Success Metrics for Your CX Strategy

2017 is in full flight. As business leaders, we’ve all committed to objectives and targets ranging from product introductions to revenue growth and cost management. We’ll have balanced scorecards, any number of reporting dashboards, and the ubiquitous spreadsheet telling us whether we’re on track to achieve our goals. But be careful. Many of those metrics are lagging indicators—a rearview mirror into what’s already happened. We need to have leading indicators that help us shape the future and lead to the outcome we want. Customer experience metrics do exactly that.

In an article published by Aberdeen Research titled “Customer Experience Strategy: Get it Right to Drive Success,” the authors summarize research about the culture, strategies, and metrics used by businesses to manage their CX strategies. The research divided companies into those with best-in-class CX strategies versus “other” and found clear differences on five key metrics.

CX Metric Best-in-class Other
Customer retention 85% 45%
YOY change in CX rate 37.4% -0.8%
YOY change in annual revenue 35.4% 7.7%
YOY improvement in response time to customer requests 32% 3.6%
YOY change in customer profit margin 18.2% 2.9%

 

 

 

 

 


These are excellent CX metrics to consider for improving the customer experience. Yet there still needs to be leading metrics that help us drive change. To identify those metrics, consider a framework that includes three core metrics:

  • Indicators of operational excellence and brand standards. In various time series analyses, Market Force has seen that execution on standards is a leading indicator of customer satisfaction metrics—which is a leading indicator of revenue.
  • Customer experience (CX) feedback, whether survey, contacts, social media, etc. These listening devices—and change in the volume and velocity of commentary—are exceptionally important. CX metrics are best when they can be traced to both channel (e.g., ecommerce or brick and mortar) and location.
  • Changes in patterns. Changes to the normal performance can be either positive or negative. Watch for shifts in the patterns of traffic, CX metrics, and brand standards execution. Changes in management, new competitors, new products, and acquisitions will impact customers. Watch for changes in the metrics during these event timings.

For more information about customer experience metrics, download our ebook or watch a video with Forrester’s Harley Manning and Market Force’s Cheryl Flink as they discuss research findings relating CX metrics to revenue. And if you’d like to discuss strategy, please feel free to schedule a briefing with us.

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As Chief Strategy Officer, Cheryl aligns Market Force's strategic direction with our clients' strategic objectives. She oversees the North American client base, Analytics and Insights, Winnipeg Operations and Marketing. She has a Ph.D. in social psychology and broad business experience in both private and public companies.​

On Metrics: Brand Recommendation or Satisfaction with the Experience?

I was recently in a new client’s office discussing the merits of using Net Promoter Score (NPS) or Top Box Overall Satisfaction (OSAT) as the key customer experience metric. That lively discussion highlighted the differences in the two metrics. At Market Force, we think about and use them in very different ways—and it has to do with the exact question being asked.

NPS asks “How likely are you to recommend [brand name] to a friend or colleague?” The question focuses on engagement with the brand itself, and very likely reflects everything from the brand reputation to the products offered. Consider Apple and the iPhone as an example. However, if you are interested in measuring a transactional experience in a multi-location business—we advocate using a different question: “How satisfied were you with your experience at this Apple location?” The questions then become focused on the experience in the store rather than the connection to the brand itself.

In Market Force’s customer experience (CX) management practice with multi-location businesses, we see both metrics being used. We recommend using a 1 to 5 scale, with 1 being not at all satisfied and 5 being very satisfied, or delighted. We report top box OSAT as the measure of choice. There are two primary reasons for this choice. First, it’s very actionable at the location level. Based on absolute and relative benchmarks, our clients can set performance goals for every location unique to their individual needs. Second, our panel research clearly shows that competition in every industry is very tight. Receiving a 4 instead of a 5 on a satisfaction metric means anywhere from a 2x to 12x difference in likelihood to recommend. To be competitive you must create a best-in-class/top box experience; you must delight, not just satisfy, your customers.

