Most companies don’t know whether their customers have a problem and how to fix it. According to a study published by Vision Critical, the annual cost of unhappy customers can be as high $537 billion in the U.S. Leading companies such as Apple, Uber and USAA understood the impact of the Voice of Customer and integrated customer feedback into their DNA. These companies can quantify their customers’ perceptions better, understand the customer journey as well as bottlenecks in it and continuously improve experience every day. Yet many companies are just beginning on their journeys in understanding the Voice of the Customer. In this blog, we wanted to focus on the four key areas to address when measuring customer experience.
- Metric selection
When choosing which metric to use, one of the most asked questions is: which one is the right one? Many different online resources are defining each metric by explaining their different approach and limitations. Each metric could be used either separately or in combination with each other. According to Bruce Temkin, the Co-Founder of the Customer Experience Professionals Association and a former VP and Principal Analyst at Forrester, the key is how you are using the metric and that it should not be about the number, instead of putting in place a system of continuously learning.
The customer experience metrics can be explained in three different categories:
- Customer perception of the quality of experience: These metrics are concerned with how the customer perceives and feels about the experience. For example, waiting one day for the resolution of a complaint may be too long for one customer, while it may be quite reasonable for the other. Metrics such as customer satisfaction score (CSAT) followed by Net Promoter Score (NPS) questions are within these categories.
- Operational Metrics: The second type of experience measurement does not include direct input from customers; rather these metrics are more concerned with process efficiencies. Meaning, the actual interaction rather than what the customer thinks or feels. Metrics such as waiting time, complaint resolution time, solution on first call and number of visits are some examples within this category.
- Impact on business results: Metrics such as repurchase, churn rate, lifetime value (LTV) are included here. Their goal is to track the change in customer behavior that directly affects business goals, such as ROI or sales growth. According to Forrester’s research, experience-driven businesses grew revenue 1.4x faster and increased customer LTV 1.6x more than other companies in the past year.
No matter which category they belong to, there is no mistake in choosing these metrics. Each company can use different metrics according to the level of maturity in terms of business goals and customer experience management.
- Enabling actionability
- When measuring customer experience, it is vital to take improvement actions. For example, if a company is unable to understand why its Relational NPS score increased from 38 to 43 or decreased to 30 from 38, the metric is not very actionable but rather useful for reporting purposes. For this reason, many companies have recently started to build their customer experience programs on transaction-based NPS (T-NPS). Transaction-based NPS measures customer experience after each interaction, allowing companies to understand and identify the problem in real-time and take action for improvement in the relevant channel or process. Since transaction-based NPS can be measured down to the employee level, companies can see employee and touchpoint based NPS scores and even include it into performance scorecards if needed.
- Sharing Responsibility
- One of the most critical aspects of customer experience is sharing responsibility across the organization. Even today, often, either the customer experience team or customer service is only responsible for the customer experience programs. However, in most cases, customer services and/or call centers are only receiving complaints by customers that have been the result of other departments (such as limited or misinformation of campaign details, product malfunction, bad service, etc.). Companies can minimize such complaints by understanding the root cause of the complaint and owning the responsibility across the organization. Metrics such as complaint resolution rate, first call resolution rate become insufficient in terms of proactive customer satisfaction. Customer experiences should be managed and measured across the customer journey touchpoints across relevant departments.
- Building a Continuous Improvement Loop
- The ability to not only measure customer experience but to take the necessary improvement actions dynamically is known as the “continuous improvement loop.” The improvement loop is essentially a mechanism to let customers know that you have heard their feedback but also to bring the customer’s voice right inside the organization. It starts with follow-up calls & emails to customers to understand the root cause of the issue and taking action based on the type of the issue; it also involves experience sharing in the front line; managers and executives. It is crucial to continuously integrate customer feedback or the operational data to feed into the improvement loop.
Below are real-life examples and learnings from companies that have successfully established the voice of customer programs. If you would like to learn more about CX metric selection, continue to our Part 2 of the article here.
Improving Customer Experience
The number one home improvement retailer and part of Kingfisher Group in Europe increased its Net Promoter Score by 60% only in nine months and boosted its customer-centric culture.
Contextual Relevance to Drive Continuous Improvement in CX
How can companies leverage voice of the customer (VoC) to understand the context of the experience and improve customer journeys?
With increasing competition across industries, it is more important to understand what customers are thinking about the products and/or services provided by companies.
Voice of Customer program enables companies to systematically capture, track, and analyze customer feedback and act based on the collected insights.
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