or more strategic brand positioning, which also defines metrics frequency: continuous or periodic measurement, and its priority benchmarks (previous period or competitors)
– The people focus: employee or customers, which defines metrics main orientations: improving delivered quality (objective) or resulting impression (subjective).
With data-intelligence and consulting at the heart, to bridge the gap with business metrics and solutions to activate (CRM, AI Customization, Sales Training…)
Behind these 4 quadrants are 4 KPI measurement types :
– Marketing Research: strategically oriented, MR is used to identify customers and prospects, priority channels and levers for a brand in its market (segmentation studies, loyalty, positioning…). The data is collected by ad hoc questioning, CRM data-bases, Social data. Models and analyses are used to understand the components of customer satisfaction, as well as its impact on brand image or loyalty. These marketing studies most often include competitive benchmarks with strategic KPI’s
– Feedback management: more operational, its purpose is to set-up “event-based” corrective actions from real-time surveys, triggered at key moments of the customer journey (Customer service interactions, orders, complaints management, after-sales, etc.) or from Social listening alerting. The follow-up of customer opinions is often mirrored with employee surveys to help managers to animate and motivate teams over time. These tools are part of a commercial continuous improvement process (often called Voice of the Customer and Voice of the employee programs), focused on the company and its services.
– Mystery Shopping: the purpose of Mystery Shopping is to control the conformity of the quality delivered with regards to the standards defined by the brand. Observation is carried out in-situ by mystery shoppers trained to take on the role of a customer. They verify the implementation of quality commitments, brand signatures or business actions following a “path to purchase” scenario. Conducted by a third party under cover of anonymity, it also serves to benchmark competitors on their practices, mostly in retail environments.
– Quality Monitoring: equivalent to mystery shopping, but carried out internally by supervisors, its purpose is to measure the qualitative performance of CRM agents (call centers, on-line…) during interaction and to define corrective actions (call-back, training, etc.). The measurement is carried out by quality teams (sometimes by a trusted third party) and is based on posteriori listening to a sample of interactions.
But just as the doctor never starts all the tests at the same time, the CX specialist must proceed methodically. Choosing the tools to monitor the customer experience and deciding what treatments are needed to improve it is a matter of sequence.
So where to start from ?
Step 1: Involve all stakeholders & audit current state
Too often, each department tries to collect customer data with its own scope and prism of analysis (CRM, quality, marketing, Stores, etc.). By pooling thoughts and experiences, you will facilitate internal alignment on a more integrated customer-centric vision. The group will identify opportunities to simplify data-collection, mutualize dashboards, and prevent customers from being overloaded with surveys. But to manage a transition, you first need to know where you start from, who in the company uses what, where, and why, and identify what are the main barriers for change.
Step 2: Prioritize your CX objectives vs business strategy
Business objectives come first. The competitive position of the brand often determines its strategy: acquiring new customers? or preventing churn? May be cross-selling additional services? The prioritization of customer segments, offering and channels is based on strategic marketing research and internal analytics. They should be translated at every level of the organization. As for the competitive benchmark of quality standards, they help to define ambitions: improvement or transformation? Having a clear view on “transactional” and “relational” customer strategy is then critical at start. Where does the conversion funnel show biggest risk or opportunities? What is the positioning contract your brand want to deliver to its customers”? Are there clusters of different maturity to handle across countries? Only when the group is aligned on where they want to go, they can start looking at how to measure progress.
Step 3: Choose your KPIs (incl frequency and depth) considering ownership & business purpose
A need for diagnosis, transformation or simple improvement monitoring of the CX does not require the same KPIs. For example, only tracking the brand’s quality commitments means creating blind spots on the truly perceived customer’s journey. Depending on business maturity, some KPI’s can be considered as mandatory, while others are considered as secondary metrics. The Head-Quarters metrics will not always match the granularity required for actionability at point of sales. KPIs must therefore remain a reflection of strategic and operational priorities. But they should keep a twofold dimension “transactional” and “relational”. Indeed, it is good to maintain a healthy tension between short term sales results and longer-term relationship investment. They may sometimes look contradictory, but they pay dividends at different timescale. Ownership and governance is the tricky part: who is in charge of defending customer’s interests in the company? Where are discussed arbitrations? Which KPI’s should be tied to bonus schemes?
Step 4: Test, Adjust & Connect, focusing on business value
It is not a question of measuring everything but rather of investing the efforts of collection and analysis on data capable of impacting the business in the short or medium term. For example, by enriching CRM profiles you will optimize targeting and personalization. If recommendation or e-reputation is key in your sector, use it to animate your networks and convert your prospects. Cross-analyzing perceived quality and delivered quality you can diagnose if you put your efforts where customers put value in. Be certain that any continuous CX program will generate inevitable drifts: people cheating KPI’s, people disengaged from poorly communicated KPI’s… So your plan needs to embed regular updates, new-news, and momentum activities to build long term team engagement.
Two major pitfalls should be avoided at all costs in this process: the temptation to choose a tool before clarifying the strategy. The other trap is to focus on metrics instead of the customer experience, and have trees makes you lose sight of the forest. Do not hesitate to use an external perspective, like a consultant with a good knowledge of the client’s psychology to coach you and your teams. He can help them design enchanting moments, not just fixing KPI’s. Indeed, as in a sports competition, the right dashboard should encourage everyone to look at the players game, not to remain focused on the scores. Because it is the customer experience that needs to be improved, not its shadow cast by this or that metric.
This article is adapted from my original HBR Chronicle :
https://www.hbrfrance.fr/chroniques-experts/2016/11/13156-ce-que-lexperience-client-signifie-vraiment/