Our financial modeling work has found that overall satisfaction—and the critical drivers of that metric—predict revenue growth metrics, ranging from same store sales growth for restaurants to revenue per available room for hotels. Our survey design practice advises implementing both questions—satisfaction with the experience and brand recommendation—to get both views. And we clearly advise not being solely dependent on NPS as a metric for your multi-location brand. Your operations teams may see a NPS result as intangible and very difficult to improve their score while specific transactional experiences may seem more in their span of control.

For more detail on how Market Force links financial data to customer experience metrics, please see a recent webinar that we conducted with Forrester on the topic. In this webinar, our own Dr. Cheryl Flink, Chief Strategy Officer for Market Force, compares notes and best practices with Harley Manning, Vice President and Research Director–Forrester. And of course, our Customer Experience eBook provides a very detailed perspective on implementing a comprehensive measurement strategy. 

Time to reconsider the Financial Services Customer Journey

According to Deloitte nearly three quarters (72%) of consumers still want to use their local branch to access financial services. This emphasizes the importance of the branch experience on customer loyalty—at least for now. However, our most recent competitive benchmark shows over one in ten banking customers are not satisfied with their relationship with their primary bank. This makes brands vulnerable to losing market share. Overall, 12% of all banking customers are considering switching banks in the next 6 months, with individual brands ranging from 10% to 19%. Our study also shows that many financial companies have a long way to go in order to create a positive encounter with most of their touchpoints. Look at the following:

  • 1 in 6 consumers are dissatisfied with their experience interacting with their bank’s call center
  • Nearly 1 in 5 customers had a recent problem; fees were the most common problem, followed by operations issues while inside the branch
  • Of those with a problem, 13% said it was not resolved, resulting in a net loss of 46% in overall satisfaction

The research also shows that the advisory experience clearly impacts customer loyalty. Consumers continue to visit their banks’ physical branches to speak with and advisor—and over two thirds were very satisfied with that interaction. However, although bank advisors execute well on the basics such as explaining products and services, they miss opportunities to build relationships by asking questions to understand consumers’ needs and following through on commitments. Most large scale financial institutions are investigating the customer journey and the impact each touchpoint has on customer satisfaction. They would do well to consider the following:

  1. Driving Satisfaction: To create true loyalty, and not simply complacency, banks need to deliver an excellent experience that makes it easy to do business with the bank and builds a sense of trust with consumers. This means focusing on consumers’ financial well-being with great advisory services and creating transparency regarding fees.
  2. Resolving problems is critical: Besides impacting overall satisfaction, unresolved problems lead to decreased recommendation rates. Very few disappointed consumers tell brands they were disappointed, and that leaves brands open to loss of wallet share and poor ratings in social media.
  3. Banking brands have opportunities to differentiate: Banking customers scored their primary banks low on concern with the customer’s financial well-being, understanding unique needs, and even community investment.

These are big undertakings and require a strong discipline to develop the right strategy when they begin the customer process. Consider the following when you embark on a customer journey strategy:

  • Do advisors ask the right questions to ascertain needs and make solid product recommendations?
  • Does your bank have the right processes in place to listen and respond if customers have issues—and is the response consistent across channels?
  • Are you listening to your customers across all of the relevant online, social, and conventional channels?
  • Are you aggregating and disseminating information in effective ways?
  • Do you have a clear picture of reality in terms of your ability to execute against your standards and training?

Market Force’s banking customer journey maps assess the channels customers use to engage with your bank. We will help you identify customer expectations and frustrations at every touchpoint—and show gaps in the overall omni-channel experience. If effectively designed, your customer journey mapping can create an effortless customer journey—and that will insulate you from customer defections and help you improve the number of products each customer wants to purchase from your bank. That’s a great ROI.

Contact our experts today to schedule a free 30 minute consultation that will help you determine whether it’s time to consider a customer journey strategy for your banking customers.

