Customer experience metrics can seem paralyzing – but it’s not as daunting as you think.
Measuring customer experience (CX) is not a new idea. For decades, executives have been searching for answers to question such as “Where do I spend to improve the customer experience? What is the ROI”? There’s a continual hope that the industry is on the verge of cracking the code, finding the silver bullet or writing the perfect algorithm, telling companies where and how much to invest to spark meaningful growth.
But we know now that consumers control our brands. And what they do with that control depends on the experience they have. We can’t wait for the analytic utopia. While we may get there someday (and, like everyone else…we’re working on it!), we believe there are plenty of good techniques already available to help identify and measure the most critical parts of the customer journey. A lot can be done with existing data to quantify the impact of customer experience investments.
In fact, more effective than any magic bullet, we’re seeing that companies committed to improving the best measures for their industry are able to drive better alignment and maximize connections to their brand.
To simplify things, we believe in focusing on two very important metrics: Sales and customer satisfaction. Rising sales mean customers value a brand. And customer satisfaction has a major impact on sales — after all, it’s the happy customers that keep buying.
Combining analytics and observation
Sales and satisfaction are influenced by many factors, and it’s important to know which matter most. Much of what happens in the purchase funnel isn’t mysterious. For example, we’ve known for years that communications and advertising drive brand awareness. And marketers are well aware that messaging shapes consideration. But a great deal happens between consideration and the time of the actual purchase, and we believe that’s where brands experience plays a major role.
It’s a pragmatic approach. For a retail or consumer goods company, we start with a business analysis using basic numbers such as same-store sales growth, sales per square foot, average basket size and product mix. From there, we move to what we call “the what”—a driver regression analysis that helps us determine the factors in the customer experience that seem to have the most impact on a stated behavior, such as purchase or engagement.
Next, we study “the why,” using observational techniques that allow us to understand why customers behave as they do, even when they can’t articulate it. How do they interact with associates? Where do they spend their time in stores? How do they use samples? Respond to promotions?
When we marry those two sets of insights to a business analysis, a much clearer picture emerges. We are able to quantify which touchpoints or experiences drive people at different levels of the funnel and are able to create a clear economic link, helping clients understand the value of a percentage increase at each level.
Defending against data paralysis
But without breaking the big questions down into these smaller, more focused and pragmatic pieces, many companies become partially paralyzed. Brand leaders feel they don’t have the data they need—or that they don’t fully have their arms around the complexity of the data they have—so they aren’t doing much at all. Or worse, they obsess about metrics that lead them in the wrong direction.
Take the troubled casual dining category that includes the likes of Applebee’s, Olive Garden, Outback Steakhouse and Chili’s, which have been losing ground to the newer fast casual category that includes restaurants such as Chipotle, Panera and Baja Fresh.
Many continue to drill down on their favorite metric: How quickly can they get customers seated, served and out the door? It’s a measure that is meaningless in the face of the larger questions. If you’re a casual-dining restaurant, and you serve a $17 meal in 47 minutes, you won’t change the game by serving it for $15 in 42 minutes. Customers are choosing an entirely different experience. The customer journey is broken, and the solution won’t come from measuring speed of service.
Some brands, though — especially those where the customer experience has long been built into its employees’ DNA — are inherently good at knowing what to measure. Take luxury hotel brands and their business guests. Ask frequent business travelers what matters, and they’ll say its location or price. But dig a little deeper into the fragile psyche of these road warriors: They are continually buffeted by uncaring airline staff, TSA employees and cab drivers. They may not admit (or perhaps aren’t even aware) that they want to feel pampered and special; yet research has shown that treating them makes all the difference, which explains the success of brands like Fairmont and the Four Seasons.
So no, there’s no magic bullet. There will be blank spaces along the way, either because data is incomplete or because consumers still can’t quite articulate what they want. But even though parts of the journey continue to be amorphous, it’s time to start measuring. It’s not about being perfect, it’s about getting smarter on decision making. When companies find the drivers that matter, they can focus on improving the parts of the experience that matter. Those metrics, in fact, will be the levers of its growth engine, both today and into the future.