- … using small data effectively can be the key to improving your experience
The need to build bridges between the world of data and the real world of customer experience is critical to any customer-focused agenda. There is a delicate balance between what needs to be done behind the scenes and what the customer expects. Realistically, there is no shortage of data from an organisational perspective when it comes to engaging with customers. In today’s world of data, we are blessed with a long list of experts ranging from data scientists, analysts, data miners, and ‘big data’ actors to name a few.
Consequently, data volumes have grown to monumental proportions and it is not surprising some joke that data measured in terabytes can best be described as ‘terror-bytes’. We are so overwhelmed with data that what seems like a great opportunity to enhance business performance can also be a potential letdown. One of the greatest contributors to this data ‘chaos’ is – you know what – customer data!
To begin with, raw data – however large – is of minimal value if you can’t make any sense of it. Transitioning from data to information is where the real value is. Pennington (2016) raised the question poignantly when he stated: “Remember the ultimate question you are answering is not how much data you have, but who has it and how it is used”. How we find the critical small data which lie at the heart of customer experience – that recognises and picks out the small but personal data variations between individual customers and their preferences – is what makes the difference.
When it comes to measuring customer experience, some very common metrics get mentioned easily. These are Net promoter Score, Customer Satisfaction, Customer Effort Score, Customer Lifetime Value and Customer Churn Rate.
Net Promoter Score
Net Promoter Scores help you measure the customers’ readiness to refer your company to others. It highlights the level of satisfaction derived by your customers while using your products or services – on a scale between 0 to 10 whereon ten is regarded as “very likely”, and 0 is “not at all”. Depending on the score returned by the customer, 0 to 6 are termed as detractors, 7 to 8 are termed passive and 9 to 10 are promoters.
The goal here is achieved by asking open-ended survey questions to get further insights from your customers. These insights can then be used to enhance their satisfaction. The NPS is calculated by subtracting the total number of detractors from the promoters. Customers are asked how likely they are to recommend your company to others on a scale of 1 to 10.
Customer Satisfaction (CSAT)
This is used to learn the percentage of customers who are pleased with your services and those who are not. This insight enables you to plan for their next interaction with your brand. When used effectively, it helps reduce customer churn rate. The insights from its use provide you with the information you need in terms of where you can exceed expectations of the customer. By gathering information from multiple interactions, you are well placed to deliver timely services.
The approach here is to divide the total of positive responses received by the total number of responses received and then multiply by 100. This gives you a CSAT score in percentages. 100% is considered a great score while 0% is the least score. It’s a quick survey that enables you to ask questions across multiple experiences during a customer’s journey to get a clear view of how the customer feels at your various touchpoints. You quickly identify potential bottlenecks to improve the customer experience.
Customer Effort Score
How often have you reflected on the ease with which customers interact with your business? Customers Effort measures this using a metric rating ranging from “very difficult” to “very easy” concerning rating the ease with which customers can search for products or complete transactions from your online store. A typical example here is the number of departments a customer is transferred to while resolving a complaint.
If a customer is moved to a different department multiple times, chances are they will score you low on your CES. Note that when you strive to improve customer experience your customers are more likely to purchase your products again. Therefore, your CES will help you understand whether the customer experience you provide makes life easier for them. By analysing the data from your CES survey, you can work toward making your customers enjoy interactions with your brand.
Customer Lifetime Value
This is measured with the cost of customer acquisition (CAC). Companies can measure how long it takes to recoup the investment required to earn a new customer. This is well-suited for your sales and marketing campaign, as you aim to retain your customers for as long as possible. If the goal of your business is to acquire and retain highly valuable customers, then you must introduce this metric to enable your team to learn how to adapt and implement it.
There are good reasons why this metric is helpful. First, it identifies the specific customers that contribute the most revenue to your business; thus allowing you to serve them better to retain them. Second, it boosts customer loyalty and retention as you respond by giving them excellent customer support. Third, it helps you target your ideal customers as you know how much they spend. Your customer acquisition strategy is targetted to their specific needs.
Finally, it reduces customer acquisition costs. According to a recent article from The European Business Review, the acquisition is typically five times more expensive than retention. Furthermore, a study conducted by Bain & Company – a Global Management Consulting Firm – found that a 5% increase in retention rate can lead to a rise in profit of between 25% and 95%. Therefore, a business that identifies and nurtures its most valuable customers is guaranteed higher margins and reduced customer acquisition costs.
Customer churn rate
This metric calculates how frequently customers cancel their subscriptions or opt-out of purchasing products from your brand. I found out just recently that my car insurance wasn’t necessarily the best deal. I may just switch if an insurer offers me a better deal. `I experienced this a few times in the UK, where the utilities are quick to offer you deals when the year is coming to an end – so I switched a few times, only to discover to my chagrin that nothing much changed …sic.
The fact is the lower the number, the better it is for the business – since it’s more expensive to acquire new customers than maintain existing ones. Furthermore, the lower the churn rate the more loyal your customers will be. It is calculated by subtracting the percentage of lost customers at end of the month with the percentage of lost customers beginning of the month and then dividing it by the percentage of customers at the beginning of the month. Keeping an eye on the churn rate metrics with other operational data helps you identify churn patterns, which can help you assess where your customer experience issues lie.
Should we use all the CX metrics?
Please don’t be carried away by the plethora of metrics out there, as the saying goes ‘there is a method to the madness.’ In reality, you don’t need to apply all of them. You must assess their relevance to your business in employing them as CX metrics. What experts advise is that most times you choose a single customer experience metric and one related behavioral metric, and this works best for most companies.
More importantly, apply what best suits your needs. Ease of use is critical. increasing the complexity hardly brings you the right results. In contrast, a simple survey targetting one aspect of your business and tracking it with one or two metrics can do wonders. Note that not all customer experience metrics are created equal. To get the maximum leverage for your business, you need to find the right ones and apply the most up-to-date processes and technology.
There are many others – such as Average Response Time which measures the average amount of time a requester must wait before a request for a global resource can be granted; and Average resolution Time which calculates the total duration of all resolved conversations and divides the number by number of customer conversations that took place in a selected period. These and many more are available to help us navigate our customers’ journeys, delivering unique experiences to them along the journey.
Experts opine that many CX metrics are internally focused and only important to the organisation. However, these are very likely unimportant to the customer. According to them, what’s important to the customer is measured as the Customer Performance Indicator Index (CPI). A customer-centric organisation can begin by focusing on what customers value and measuring them in their terms. A good approach is to link the external CPIs with your internal KPIs to get the balance right. This is the outside-in approach, and it has tremendous benefits.
If a CX programme is to be a real differentiator for your business, you must use metrics that matter to both the organisation and customers. The key is to capture and compare inside-out with an outside-in perspective with your metrics data. This way, the strategic importance of Customer Experience can be fulfilled. The improvements come by taking action on insights, not the metrics: this should be the ultimate objective of any Voice of the Customer (VoC) function.
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The Writer is a Management Consultant (Change and Customer Experience). He can be reached on 059 175 7205, [email protected], https://www.linkedin.com/Kodwo Manuel |