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Charles is a customer experience management expert with over 28 years experience. In that time, he has assisted more than 200 service related companies with their efforts to improve customer experience and loyalty. His education and training includes advanced graduate degrees in Statistics and Market Research Methodology.

Linking CX Investments to Financials: What the Research Says

Brands continue to invest in customer experience—and that investment is validated by independent analysts in the CX space. MarketsandMarkets projects that the CX space will grow from $4 billion in 2014 to $8 billion in 2020.

Why do brands continue to invest in CX? Because there is a high ROI.

In the recent Market Force webinar featuring Forrester, titled “Show Me The Money”, Forrester profiled companies that they have identified as CX leaders and CX laggards. Using public data, they found that CX leaders beat CX laggards on any number of financial metrics, ranging from compound annual growth to shareholder returns. The webinar showcased differences in leaders and laggards like AT&T vs. Comcast, Southwest Airlines vs. United Airlines, Edward Jones vs. Morgan Stanley, and Amazon vs. Walmart.

In sum, Forrester Research finds that CX leaders, in comparison to laggards:

  • Grow revenue faster
  • Drive more purchase intent
  • Earn greater pricing power
  • Lower their service costs
  • Reduce regulatory compliance risks

Market Force’s research findings focused on applying this research within a brand, looking at the CX ROI for location leaders vs. location laggards. In sum, our own work parallels that of Forrester. We found that CX location leaders, in comparison to laggards:

  1. Have higher revenue than other locations in the system
  2. Reduce costs of service
  3. Reduce regulatory compliance issues
  4. Have more loyal customers and are less vulnerable to competitive threats.

When brands don’t meet their growth and profit goals, they look to cut budget. These joint research findings definitively make the case that CX investments should be one of the last components to be cut from your budget.

We encourage you to watch the webinar, and if you need help in linking your CX investments to ROI, please give us a call 877.329.9621. We’re happy to walk you through relevant case studies and best practices for making the CX-ROI link crystal clear to executives. 

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As Chief Strategy Officer, Cheryl aligns Market Force's strategic direction with our clients' strategic objectives. She oversees the North American client base, Analytics and Insights, Winnipeg Operations and Marketing. She has a Ph.D. in social psychology and broad business experience in both private and public companies.​

Customer Experience Insights: Transforming Big Data into Smart Data

Big Data presents great opportunities for insights into the customer experience, but it is not without its challenges. The problem, of course, is that Big Data, by definition, means that there is increasing volume, velocity and variety of data. That volume and velocity of data often outstrip a company’s ability to utilize it.

Over the past decade I have seen brands gather data from various sources (mystery shopping, customer satisfaction surveys, social media, audits, contact centers and finance), but few companies truly break the data down into actionable insight and build a clear customer strategy behind it.

It’s no wonder. With so many forms of data being collected by various methodologies, different vendors, with siloed analysis of data streams, it’s not surprising that mixed and sometimes even conflicting messages are reflected back to the business, from CEO to store manager, to Learning & Development to Operations. Or what is more typical—companies end up with lots and lots of data, but no real insights.

Through working with hundreds of brands, we have learned the best way to transform Big Data into Smart Data is to:

  1. Aggregate. To take advantage of Big Data and understand how to improve the customer experience with the greatest ROI, we recommend investing in technology that allows you to gather data inputs from multiple sources and multiple vendors in real-time into a single platform.
  2. Analyze. Turning Big Data into Smart Data, is not just the aggregation but analysis. To extract insights you need analysts who specialize in dealing with customer experience data. In fact, our analyst team has found that by combining different types of data you get insights you could not get with each individual data stream. These insights can then be fed out to each location via the technology platform.
  3. Recommend by Location. Make sure that the platform allows you to drill-down to location-level data and recommendations. Not all locations need the same fixes. Giving blanket instructions based on aggregate data to all locations will penalize some, and totally miss the mark on others.

To learn more about Market Force and how we help companies turn Big Data into Smart Data, schedule a briefing today.

