When B2B and B2C Key Performance Metrics Flatline….

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This blog represents two true stories of what happens, or can happen, to an organization when its key relied-upon key, single number (CSAT, CES, NPS, etc.) performance metrics flatline and, for all intents and purposes, have little or no granular actionability.

The first, a B2C example, involves a major player in the cable television industry. Two years ago, they adopted, system-wide, one of the popular single number performance metrics. As they have moved from a customer acquisition focus to a more balanced approach between acquisition and retention, they’ve observed that, in endeavoring to leverage their key performance metric, there have been two major hurdles: a) the metric has flatlined across major customer segments, i.e. generated the same or similar results year over year, making interpretation and experience improvement a challenge, and b) the metric isn’t helping them improve the overall value proposition, especially in the area of price/value. This is of special concern in competing with providers who provide substantial content for a much lower price.

The company needs to understand the benefits, and overall perceived value, customers seek in the entertainment experience. This involves looking deeper into the emotional components of value delivery, as well as the functional. In short, the desired outcome is to de-emphasize price and de-commoditize the service, building value delivery advantage around the total experience. More important, it involves utilizing a metric or metrics reflecting real-world decision dynamics such as word of mouth and brand favorability which, along with more actionable forms of analysis, will help them to understand, and prioritze, the drivers of bonded, positive behavior.

The second, a B2B example, involves a major business services firm. In over a decade of performance measurement, only key driver (simple regression/correlation) analysis around a single number metric were reported. As basic customer experience processes were improved, the metric flatlined, offering no opportunity for further enhancement or competitive advantage. A new, more real world research protocol focusing on bonding behavior offered this company a means to understand the relationship between customer attitudes and behaviors, and business outcomes. Web-based survey invitations were sent to the company’s current customers. Close to 1,000 survey responses were received.

The study revealed that an overwhelming 75% of the company’s customers were communicating to others about the organization through offline and online channels. As a result, the new bonding behavior research framework helped classify customers into four behavioral segments, ranging from highly bonded/positive to disaffected/negative. Over 40% of the customers in the study emerged as highly bonded; and under 20% of the company’s customers were disaffected, a reflection of how positively the company was perceived. However, through analysis it was apparent that even mild negativity was driving customers to use competitive suppliers.

The next step in analysis and guidance to the company was to identify which tactics, diagnostics in the survey, could move the organization’s customers to a more bonded state. Applying a multivariate technique to the bonding level segments, it was learned that the company’s ability to anticipate a customer’s future needs truly distinguished the positive from the negative group. This element of performance was more than twice as high in terms of behavioral leverage as the next most important element, the customers’ perception of trust. This was essential to building bonded and positive customer behavior. It was particularly noteworthy that, although the company had measured “anticipates future needs” for some time, until bonding research and analysis was conducted, its critical importance as a positive and distinct decision-making driver had never been identified.

Passive performance has the potential to undermine bonding behavior. Maintaining a reputation as an expert in the industry and anticipating future needs are important values that must be performed well. Analysis identified these as the most critical steps to reduce the percentage of neutral or negative customers.

In order for the company to protect and build bonding levels, our counsel was that the organization must continue to find innovative ways to meet the emerging needs of its customers. This element of service performance was found to have almost four times the impact on driving customer bonding behavior when compared to follow-up regarding staff performance. Again, though the company had measured innovation and need anticipation for several years, its unique importance in driving bonding behavior had never been singled out.

As a core performance metric, customer bonding is very much alive and well in both B2B and B2C products and services. Scores of studies, in many verticals around the globe, have demonstrated that informal word-of-mouth and brand reputation are essential decision-making levers. If anything, due to the more critical nature of touch points, performance, brand perception, and relationships in B2B, bonding may well be more important in this arena than in the business-to-consumer world. Critically, in both B2B and B2C performance measurement, there is little evidence of flatlining.

Michael Lowenstein, PhD CMC
Michael Lowenstein, PhD CMC, specializes in customer and employee experience research/strategy consulting, and brand, customer, and employee commitment and advocacy behavior research, consulting, and training. He has authored seven stakeholder-centric strategy books and 400+ articles, white papers and blogs. In 2018, he was named to CustomerThink's Hall of Fame.

2 COMMENTS

  1. Word-of-mouth is free marketing and also very effective. Brands should make customer satisfaction as the most important metric.

  2. Agree that informal offline and online word-of-mouth, along with level of brand favorability, have a great bearing on customer decision-making. However, the principal challenge with customer satisfaction is that, as a metric or KPI, it is more reflective of tactical and transactional results than longitudinal loyalty behavior. Satisfaction, as a result, is a benign, passive, and reactive measure of performance. In addition, overall, satisfaction correlates very poorly to actual business results. An evaluation of year-to-year changes in CSAT levels, for every company in the ACSI, showed 0.00 correlation with changes in company sales over the same period.

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