Monday, October 21, 2019

Is the Customer the Subject or the Object of Your Customer Experience Efforts?

I often see customer experience (CX) programs that connect point A directly to point B, equating the actions the brand does to the value it derives from those actions. A straightforward example of this is when a martech vendor claims, "We improve the brand's CX by enhancing offers and 'next best actions,' resulting in more clickthroughs and conversions." Or, you might hear an executive say, "We improved our CX by implementing self-service, which reduced call volume and headcount, thus saving us money."

Those are both excellent business outcomes, but is either a CX outcome? In neither of those examples do we know the impact on the customer. Are customers happier? Do they perceive more value? Have we changed their attitude toward the brand or themselves? Are they more likely to be loyal or tell others? We don't know because, in both of those examples, we skipped the customer. If you are doing CX, you cannot go from point A--what we do--to point B--what we get--without going through point C--the customer.

When we skip the customer and tie our "CX" projects only to the value the brand receives, we convert our customers into objects rather than the subjects of our efforts. In your life, objects fit into one of three broad categories: They are tools for you to exploit, barriers for you to overcome, or they are nothing. In those examples, we made the customer a tool (a wallet for us to pluck) and a barrier (an annoyance for us to eliminate). In neither case did we treat customers as people: Human beings with wants, needs, and expectations. Nor did we, in either example, measure (or even care about) the impact on the customer.

To make the customer the subject of what you do and not merely an object that is acted upon to get what your brand wants, go from point A to C to B. That means connecting what you do to how it changes customer perception, and then recognizing how those changes in perception drive behavioral shifts that deliver long-term brand value. That may sound complicated, but it's not. We just have to listen to customer perception and tie that to the loyalty behaviors that drive brand value, such as retention, sales growth, purchase frequency, the cost to serve or retain, and brand advocacy and WOM.



If you start with what you want (more sales or lower costs), develop a plan to enhance your brand's immediate financial outcomes, and measure only brand impact and not how or if customer perception has changed, you may deliver short-term ROI but cannot know if you've provided a better customer experience. More to the point, you cannot know if you've traded improved financial results today for powerful, lasting relationships that drive growth, margin, and profit tomorrow.

To change the customer from an object to the subject of your CX program, start with what customers want and need, develop a plan to lift customer satisfaction, and measure how you improve the customer and their relationship with your brand. Here's how (along with links to relevant research reports for Garter subscribers):

Monday, October 7, 2019

My Hotel Light Switch and the Three Easy Questions to Ask About Customer-Centric Innovation

I checked into a hotel late last night after a long evening of travel. When it came time to go to bed, I was unable to locate the switch for the lamp over my desk. I spent five minutes testing every switch, feeling the underside of the ledge over the desk, and searching behind curtains for hidden switchplates, all in vain. Finally, I made an awkward call to the front desk to ask how to turn off the lights.

The response from the front desk sounded unsurprised and well-practiced. Look for a white button on the desk she told me. The magic button that controls the desk lamp is this:
 


Maybe I should’ve realized this was a light switch. Perhaps not. What I do know is that I am far from alone. The front-desk clerk shared she gets several calls a night from frustrated guests asking the same question. “There are no instructions,” she added, demonstrating a firmer grasp of usability concepts than this hotel chain’s innovation team. (How many guests, I wonder, go to bed with the lights on because they’re too embarrassed to ask.)

This left me pondering why so many brands get innovation so wildly wrong. Just 3% of users who enable Alexa or Google voice apps are active users a mere two weeks later, and 75% of downloaded mobile apps are opened only once. When your brand makes investments into innovative customer experiences, is that the kind of adoption and success you seek?

The problem with too many innovation efforts is that brands focus on the tech, not the customer. By failing to be customer-centric in their thinking, brands end up with “solutions” that do nothing important for customers, leading to depressed usage and disappointing KPIs. It may be fine to pilot new tech simply to gain knowledge, but wouldn’t it be better to achieve that same knowledge while simultaneously creating something customers want?

Customer-centric innovation requires answers to three fundamental questions before committing to development. To learn the questions and explore why this hotel's innovative button fails the customer-centric test, please read the entire blog post on Gartner.com.

Sunday, August 4, 2019

Measuring Loyalty: Attitude versus Behavior

Photo by Cory Bouthillette on Unsplash
Customer experience (CX) leaders are called upon to lift customer loyalty, which, of course, means they have to measure loyalty. There are two broad ways to measure customer loyalty: Attitudinal measures and behavioral measures. Too often, CX leaders lean on one or the other, but delivering reliable CX results requires both.

Attitudinal measures are used to understand how customers feel about your brand. You collect attitudinal data via Voice of the Customer (VoC) surveys that ask about the customer’s satisfaction, likelihood to repurchase, or willingness to recommend.

Behavioral measures are used to measure if customers are acting on their feelings of loyalty. You measure behavioral loyalty using transactional and sales data. Do my customers continue to purchase? What is their purchase frequency or average order amount? At what rate to I retain or churn existing customers?

Many organizations believe that behavioral measures are most important. After all, what good are customers who feel loyal if they don’t act on that feeling? In the end, you take behavioral measures of loyalty to the bank--it is nice to get a high Net Promoter Score, but it's customers' behaviors that provide the dollars that drive business results.

But while behavioral measures are vital, there is considerable risk in relying on these transactional measures in the absence of attitudinal data. Repeat purchases may look like loyalty, but they can be driven by factors that are not related to customers' feelings of brand loyalty. People may repeatedly buy out of habit, because of limited competitive options, for convenience, or because your brand offers the lowest price. A brand focused only on behavioral loyalty metrics may gain false confidence that all is well because customers are repurchasing, only to learn how little loyalty the brand earns when it tries to raise prices or a better, more-convenient or lower-price competitor enters the market. Behavioral measures tell you what customers are spending, not what they feel toward the brand.

The taxi industry offers a recent and compelling example of the risks of relying only on behavioral measures of loyalty. For decades, taxi companies owned the on-demand transportation market. Protected by regulation, they were the only option for travelers and urban residents in need of a quick ride. No one liked taxis, but they used them, so the industry’s behavioral loyalty looked great—until Uber and Lyft entered the marketplace. Customers who felt no loyalty to taxis rapidly shifted to the new entrants. Had taxi companies collected attitudinal measures of loyalty and addressed the reasons for customer dissatisfaction, the industry might have enjoyed stronger customer relationships and mounted a more effective defense against the upstart network transportation companies.

Another problem with leaning on behavioral measures is that this data is a lagging indicator. Using purchase data to measure loyalty, you can only measure a lost customer after they’ve left. As a result, behavioral loyalty data can let you know if your retention rate is declining, but it isn’t predictive of what you can expect in the future, which customers may be next, and why they are abandoning your brand.

Behavioral data may be closest to the dollars and cents of business, but attitudinal loyalty data (quantitative survey data appended with qualitative research) is even more powerful for understanding customer perception, feelings of loyalty and emotional bonds, and what adverse factors can be addressed today to reduce customer churn in the future. Smart brands use their VoC survey results to identify which customers are most at risk and target them for unique retention and recovery efforts, helping to improve loyalty and reduce turnover.

When measuring loyalty, smart CX leaders don’t lean on one kind of measure over another. By collecting and analyzing both behavioral and attitudinal loyalty, you are best prepared to identify likely causes of customer churn while also measuring the financial costs and benefits of delivering better customer experience.