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.

Wednesday, July 10, 2019

Omnichannel Customer Experience Is More About Your Organization Than About Your Technology

Photo by Thomas Q on Unsplash

There is a lot of focus today on omnichannel marketing and engagement, but brands would be well advised to focus first on omnichannel service. Getting omnichannel service right is not just a tech problem; far from it. In too many of today's customer interactions, organizational silos are evident, channel adoption and maturity is variable, brands' self-interest is apparent, and employee training and empowerment is weak. All of this contributes to a fractured customer experience that undermines trust, loyalty, satisfaction, and advocacy.

This was brought to mind as a result of a rough experience I had with a telecommunications provider. In the end, I am happy with the services and where we landed, but getting there--whew, what a frustrating and unpleasant ride.

I moved to a new home, and I used the telecom provider's website to purchase a set of services, including a set-top box, a channel and movie package, and internet services. The installation process was tortured, and it didn't need to be:
  • Day One: The installer comes to my new condo. She can't find a way to wire a set-top box adjacent to my TV, tells me I needed a rewiring specialist, and promises to arrange the appointment.
  • Day Two: The technician who is about to arrive calls and asks if I've been rewired. I tell her that is what she's supposed to do. She cannot--she's only an installer. Someone entered the wrong data, so I need to reschedule, yet again.
  • Day Three: I need to wait two days for a rewiring specialist, but in the interim, I reach out to the company on Twitter and ask if there is a streaming option that would avoid the time and hassles of rewiring. There is, but Twitter support cannot help. I need to call.
  • Still Day Three: I call the company and learn there's an easy streaming option using my provider's app on Roku. So, I cancel the rewiring appointment and replace it with yet another installer visit.
  • Day Four: While we've changed the appointment schedule, nothing has changed with the services I ordered, and I wonder if I have the right package. So, I reach out to Twitter support and ask. They cannot help and tell me I have to call.
  • Still Day Four: I call and speak to a person who confirms the package I ordered will not work with streaming. After a lengthy discussion, I settle on the right streaming package. I assume I'm done, but nope, the person to whom I'm speaking cannot make the changes. I need to talk to a sales rep, and so I'm transferred.
  • Still Day Four: Another long and torturous discussion ensues, and it seems to me the salesperson with whom I'm speaking did not review the lengthy and detailed notes captured by the first rep. After almost 55 minutes on the phone, I finally have the original order canceled and the new streaming services set.
  • Day Five: I'm frustrated and angry, but this is the turning point. The installer arrives, and installation goes fast. Roku and the provider's app work like a charm. Everything is right with the world.

All's well that ends well, or is it? To explore the adverse impact of this experience and why this company needs to focus not just on tech but on org structure, job descriptions, employee empowerment, and product complexity, please finish reading this post on my Gartner blog.

Monday, June 3, 2019

Life-or-Death Customer Experience

Photo by Leio McLaren (@leiomclaren) on Unsplash
The other day, I was talking to a peer about customer experience (CX), and she said, "It's not as if we're curing cancer here." We're not, but there are countless ways, both overt and imperceptible, that your brand's customer centricity and employees' commitment to customers can become matters of life or death. The decisions employees make, large and small, that impact the welfare of your customers are not theirs alone but are shaped by the priorities, goals, processes, and expectations set by your leaders.

What do your employees do when no one is looking? What decisions are made that can impact the safety of one or more customers? And how will customers be affected by and perceive those decisions? These are questions that will affect your brand's customer experience, its customer relationships, and the customer satisfaction, loyalty, and advocacy your brand deserves.

Issues of CX, risk, customer welfare, brand perception, and corporate culture are complex, as exemplified by the recent news reports about the Boeing 737, its cockpit alert systems, and two fatal air disasters. Boeing has acknowledged that some within the company knew in 2017 that its display system failed to meet the company's own angle of attack (AOA) alert requirements. Boeing engineers decided not to take any action, even though the missing alert could have notified pilots that a sensor was malfunctioning. It is, in fact, this same sensor that investigators are exploring as one possible contributor of two fatal crashes that resulted in 346 deaths. Boeing's statement notes that a Safety Review Board was convened to consider whether the absence of the AOA Disagree alert presented a safety issue, and the board "confirmed Boeing’s prior conclusion that it did not."

Investigations are underway, and time will tell to what extent the AOA sensors, the missing alert, and the aircraft's anti-stall software did or did not contribute to these fatal accidents, but people reading the news won't wait for official inquiries to end before asking themselves what Boeing engineers put first--the company or the customer? Many will conclude that fixing a broken alert seems the obvious customer-centric decision for a brand responsible for the wellbeing of ourselves, family and peers while traveling six miles above the ground at 500 miles per hour. In fact, a recent survey found that 53% of Americans said they would not want to fly on a Boeing 737 Max, even after the FAA clears the plane for service. None of this is lost on Boeing's leaders, and last week the company CEO apologized to the families and acknowledged, "We clearly fell short.”

This all acts as a potent reminder that what matters is not what your brand intends but what is perceived. It also reinforces that leadership and culture influence day-to-day CX and customer centricity in ways that affect the safety of your customers and the reputation of your brand.

There are many examples where corporations' bias toward revenue, profitability, and cost avoidance conflict with protecting the health and safety of customers. We now know that tobacco companies not only conspired to cover up the risks of smoking but intentionally made cigarettes more addictive. Oil companies knew of their products' tie to global warming for decades, even as they funded groups that cast doubt on climate science. And in the 1970s, Ford once infamously decided to avoid safety improvements to the Pinto after calculating the $11-per-car cost was more expensive than dealing with the claims from 180 burn deaths and 180 serious burn injuries.

To continue reading the blog post, including an example of a bold Salesforce action that brings reputation management, corporate values, and customer experience together, please visit my Gartner blog.