Does your organisation measure customer experience? Or customer value?
Many companies seeking to gain competitive advantage though Customer Experience (CX). Why? Because it drives profitability and shareholder value creation. It is said that by 2020 CX may be the No.1 differentiator of brands.
The reasons are well documented – repeat business, recommendation, the growing importance of consumer power, increases in consumer expectations driven by some of the new ‘digital unicorns’.
Digital transformation can improve CX and dramatically reduce costs while at the same time boosting satisfaction, allowing front-line staff to focus on what matters most and with remarkable cost-saving in some cases, dropping activities that don’t add value for customers and channel-shifting customers to self-service – which they sometimes prefer – a concept which was once alien. Two words – “mobile banking”.
McKinsey has identified some of the art and science of customer experience with it’s call to focus on customer journeys not touchpoints. As customers typically criss-cross several touchpoints (digital, retail and human) in their unique path to purchase almost anything from a car to a T-shirt, it’s not the sum of the experience across the touchpoints that matters, but the product. Get a zero for one touchpoint and the whole journey gets a zero !
Some UK retailers still haven’t worked this out. They’ve invested huge sums in a frictionless digital checkout for online grocery shopping, but they have an upturned (branded) carrier bag and a handwritten notice on their automatic checkout in the local convenience store on a Friday night. Conversely, did you hear the one about a major clothing retailer that invested millions over many years in their in-store experience and outstanding service reputation and then invested in a new online website experience requiring the re-registering of all customer accounts.
This is #BrandBandit behaviour. Destroying Customer Value… one customer interaction at a time.
And multiplied by all affected customers. At 3RM we hate to see Customer Value destroyed.
So what is Customer Value?
We still have a long way to go in measuring CX and even further to go in understanding customer value generated and ROI from CX programmes. Yes, it is about how an organisation delivers in addition to what it delivers as suggested by McKinsey. But it’s also about the communication it delivers, seamlessly interwoven with product consumption and repeat purchase by digital personalisation or highly trained staff. That is the brand experience. It’s also about reputation and TV ads driving brand perception and social, word of mouth, bloggers, vloggers and celebrities driving influencer perception.
3RM has developed a formative equation to tackle the concept. Similar to the argument on journeys versus touchpoints, Customer Value is a product of brand experience, brand perception and influencer perception. If just one is zero… it drags down the others.
Customer Experience Programme
As a CEO, CIO, CFO or CCO / Head of Customer you may already have a CX Programme underway or you be participating in one as a change manager. It may be extensive, expensive, cross-functional, omni-channel, culturally-mindful and agile.
Ask yourself some searching questions on the customer financials…. How are the multiple, interweaved initiatives and tasks of the CX Programme being prioritised? Is the overall programme being prioritised by potential and projected change (delta) in customer value? Are those changes being measured?
Years ago, organisations would take a week or so to get their previous monthly sales figures together and then review them. Now it seems unthinkable to do that daily. 3RM believes we will soon do the same with Customer Value.
Customer Value Maximisation
Has your total customer value has gone up, or down today?
That is, – the change in the future value of that customer, who interacted today what they will now spend with your brand(s) in the future, minus what it will cost you to deliver that for them – summed for all customers, across all brands and segments.
Do you know what your organisation did today to influence that – up or down? And what your organisation will do to influence and grow customer value tomorrow?
You’re doing great work, but it can’t all be simplified to changes in NPS or customer satisfaction scores across a range of criteria.
Customer Experience can’t be a metric in its own right, because what’s important is the value exchange. We know that some activities add nothing to customer experience and in some cases detract from it, but they sure cost a lot !
Customer Value could be the metric you’re seeking.