Best Practices in Customer Experience (CX) Measurement and Analytics

The following are the top 10 concepts you will learn in this blog article:

  1. What are the most common set of metrics used to measure customer experience quality and effectiveness.

  2. What these common customer experience metrics are used for

  3. When are these best practice customer experience metrics best measured

  4. What a customer journey (a.k.a. customer life-cycle) is and how it related to customer experience metrics

  5. Why a balanced scorecard is better than any one single customer experience metric

  6. Why NPS is not sufficient to provide a comprehensive picture of your customer experience quality and effectiveness

  7. The top 10 best practices in developing a world-class customer experience measurement program and balanced scorecard

  8. Sample of what a customer journey looks like as well the customer experience analytics collected at each journey phase

  9. Examples of embedded detailed customer journey phase analytics paired with summary & executive level customer experience analytics

  10. How to develop customer experience analytics that also drive the development and support of a customer first, surprise and delight culture.

Peter Drucker once said “If you can’t measure it, you can’t manage it”. This ageless and famous quote applies to almost all situations and customer experience is no exception. There is virtually no way to determine how effectively your customers are being treated without a robust set of measures to gauge how well you are fulfilling their needs, wants, desires, etc. In this blog article, we will cover the specific metrics that best practice companies use to measure their customer experience delivery along with it is done.

 

Peter Drucker's Famous Measurement Quote

Peter Drucker’s Famous Measurement Quote

The Chart below illustrates some of the more commonly used customer experience (CX) metrics and how/where they are used in the customer journey continuum.

Commonly Used Best Practice Customer Experience (CX) Metrics

Commonly Used Best Practice Customer Experience (CX) Metrics

  • Customer satisfaction (CSAT) – one of the most common uses of customer satisfaction ratings is on ratings websites like Yelp, TripAdvisor, Facebook, Google, etc. using the now famous five star rating system seen below. Other customer satisfaction feedback mechanisms are more sophisticated, querying customers on an array of customer experience topics that are multi-dimensional in nature.

Customer Satisfaction Score Example

Customer Satisfaction Score Example

  • Customer Churn Rate: Customer churn rate is almost always expressed in terms of a percentage and is a product of the number of lost customers divided by the number of retained customers for any given period (day, week, month, Quarter, Year).

Customer Churn Rate Example Calculation

Customer Churn Rate Example Calculation

  • Customer Effort Score: Customer Effort Score is recorded to keep a pulse on how easy it is for a customer to accomplish certain transactions with your company (e.g. return a product, handle an issue, inquire about upgrades, etc.). It is obtained via surveying customers following a major interaction and is expressed in terms of a numeric, typically on a 1-10 or 1 to 7 scale. Here is a sample I developed for a client where the score is translated into a 1 to 7 scale (from “Strongly Disagree”=1 to “Strongly Agree”=7).

Customer Effort Score Example Quantification

Customer Effort Score Quantification Example 

  • Customer Average Time to Resolution (CATTR): This metric is a measure the average time it takes to resolve categories of customer interactions (inquiry, product issue, service issue, contract renewal, return, etc.). This is expressed in average time per interaction category as shown in this example

Customer Average Time to Resolution (CATTR) Example Calculation

Customer Average Time to Resolution (CATTR) Example Calculation

  • First Contact Resolution (FCR): All companies should strive for what is called “one and done” customer service, enabling the customer to handle any need with one short effort. The benefits of achieving this are endless including the following: Research I have read has indicated that a 1% increase in FCR rates translate into decreasing operating costs by 1%, increases of both customer satisfaction and employee scores by 1-3% as well as increasing customer loyalty (up to 20%). How companies measure FCR vastly differs including surveying customers, tracking it in a CRM system, tracking it in a contact center database or querying the customer at the end of a call. Many companies sadly do not track this metric and lose out on the visibility and resulting benefits this provides.