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As a Senior Director of Strategic Relations at Market Force, Jay aligns his team's focus on providing the best actionable insights to the UK & European client base. He has vast experience not only in Retail Management, B2B Client Management & thought leadership, but also how to empower and motivate your teams to deliver the best Customer Experience possible.

It Takes Two; a Customer Experience Measurement Strategy

World class multi-location brands leverage several measures to understand individual store performance. This is true across numerous industries, from restaurants to supermarkets to petro and convenience retailers to drug stores to department stores to hotels to banking and financial services organizations. However, not all stores are created equally. There are many factors that go into measuring how an individual location delivers on the brand promise. Financial metrics are an obvious metric—but tend to be in the rear view mirror. In Market Force’s modeling work, we have found that both delivery to brand standards (assessed through mystery shopping and audits) and customer experience metrics (surveys and call center data) can be lead metrics of financial performance. So how?

Location-level customer experience derives from two components:

  1. Operational execution—how well did the location deliver on the brand standard?
  2. The experiential factor—how did a customer feel about his or her experience?

Both operational and experiential measures tell a brand how its locations are delivering on the brand promise.

Operational Measures: Most brands leverage mystery shopping to understand their operational execution. This measure is a black and white, objective evaluation of exactly what happens at the store when a customer comes in. Were they acknowledged and greeted? Were they served properly? How quickly did they receive service? How long did it take them to check out? Were they thanked for their business? These are simple questions, answered with ‘yes’ or ‘no’ responses. In addition, shoppers can assess the sales process—did associates ask needs based questions, provide recommendations, and interact in a way that positively represents the brand. Mystery shopping enables a business to ‘inspect what they expect’. This feedback helps brands know where they are executing and where there are performance gaps.

Experiential Measures: Just as many businesses deploy customer experience surveys. This measure is more of a ‘shades of gray’ perspective; a subjective read on how a customer felt about their visit. Overall, how satisfied were they with their experience? How likely are they to return? How likely are they to recommend the store to a friend, family member or colleague? How do they feel about the value for the price paid? These questions are answered using both quantitative scales and open-ended text data. Leveraging both numeric and open-ended data will provide operators with the information they need to coach their teams to delight each and every customer.

With both measures in place, an organization has a truly holistic view of their location level CX, and change becomes a matter of acting on very specific behaviors. In our research across hundreds of multi-location businesses, we find that better performance on brand standards (as assessed by mystery shopping) has a high impact on the actual customer experience—customer satisfaction increases as locations deliver better on standards. In addition, our sophisticated financial models show that the actual behaviors of store staff and operational attributes of a store can predict financial metrics like same store sales, transaction counts and average transaction value. And these are the metrics that really matter.

For additional insight into this integrated approach, please see our “Better Together: Integrating Direct Customer Feedback and Mystery Shopping Data” white paper.

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Brad Christian is a Managing Director at Market Force and consults with retail and restaurant executives to design cost-effective customer experience measurement programs that help them protect their brand's reputation, delight guests and drive greater unit economics.

Blended Index: How to Create a CX Single Metric

The use of blended indices is quickly becoming a best practice as companies attempt to connect the dots across many sources of data being collected for their organizations. No single measurement tells the whole story—and that’s particularly true of multi-location businesses. Why? Because locations are looking at operational excellence metrics, satisfaction and loyalty metrics, as well as financial metrics to understand how they perform. And how they perform needs to be within the context of the brand itself and peer groups. In order to make sense of the rich data sources, we recommend constructing a blended index.

WHAT is a blended index?

A blended index creates a composite score from multiple data sources, spanning operational and customer metrics. The algorithm must normalize the data so that scales are not an issue (e.g. mystery shopping on a 100 point scale, customer satisfaction on a 5 point scale, or contacts on a number of complaints/1000 transactions). The algorithm should also flex to weight specific metrics. This single score provides the brand—and your locations—with a holistic view of performance across all metrics.

WHY should I have a Blended Index?

