In our fast changing, increasingly digital world, building a strong customer relationship is the lynchpin to building a great business. Digitally-savvy, hyper-connected customers are now harder to define, understand and please than ever before. Today’s enterprise must focus on the customer experience as never before--or risk being replaced or ignored.
A new report by Harvard Business Review Analytics Services, "Lessons from the Leading Edge of Customer Experience Management" spotlights how leaders in customer experience management are developing strategies, capabilities, processes, and metrics to gain competitive advantage and remain relevant.
One of the striking aspects--and there are many--of this report pertains to measuring customer experience efforts. Maximizing the customer experience ROI (52%) was cited as the top issue. Nearly half also reported that it's extremely challenging to tie customer experience investments to business outcomes. Leading-edge firms aren't immune from this issue, with a third in the same predicament.
That difference suggests that a higher incidence of tying customer experience to business outcomes sets the leading-edge firms apart. Still, a majority of leading-edge companies admit to having at least some difficulty tying their customer experience investments to business outcomes.
The traditional measure of customer experience success—customer satisfaction scores—are widely used in all companies. Yet a variety of other metrics deemed highly important by those that use them, such as customer effort and digital engagement scores aren't as prevalent.
The report showed that customer experience leaders use an array of metrics, often more effectively, to track customer experience management progress, including measures such as customer lifetime value, indirect traffic, social media sentiment, and upsell rates.
Three categories of customer experience measurement
To tie customer experience investments to business outcomes, consider this multi-layered approach to guide your customer experience measurement:
Engagement metrics help marketers measure the specific actions-- transactional or non-transactional--that people take when interacting across customer touch points as well as their resulting impressions toward the brand. Are they attracted or disillusioned? Quantitative metrics include online interactions (visits, downloads, registrations, etc.) or at the interactions at physical location or store, number and frequency of visits, recency, customer migration metrics (from lower to higher tiers of customer value), and customer profile completion rates. Softer, qualitative metrics include satisfaction survey responses and sentiment in social mentions or contact center experiences.
Operations performance measures. This category assesses the efficiency of customer experience activities.
By tracking operational metrics, marketers can get a sense of the size, scale, and activity level of customer experience initiatives, and how those change over time. Marketing operations management can connect budgeted and actual spending with activities, tasks, resources and objectives related to your customer experience efforts. Operational metrics can include enrollment rates in loyalty programs or campaigns, offer response rates, issue resolution times, asset re-use, and the like.
Corporate business measures. This category assesses customer experience contribution to overall corporate value.
Corporate metrics incorporate available financial and market data to link customer engagement and operational performance and to the firm's top and bottom lines. Examples here include revenue, growth,margins, market and wallet share, and other productivity measure. Tying everything together, these metrics are often the ones that matter most to the executive team.
Considering the overarching objectives for their businesses, marketers must choose appropriate measures that map to those goals directly or indirectly. For example, if the corporate imperative is to increase customer retention, then marketers should examine the correlation between online engagement and length of relationship or status level to renewal revenue.
Three tips to remember
Here are reminders as you embark on the customer experience measurement journey.
Approach customer experience measurement based on an integrated data set. Data integration is the very foundation of demand generation measurement. In the report, one customer experience director is hiring more analysts, working more closely with finance, integrating more databases, and trying to determine the real business value of a satisfied customer.
Connect the dots between branding, demand generation, and customer experience. Many companies have separate departments and marketing budgets. One focused on branding, one on lead generation, another on customer loyalty and so on. Ensuring that the business (not just marketing) takes ownership of the entire customer experience--from a customer's perspective-- is vital to gauging success. One survey respondent says it this way, "It’s quite a challenge. Everyone has always measured themselves by progress against sales goals, and customer experience can seem like another initiative. We had to make it clear that it’s not another initiative. It’s part of what we do. We achieve our sales goals via solid customer experience."
Focus first on effectiveness, then on efficiency metrics. Effectiveness is answering the question: “Are we doing the right things?” While efficiency is answering: “Are we doing that thing well?” First measure if your omni-channel efforts are effective in driving the desired interactions, involvement, intimacy and influence for your brand. Then look at efficiency metrics by evaluating costs of customer acquisition methods, buying and placement of media content, digital asset use, etc.
The best customer experience measures are not only manifested in delighted customers but also in a cheery financial story. The more companies tie customer experience investments to business outcomes, the more organizations will fully appreciate and see value in customer experience investments.
To learn more, download the full report "Lessons from the Leading Edge of Customer Experience Management" and let me know what you think.