One & Done Customer Service

One & Done Customer Service Creates Elated Customers

  • Contract Renewal Rates: This metric is more company specific but, when applicable and used in conjunction with the other metrics, provides a great barometer on the health of the contract oriented business. For example, you might be experiencing great FCR and customer average time to resolution, but contract renewal rates might be lagging due to a perceived lack of value by the customer for the price paid. By using this metric in a balanced scorecard along with CSAT, FCR, CATTR you have a much more comprehensive view of total customer satisfaction than with just a few measures, allowing you to reduce business risk and potential revenue surprises.

High Contract Renewals = High Customer Satisfaction

High Contract Renewals = High Customer Satisfaction

  • Net Promoter Score (NPS): Net Promoter Score (NPS) is the most commonly used and simplest customer experience metric that exists.  NPS is typically measured by asking the following question:

How likely are you to recommend [business, service, product] to a friend or colleague?

Customers rate your company, service, product, etc. on a scale of 0 to 10. Respondents are grouped in the following categories:

    • Customer Promoters (Score 9-10)

    • Customer Passives (Score 7-8)

    • Customer Detractors (Score 0-6)

Calculate Net Promoter Score is typically calculated by subtracting the percentage of net detractors from net promoters. Here is a great illustration on how this is determined, calculated:

Net Promoter Score Example Calculation

Net Promoter Score Example Calculation

It has been found that only those customers who provide a rating of a 9 or 10 on the NPS scale are those who will truly become adjunct volunteer company sales and marketing agents and are a result of experiencing surprise and delight levels of customer service. These same elated customers are the ones who tell everyone they meet about your exceptional company and your amazing, services, products, customer service, etc. More on this in a future blog that will address the topic of “Delivering Consistent Surprise and Delight Customer Service”.

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On this last point of NPS, there exist many misnomers about what to measure for customer experience effectiveness. Many professionals I have met in my consulting travels have the misconception that measuring one metric like Net Promoter Score (NPS) is sufficient to measure the quality of the customer experience you are delivering to their customers.  This is equivalent to believing that taking your body temperature is sufficient to determine your overall health when in actuality there are many measures taken together that help make this healthy/not healthy determination. The same is true for measuring the quality of your customer experience. While NPS is a good measure for helping to determine the quality of your customer experience effectiveness when used correctly, similar to body temperature, it must be augmented with many other measures to determine its overall effectiveness.

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Other customer experience metrics include employee turnover (a leading indicator of customer satisfaction), year-over-year same customer spend, customer loyalty and average longevity, customer acquisition rates over time, etc. I will go more into this when I cover the topic of customer journeys.

Customer Experience, Satisfaction Humor

Customer Experience, Satisfaction Humor

First, let’s examine my recommended top 10 best practices for measuring your customer experience delivery effectiveness.

  1. Monitor Customer Experience Metrics in Real Time and continuously improve customer experience programs based on actual CX metrics/program performance.

  2. Track top level Customer Experience (CX) Metrics for all customers (i.e. average customer satisfaction) and for individual customer segments (i.e. price sensitive customers or high value customers).

  3. Request both customer qualitative and quantitative ratings throughout the Customer Life-cycle during critical customer interactions. Accomplish this my providing a conduit for your customers to become brand partners who are invited to participate in providing program feedback prior to full launch, provide detailed focus group feedback on selected topics and for most valuable customers to participate in exclusive customer advisory boards.

  4. Ensure group appropriate customer experience metrics are being delivered to each layer of the organization (highest importance summary level for CEO – Chief Customer Experience officer, more granular metrics for tactical managers and line staff).

  5. Cultivate and measure your own internal customer metrics and calibrate against externally measured CX like the American Customer Satisfaction index or metrics collected by firms like the Service Management Group (Kansas City), Direct Opinions (Beachwood Ohio), C-Space (Boston), Engine Group (NYC), etc.

  6. Track customer experience effectiveness via a balanced scorecard of Customer Experience Metrics including customer satisfaction, NPS, Customer Churn and renewal rates, customer spend per year and employee turnover (a proven leading indicator of customer satisfaction).

  7. Ensure the collection and dissemination of Customer Experience metrics meet the golden rules of being seamless to your customers, easy to obtain and are ingrained as part of normal business operations.

  8. Review customer experience metrics during key management reviews like operational reviews, leadership team reviews and financial reviews. Ensure action plans are developed for metrics above and below expected performance levels.

