Financial metrics are an obvious metric—but tend to be in the rearview mirror. In Market Force’s modeling work, we have found that both delivery to brand standards and customer experience metrics can be lead metrics of financial performance. But how?
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 rearview mirror. In Market Force’s modeling work, we have found that both delivery to brand standards (assessed throughmystery shoppingandaudits) and customer experience metrics (surveysandcall centerdata) can be lead metrics of financial performance. But how?
Location-level customer experience derives from two components:
Operational execution—how well did the location deliver on the brand standard?
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 of 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 canpredict financial metricslike same-store sales, transaction counts, and average transaction value. And these are the metrics that really matter.