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Drive revenue with CX

Why Looking For The Perfect CX Metric Is Futile — And How To Try Anyway

Maxie Schmidt
Principal Analyst
May 30, 2018

What is the right top-line CX metric? I lead the CX measurement research at Forrester and get this question a lot. Usually clients ask whether Net Promoter Score (NPS)* is best, or whether customer satisfaction or effort make more sense, or whether there is something new and exciting coming up. So I thought I’d share how I usually answer this question.

One of the big CX misconceptions is that you can and should try to find the perfect top-line CX metric. That quest is impossible. Instead, you should select a top-line metric that is as good as possible. After all, CX isn’t about the metrics; it’s about how you use the CX metrics.

So how do you select a top-line CX metric that’s as good as possible? You want a metric that does three things well: Drive business success, rally employees around CX, and engage customers. That’s why, when looking for the “right” top-line metric, you should ask yourself three simple questions. Let’s take each question in turn and look at how to answer them.

  1. Drive business success: Is the metric a leading indicator for financial success?
    You’ll have to find the answer for your own firm, because there is not a lot of agreement in research about which top-line metric best predicts financial success. Instead, you’ll find a lot of — sometimes conflicting — studies. How? Write down the two to three most important business goals of your firm; chances are you know them from town hall meetings and internal communication. Now, identify which behaviors of your customers drive that success. For example, if revenue growth is your firm’s goal, the customer behaviors you are looking for are customers staying with you, buying more, and recommending your firm to potential customers. Now, go and find data that helps you measure how much your customers exhibit these behaviors — usually you can find this in your customer database and transactional information. Beware that you need to start collecting this data now so you can look for relationships when you have 12–18 months’ worth of data.Now you “just” need to measure your firm’s performance on different top-level CX metric candidate(s) and check whether that performance has any relationship to customer behaviors. Start with a simple comparison analysis: Did customers who gave you high scores on your top-level CX metric candidate(s) behave differently from customers who gave you low scores on the same metric? This comparison will give you direction and help you eliminate candidate metrics. Look especially for early red flags, such as the experience of one firm I spoke to: It found that promoters were usually customers who had received high discounts. In that case, managing toward NPS would reduce profitability, which isn’t a good long-term play.Repeat your analysis every year or so, just to see that you aren’t missing big changes. And even though you have a top-line metric, avoid relying on this metric exclusively as you make the case for CX. Instead, tie each CX initiative back to its direct financial impact. This will help you to not lose steam by year two or three of your CX program.
  2. Rally employees around CX: Does the metric energize (and enable) your employees to improve CX?
    A top-line metric that engages employees is simple to understand and creates a common language that employees can rally around. For example, some of the success of NPS is due to its pithy language around “promoters” and “detractors.” Unlike a good wine, however, a metric doesn’t get better with age. The longer a metric is used, the less it gets people out of their seats. For example, I used to get many questions about what’s next after customer satisfaction. Lately, I have been getting the same questions about NPS. Employees will feel energized by a top-line metric only if it taps into a topic that employees are passionate about, especially if it is about their sense of purpose for the work they do. For example, a CX professional we spoke with had a lot of conversations with employees internally and found a lot of energy around more simple communications. It made that a great top-line metric.Enabling employees to perform well is another characteristic of a good top-line metric. The broader the top-line metric — think CSAT or NPS — the more important it is to establish a system of promises or drivers to manage daily CX efforts. The more specific a metric, the easier it is for employees to develop some ideas on how to contribute to improving it. For example, if somebody asked you, “Our NPS is down; what can we do?” you’d find it hard to even imagine how to answer them. If somebody asked you, “We are making it hard to do business for our customers; what can we do?” you might have a few ideas. More specific metrics will also make it easier to create a more actionable driver analysis.But the more specific the metric, the bigger the risk of focusing so much on one element of CX at the expense of others. For example, if you use effort as a top-line metric, you don’t measure whether you are creating emotional connections with customers. And more specific metrics can age quicker and run out of runway when you achieve improvements and high scores.
  3. Engage customers: Does the metric-related survey question make your customers feel good or valued?
    Typical top-line CX metrics rely on a survey question — sometimes several. Answering that survey question is part of the customer experience. At a minimum, therefore, your survey question must make sense to customers. Customer satisfaction and effort clear that hurdle easily. NPS sometimes doesn’t. For example, CX professionals in financial services firms tell me that customers write in the open answer field after an NPS question, “I gave a low score because I just don’t talk about finances to my friends.” Or CX professionals in nonprofit organizations find that customers feel ashamed to give a low score on the “would you recommend?” question for an organization that does so much to cure cancer, educate children, etc. And there are other situations (limited choice, limited buying decision power, specialty industry) where the same issue applies. But the question should also make the customer feel good. The NPS question implicitly asks a customer for a favor: “Would you recommend us?” That can be an awkward way to start a survey.

When you have answered these three questions, you are well on the way to picking a good top-line CX metric.

But always remember: The real work starts as you plan how you’ll use the metric to drive customer centricity!

Happy CX-ing!

 

*Net Promoter and NPS are registered service marks, and Net Promoter Score is a service mark, of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

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