A blended index that spans across operational and customer metrics helps you understand performance as a whole. The magic happens when you bump that information up against a financial metric like same store sales growth, revenue per available room, or volume of gas sold. You’ll then want to understand the performance of every location on that grid to determine where you will want to require better operations, more marketing to drive traffic, management changes, and adoption of best practices.

HOW do I get value from a Blended Index?

The final step in maximizing your value from a blended index requires socializing the information with the rest of the organization. Executives and managers from both operations and marketing need to understand the numbers. More importantly, they need to drive action across the organization. Finding the critical drivers—specific actions that can be taken to change scores on the blended metric—must happen. Without that commitment, you’ll be looking at data that stays the same and never changes—and that will not help you grow your brand. 

Sam McKeveny is Head of Program Development, North America at Market Force Information. Sam consults with client executives to design program architectures that systematically improve operational execution, customer delight and sales growth.

Incenting Employees: Three Best Practices from our Clients

Our clients often ask us how other companies incent their employees to deliver exceptional customer experiences. Practices range widely and tend to group into three major categories. Let’s take a look at those categories and why they are used:

  1. Appreciation through badges, certificates, pins, etc. That “badge of honor” really matters to the front line. A certificate acknowledging superior performance, signed by an executive, makes an indelible mark on employees. They are proud to be recognized and execs can reinforce the importance of serving customers. I’ve personally seen a pride wall where a petro-convenience retailer had every 100% shop certificate up on a wall. I’ve seen employees wearing their “employee of the quarter” pins or displaying their “WOW” certificates for exceptional service. Indeed, virtually every research firm confirms the importance of employee recognition in driving retention and engagement.
     
  2. In the moment recognition for delivering exceptional service or complying with brand standards. In one program we deliver, employees receive a “Golden Ticket” for upselling beverage products at restaurants. That golden ticket is a gift card delivered immediately and directly to the employee. Not only is that reward valuable to the employee, it’s valuable for both the restaurant brand and the beverage vendor. Both see an uptick in sales.
     
  3. Bonus compensation tied to results. We have a number of clients that tie compensation to CX results—but it takes many different forms. Some clients emphasize the performance of the front lines. In one case, consistent delivery on 100% shop scores results in a bonus added to each monthly pay check for front line employees. For others, delivery on core CX metrics is tied to management MBO’s that go all the way up to the CEO. As with any compensation, you’ll want to check that you have a solid metric, that every location knows how to move the needle on that metric, and that you are recognizing improvement towards goals as well as overall results.

Recognition and incentives are critical to your team. We’d be happy to discuss alternative incentive programs that help your teams understand their importance to creating exceptional customer experiences and positioning your brand for financial success. 

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As Chief Strategy Officer, Cheryl aligns Market Force's strategic direction with our clients' strategic objectives. She oversees the North American client base, Analytics and Insights, Winnipeg Operations and Marketing. She has a Ph.D. in social psychology and broad business experience in both private and public companies.​

Innovation in Social Media: The Power of a Listening Ear

Social media strategies now require a large percentage of our marketing budgets. In fact, Forrester research forecasts that US social media spending will increase dramatically in the next five years, from $13 billion in 2016 to $30 billion in 2021 with a growth rate of 16.9%. In Europe, growth is projected at 18.4%, from $7.4 billion in 2016 to $17.3 billion in 2016 (US dollars). And advertising is only one component of social media dollars spent by big brands. We divide that spend into three separate categories:

Responding to CX commentary. Customers post their customer experience comments to both corporate and site level Facebook and Twitter pages. Brands have built strategies for managing those comments, focusing on taking negative commentary offline and recovering unhappy customers. Positive commentary can be used to uplift and motivate employees. Direct recognition for great work can immediately impact morale!