  9. Ensure that the company culture and training is supported and in-line with customer experience metrics by making everyone’s KPIs metrics align to the performance of key customer metrics.

  10. Develop customer journeys (a.k.a. customer life-cycles) and develop customer experience metrics for each major step in the customer journey.

The last best practice is to identify key end-to-end customer journeys or paths of customer progression when engaging your company and then attach appropriate customer experience journey analytics along those customer paths. Once you understand the different touch-points and how they impact the overall customer journey, you will be in a far better position to pick the most appropriate metric to use at each touch-point. The best metric is company determined based on a developed set of customer experience standards and goals.

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In my example in the introduction, Net Promoter Score (NPS – which answers the question, “How likely are you to recommend [business, service, product] to a friend or colleague?” and is rated on a 0 to 10 score), is not a total customer experience solution metric. The reason is that NPS works best when measured at the end of a customer journey (a.k.a. customer life-cycle), such as at contract renewal time. For example, if a customer is getting frustrated returning a product or trying to resolve a service issue, then they will likely defect long before they are queried on NPS. It is better to measure customer satisfaction right after an interaction to have real-time insights into a customer’s experience satisfaction and not wait until NPS query time.

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Here is a sample customer journey I developed from a recent client consulting engagement along with the metrics they decided to collect at an aggregate level as well as along this customer journey. Some of the metrics and customer journey names have been changed to protect my client’s identity. In addition, this client wanted to err on the side of measuring many metric points frequently and not all clients are this exhaustive in measuring their program. Some of these metrics were already in place before we added many others.

Customer Journey Analytics Illustration

Customer Journey Analytics Illustration

The above illustrates one of the main customer journeys (discover to renewal) in the life of a customer along with the Macro customer phases in that journey (i.e. 1-customer discovery, 2-customer sales & on-boarding, 3-customer support, 4-customer renewals) as well as the micro phases in that journey (product, service credibility evaluation).

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The above chart also illustrates the fact that it is important to track global/summary metrics at the top of the organization (i.e. total customer satisfaction) in order to gauge overall customer experience health and to balance these with more granular measures along the customer journey phases (i.e. First Contact Resolution in the on-boarding and support phases). While there is a recommended set of best practice metrics to collect for standard customer journeys, each company will make a different selection of the mix of metrics. For example, if a company’s life blood is contract renewals then the metrics will be more geared toward gauging the customer’s satisfaction for the existing contract experience (value for contract price, value of contract to client’s business, contract terms & ease of doing business vs. perhaps product return rates).

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One best practice embedded in the above is to report on the number of customer stars (in the 1st and 3rd phases above) per period whereby employees who have delivered exceptional “surprise and delight customer service” are recognized and rewarded. Customers of this company as well as executives from the company are provided incentives to recognize employees who went above and beyond in delivering exceptional customer service. This company tracks this via reports and recognizes top employee customer stars quarterly and annually with top company customer stars getting recognized, rewarded, etc. This helps build a culture of support for being customer exceptional with top stories being told over and over to teach employees what it means to be customer exceptional  and encourage others to emulate this valued behavior.

Summary:

In summary, measuring your customer experience quality/effectiveness must be guided by a set of best practices to be effective and comprehensive. The use of customer journeys as well as customer experience journey analytics, balanced by summary customer experience metrics comprises a customer experience balanced scorecard.  By not measuring or under-measuring your customer experience delivery effectiveness, you are flying blind and having to take guesses as to whether your program is delivering exceptional customer service to your customers or not. Only when you reach the level of consistently delivering exceptional “surprise and delight” customer service will you reap bottom line benefits of accelerated customer acquisition, reduced sales and marketing costs, increased customer loyalty and increased employee and customer satisfaction.

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With all this being true, there is no excuse to not actively work on creating the best customer experience program possible!!

