In our last post, the CEO’s Epic False Sense of Security, we left our CEO with his business performing well and his metrics all reading positively. The security felt by the management team is borne out by the fact that the company has identified the metrics they care about and are diligent in adhering to the measurement process.
Yet the CEO is not seeing the improvement in his business that he anticipated, and this has caused him to question the management team’s approach.
Inspect What You Expect
Like many business leaders, our CEO implemented the most popular metrics, like Net Promoter Score and Customer Effort Score, to try and get insight into how his organization is delivering on its Customer Experience objectives. As the CEO evaluates the company’s performance, he decides to inspect the processes and key metrics the management team is currently using to analyze what the team is telling him.
The metrics are as follows:
Net Promoter Score (NPS)
The Net Promoter Score is an index measuring the willingness of customers to recommend a company’s products or services to others. It is used as a proxy for gauging the customer’s overall satisfaction with a company’s product or service and the customer’s loyalty to the brand.
NPS is sort of a survey that is taken after key moments of engagement with a brand. Our CEO learns that his company is capturing NPS feedback at the end of a purchase process and during the product return process. The NPS scores seen by our CEO are generally positive, suggesting his brand is well liked. After further investigation, he learns that scores are typically collected after customers utilize the company’s generous return policy.
Net Promoter Score Shortcomings
There are several problems with how the company is using NPS:
- NPS is not reflective of the entire customer base, as it only represents the sentiment of a small percentage of the firm’s customers.
- The NPS scores are more reflective of a returns process and NOT the company brand. The CEO realizes that continuing down this path will not build loyal customers; rather it will encourage transient customers that are loyal to a process. Overtime, this will erode the brand that the company invests so much in developing.
- NPS is available for use after the fact – as a set of reports and recommendations. It is helpful in gauging broad sentiment and where to tweak processes, but it does not help with a customer in the moment of truth.
Customer Effort Score (CES)
This is an approach that the CEO uses as a predictor of increased spending and of re-purchase by customers. The technique simply asks, “How much effort did the customer personally have to put forth to get a request handled by the company?”
Our CEO uses CES during the sales process with customer-facing associates and in his call center to determine how effective his business is in addressing customer needs. The data collected by the firm is also used as a proxy for customer happiness and brand affinity, and it is also used as an input to predicting future sales.
Customer Effort Score (CES) Shortcomings
Once again, the CEO realizes that what is being learned by this metric are different that the original assumption:
- Customers don’t want to answer the question about how much effort they had to put forth. The CEO sees that, more often than not, customers opt out of answering this question. As a result, the data they have is very skewed towards the few really happy customers or the few customers who are really mad with a given product or service.
- This measure is more indicative of a particular customer interaction – like a long hold time – rather than the overall brand experience. The CEO realizes the metric is interesting, but not likely “worth his effort.”
- Once again, this metric does not give the CEO ammunition to change the way customer interaction is currently happening, which leaves him wondering if there is a better way to improve Customer Experience.
Customer Satisfaction (CSAT)
CSAT measures how products and services supplied by a company meet or surpass customer expectation. Like many organizations, our CEO administers a CSAT survey several times annually across segments of his business to try and keep his thumb on the pulse of his customer base.
The findings from these surveys influence all aspects or our CEO’s business – from sales to product development to support. However, there is a growing trend that he has seen from this process in recent years:
Customer Satisfaction (CSAT) Shortcomings
Since CSAT surveys are customary for most businesses, customers are generally familiar with the process. Over the last two years our CEO has witnessed the following:
- Participation in surveys is trending down and in-survey abandonment is up
- Offers of discounts are more frequently required to drive the completion process
- The responses are becoming more watered down and less instructive to his business
Will the “loyal customer” please stand up?
The result of the processes above has left the CEO realizing that he really does not have a good read on customer loyalty and is uncertain what is driving advocacy and his brand’s relationships with his customers. As one last foray into his review, he decides that meeting with key customers to dive deeper into their experiences with the firm is an appropriate next step. To identify possible participants, he asks his team to create a report of key advocates and influencers to see how many overlap, participating in both the measurement programs and in the company’s social community programs.
The response was staggering; there was no way to find out! Each of the processes was so fragmented that there was no way to identify the advocates the CEO had hoped to find. Sure, there were email addresses for some of the surveys, but there was no way to determine who responded positively across all measurement processes.
The CEO realized that all of the investment made by the company in measurement had not provided him with the insight he had hoped for on whether his businesses could deliver an exceptional customer experience. More importantly, he learned that using any of this data as a proxy for or predictor of future performance was dangerous and could likely cost him his job.
Our CEO has adjusted his thinking and is now on a quest to find a way to measure customer experience and better correlate it to financial performance. In the end, visibility into this relationship is the only thing that will sustain his brand in the new customer-centric world – and save his job.
Up next in this series, how the CEO finds a way to index and measure the impact of Customer Satisfaction against his business’ financial performance.