Managing third party reviews. Reviews posted to Yelp, Trip Advisor and other third party sites have become increasingly important. For example, understanding sentiment, categories of commentary, and trends—and comparing that information to key competitors—form the very basics of what your brand needs to be watching. Also, in the restaurant industry more than 67 percent of customers take online reviews into consideration when making a purchasing decision (as published by Modern Restaurant Management). In Market Force’s research, we clearly see the influence of sites like Pinterest for fashion and even comparative pricing apps like GasBuddy for gas.  

Creating engagement and innovation through advertising. We love it when brands use social media to innovate. Flynn Decker, CMO for Wingstop, gave a great interview to Loyalty 360 (https://loyalty360.org/content-gallery/daily-news/wingstop-carries-its-innovative-spirit-through-dig) about how Wingstop is using social media and CX data to engage with customers. Wingstop has aligned its CX strategy to match the heavy use of online ordering, recognition of the importance of mobility, and the first-of-its-kind social auction series on Periscope “THUMP by Wingstop.” Users bid on prizes by tapping the Periscope heart button. 

As you think about your own budget for social media, divide it into those things that will a) create and drive revenue, like engaging your customer base through advertising, b) those that will help you mitigate risk, like taking negative conversations offline, and c) those that will help you drive down costs, like using commentary and third party reviews to help your teams perform better. Every dollar you spend can be leveraged to drive your business. 

 

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As Chief Strategy Officer, Cheryl aligns Market Force's strategic direction with our clients' strategic objectives. She oversees the North American client base, Analytics and Insights, Winnipeg Operations and Marketing. She has a Ph.D. in social psychology and broad business experience in both private and public companies.​

 

Time to Re-evaluate Strategy

When was the last time you took a walk in your customer’s shoes and experienced your brand from their perspective? Having a clear understanding of their priorities and how those priorities connect to your bottom line is extremely important.

The reality is, our knowledge of the customer experience, customer expectations, and our ability to deliver against their needs, is in constant flux. If we get complacent we may find that our focus, metrics, and the systems we use to manage performance, lose their ability to create real positive change. If it has been more than 2 years since your last deep-dive into the customer journey and the associated measurement and support systems, it is time for fresh perspective.

Are you asking the right questions? Do you have the right processes in place to listen and respond if customers have issues? Are you timely in addressing customer concerns? Are you listening across all of the relevant online, social, and conventional channels? Are you aggregating and disseminating information in effective ways? Do you have a clear picture of reality in terms of your ability to execute against your standards and training? Is it clear to all what the true priorities are?

These are just some of the important questions to consider. That said, even if you recognize the importance of the customer experience, it can be easy to get lost in the daily grind and lose sight of important details. If any of the following conditions exist, now is the time for a second opinion regarding the efficacy of your customer experience practices. To make the review process easier, we’d like to share a list of telltale signs that it is time to revisit your customer strategy.

  1. Low engagement in customer experience programs with customers and/or employees and managers;
  2. Low executive engagement or visibility into customer experience program metrics;
  3. Flat or declining customer experience scores;
  4. A high degree of variability in performance across your brand;
  5. A lack of certainty in the connection between scores and a desired business outcome;
  6. Dated program design, branding and PR strategies;
  7. Reliance on a limited number of channels to engage customers;
  8. High or improving scores, with inverse financial outcomes.

If effectively designed, your customer experience program can be a highly scientific tool to manage your business, placing the wants and needs of your customers at the forefront of decision-making. By deploying best practices in combination you will elevate your chance of success, and ensure you maximize the financial return on your investment of time and energy in creating great customer experiences. 

Contact our experts today to schedule a free 30 minute consultation that will help you determine whether it’s time to revisit your customer experience strategy.

 

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Scott Griffith is Vice President, Executive Business Strategist at Market Force Information. Scott consults with client executives to design strategies that foster growth for companies in early stage ventures through IPO and beyond.

 

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To discuss your needs for improving performance for your multi-location brand, give us a call. We’d be happy to discuss best practices for measuring the customer experience and compliance to brand standards, using analytics to understand what matters most and the ROI for change, and technology solutions that integrate large quantities of data on one single platform. We look forward to a great discussion!

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