If your organization is seeking experienced assistance in measuring and improving your customer service and customer experience, then give me a call or e-mail me at 518-339-5857 or stevenjeffes@gmail.com

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Lastly, this is just one article of nearly 50 articles I have written on Customer strategy, customer experience, CRM, marketing, product management, competitive intelligence, corporate innovation, change management – all of which I have significant experience in delivering for Fortune 500 companies.  In fact, my blog is now followed by nearly 121,000 world-wide and was just named one of the top 100 CRM blogs on the planet by Feedspot, alongside Salesforce.com, Infor, Microsoft, SAS, etc. – Reference this informative site here: https://blog.feedspot.com/crm_blogs/

Measuring Marketing ROI vs. Measuring Customer Value & Equity

Hierarchy of Marketing ROI Analysis (Levels 1-4)

Hierarchy of Marketing ROI Analysis (Levels 1-4)

In this blog we cover the following topics:

  1. The four (4) levels of sophistication in measuring marketing and customer ROI
  2. The three traditional levels of marketing ROI that focus on spend vs. return
  3. The calculations for measuring campaign ROI, Brand ROI and Customer Spend ROI
  4. Why measuring customer value and equity is a far better measure than traditional marketing ROI
  5. How Customer Value and Equity Covers the Measurement of ALL customer facing activity – marketing, PR, sales, customer service, community relations, etc.
  6. What your company needs to do to increase its sophistication of measuring market and customer insights

The following chart depicts the capability levels for measuring market ROI and customer value.

Level 1: Campaign centric ROI is the measurement, at a campaign level, of campaign costs vs. campaign return (customer spend vs. campaign return)

Level 2: Brand Centric ROI is the measurement, at a brand level, of brand return for all conducted campaigns (roll up of campaign ROI to a brand level)

Level 3: Customer Spend ROI is the sum of all brand and all brand campaign ROI at a customer level.

Levels of Marketing ROI Measurement (Levels 1-4)

Levels of Marketing ROI Measurement (Levels 1-4)

The following chart defines the first three levels of marketing ROI and points out the pros and cons for utilizing each method. The downfall for all three methods, as indicated at the bottom of the chart, is that they rely on historical spend vs. forward looking measures as are found in Level 4 – Customer Value and Equity Measures.

Traditional Marketing & Customer ROI Methods (Levels 1-3)

Traditional Marketing & Customer ROI Methods (Levels 1-3)

The following chart depicts the calculations for determining campaign level and brand level ROI that, if done correctly, should roll up to a customer level (Level 3 – Customer Spend ROI). The detailed definition of the highest level (Level 4 – Customer Value & Equity) is covered just below in this blog.

Levels 1 – 3 Focus on Spend vs. Customer Value and Equity

Levels 1 – 3 Focus on Spend vs. Customer Value and Equity

The following chart defines the components of Level 4 ROI analysis – “Customer Value and Equity”.  This level includes the roll-up for Customer Spend ROI, but also includes insights that predict customer future behavior as well as defining how valuable the customer is to the company beyond what they spend.

For example, a customer who is referring 2-3 customers to the company per week, participating in customer focus groups is a far more valuable customer than another customer with equal spend with your company.  

Similar to company stock value, the measurement of customer value and equity is a far more robust way to measure the value of the customer base, how likely they are to remain a loyal customer, etc. 

Customer Value & Equity Calculations, as shown below includes several different indices such as Customer Contribution Index (CCI), Customer Perception Index (CPI), Customer Referral Index (CRI) and Customer Loyalty Index (CLI). These indices help determine the overall health of the customer base vs. merely customer spend as is associated with levels 1-3 (spend focused).

Customer Value and equity calculations take into account the level 1-3 spend ROI measures, but utilizes a balanced scorecard approach in that the indices above are weighted against the spend vs. ROI measures. For example, if Brand A has a high ROI but also has a bunch of irate customers unwilling to partner and participate in brand activities, then this is indicative of a brand that, while doing well now, will experience a great deal of future customer churn, negative social comments, brand tarnishing, etc.

Level 4 Marketing ROI Analysis - Customer Value & Equity

Level 4 Marketing ROI Analysis – Customer Value & Equity

The following chart further defines the difference between focusing on spend ROI analysis vs. focusing on customer value and equity.

Value of Focusing on Customer Value & Equity

Value of Focusing on Customer Value & Equity

The last chart provides some real examples of the difference between focusing on spend ROI analysis vs. focusing on customer value and equity.

Examples of Differences Between Spend ROI  Focus vs. Customer Value & Equity Focus

Examples of Differences Between Spend ROI
Focus vs. Customer Value & Equity Focus

The bottom line here is that if you are focusing on Level 1-3 ROI calculations, you have a short-term and myopic view of the health and value of your customer base and are missing the strategic and longer-term insights that enable you to determine customer, company and brand future value and earnings.

Any company thinking about acquiring another should perform this robust customer diagnostic to determine if they are inheriting a group of angry/upset customers that will defect after a merger or a set of extremely valuable customers with positive customer equity who will take the stock value of the merged company to the stratosphere.

Contact me to find out how to move past traditional marketing ROI measurement and how to evolve into developing more robust customer value and equity insights for your company.  

Blow Away Your Competition by Replacing Your Old CRM Program with the New Customer Relevant Relationship Management (CRRM) Model – Part 2: The Necessary Components.

1) Introduction:

In my previous blog, I covered what the new Customer Relevant Relationship Model (CRRM) is and the benefits of adopting this new model. In this blog, I will cover the components of the new CRRM model and what you need to put in place to make this new model a reality.

Ever wonder why companies like ESPN, Apple, Google, Zynga, Amazon, and Marriott dominate their respective markets? The reason is that they are ‘Customer First’ organizations and are passionate about listening to, understanding and then delighting their customers based on leveraging true customer insights. They treat their customers as business partners vs. commodities and include them in many critical decision making processes. They get this new CRRM model. Why/how ? – Read the rest of this blog to find out…

The differences between the old CRM model and how these companies are embracing the newer CRRM model are depicted in the following chart:

The Old CRM Model vs. New CRRM Model – Customers as Business Partners

2) Customers are fed up with old Dictatorial Management Style & Want to be Empowered as Business Partners

Customers and stakeholders today are longing for a company to partner with them and include them in the corporate decision making process.  These same constituencies are sick and tired of political, corporate, and other organizations making unilateral decisions for them that are really not in-line with their needs,  wants, etc. The backlash from this unwanted dictatorial management style of some companies can be seen in the Bank of America fee customer rebellion, the customer backlash from Netflix deciding to  split their company without first consulting with their customers and HPs initial decision to exit the computer market.

3) Components of the New CRRM Model:

In order to progress your organization from the old CRM model to the new CRRM  model, a few key essentials must be put in place and are as follows:

A. New CRRM Model that includes the 360° Cultivation of Customer & Market Insights.  This model enables a 360° view of all customer and market insights including customer feedback, preferences, likes, dislikes, social sentiment, competitor activity, etc. This new model takes your insights to an entirely new level whereby you are now enabled to delight customers, stakeholders and stockholders by having insights that are light-years ahead of insights provided by a traditional CRM model.

B. Customer First Culture driven by management that is passionate about their customers including a set of customer first principles and guidelines developed by company leaders

C. Customer Ratings & Feedback Structure that will identify areas where you will collect customer 360° feedback from customer and stakeholder interactions

D. Customer Feedback & Preferences Cultivation Process and corresponding infrastructure in order to allow your customers to continually rate how well you are serving them

E. Customer Health Scorecard that provides real-time insights on how well the customers, stakeholders and stockholders perceives you as serving them as well as insights into a Continuous Customer Improvement Process (CCIP) that enables you to continually improve your customer perceptions, satisfaction, brand loyalty, etc.

These components can apply to large enterprises as well as Small to Medium Businesses (SMBs).

The following graphics are all sample components from the list above (A-D) that need to be put in place to enable this new CRRM Model.

New CRRM Model – 360° Cultivation of Customer & Market Insights

 3A) The above chart “New CRRM Model – 360 Cultivation of Customer & Market Insights” demonstrates the new insights model that must be put in place to deliver world-class stakeholder and customer programs.

These enhanced insights will enable you to deliver products and services that delight your customers, stakeholders and stockholders as well as enable you to leapfrog the competition in terms of market share if they continue to rely on their antiquated CRM data and analytics insights only model. 

For Small to Medium sized Businesses (SMBs), some of the insights do not apply, but the following charts (3B-3E) most certainly apply and can be tracked via simple Microsoft Excel spreadsheets.

CRRM Customer First Policies & Organizational Principles

3B) The above chart “CRRM Organizational Guiding Principles” demonstrates the principles that must be in-place to be customer first culture. This culture is driven by management that is passionate about their customers and governs the company around a set of customer first policies.

Sample Enterprise CRRM Customer Rating & Feedback Structure

3C) The above chart “Enterprise CRRM Customer Rating & Feedback Structure” illustrates a sample structure (will vary for each type of business) whereby customer feedback and preferences will be cultivated in order to develop 360° insights into customer needs, wants, likes, etc.

Enterprise CRRM Customer Feedback & Preferences Cultivation Process

3D) The above chart “CRRM Customer Ratings & Feedback Cultivation Process” illustrates a how customer feedback and preferences will be cultivated in order to develop 360° insights into customer needs, wants, likes, etc.

Sample Enterprise CRRM Customer Scorecard Ratings Visualization

3E) The above chart “Enterprise CRRM Customer Scorecard Ratings Visualization” illustrates a how customer feedback and preferences ratings will be visually represented in a scorecard. 

Sample Enterprise CRRM Customer Scorecard Metrics

3E-2) The above chart “Enterprise CRRM Customer Scorecard” illustrates a how customer feedback and preferences ratings will be rolled up into an analytical scorecard that provides insights into customer trends,  customer feedback, customer issues, core customer strengths and weaknesses, etc. 

This scorecard can also be used to manage a Continuous Customer Improvement Process (CCIP) that continually drives improvements to customer perceptions, ratings, satisfaction, etc. 

Sample Scorecard for “Shopping Experience”

The above depicts how analytics and metrics would be maintained for a business who had a retail or wholesale shopping function.

Sample Shopping Experience Scorecard – #2

Robust Scorecard Analytics and Metrics should support Customer Trend Identification and Root Cause Analysis for Customer Issues.

Sample Branding & Public Relations Scorecard

Sample Public Relations Scorecard Above gives you insights into how well your company and brands are perceived by customers, stakeholders, stockholders, etc.

Sample Customer Service Scorecard

Sample Customer Scorecard Above from Customer Service tells how well you are serving your customers.

Sample Marketing Scorecard

Sample Marketing Scorecard Above Gives you insights into how well your Marketing Efforts are resonating with your customers.

Sample Product Management Scorecard

The Sample Product Management Scorecard above gives you insights into how well perceived your products and services are with customers and prospects.

4) Company & Customer Benefits of Adopting the CRRM Model:

By treating customers as business partners (vs. commodities) and including them in the corporate decision making process, as well as allowing them to rate how well you are serving them from an array of customer facing areas, companies can reap huge rewards including the following:

1. Better insights into the types of products and services customers want & need

2. Fiercely loyal customers who feel part of the corporate team

3. Customers who are most likely to spend more, be retained longer and purchase at premium prices with higher profit margins

4. Customers who are very likely to be brand advocates and refer others to your company, brands, and services.

5. Customers who feel connected to the company and empowered to improve company operations

The following are actual customer comments from those who have participated in a customer feedback program to help shape products & services:

“I feel like xyz company cares about me since they ask my opinion”

“Finally a company that listens to us”

“It is so refreshing to have a company ask you your opinions on products and services vs. ramming something down our throats that we don’t like”

“Wow – this is fun. I enjoy providing my opinion”

“As silly as this might sound, xyz company is the only company that ever asked me what I wanted”

“In my opinion, xyz company is much more progressive than their competitors by seeking consumer opinions, what matters to them, etc.

 5) Conclusion:

More dynamic companies like Goodle, Zynga, Amazon, etc. are inviting customers to become part of the corporate decision making process and empowering them to provide feedback, insights and rate company operations in order to drive continous customer improvements. Companies who adopt this new CRRM model whereby company management is democratized by including stakeholders and customers into the decision making process will reap the rewards of ever higher customer acquisition, retention and spend – leading to ever higher profits and share price.

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