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The Forester 2018 US Customer Experience (CX) index highlights organisations globally are struggling to drive improvements in CX. The story is the same in Australia according to their local research , describing CX efforts as “decorating” with a focus on low hanging fruit, rather than “renovating” by transforming and aligning their front, middle and back of house around the customer to deliver improved customer value.
Why is this the case?
There are many influential factors driving this state of play, and they vary based on the organisation’s maturity, strategy and readiness to become customer-centric.
The common denominator that we see time and time again is the lack of alignment and integration of customer experience with the organisation’s vision, strategy and performance management system.
So is there a magic formula for best practice CX measurement & strategic alignment?
We have identified 6 critical things you should do before establishing a customer performance management system.
1) Alignment of CX with your strategy & organisational performance framework
If you are serious about becoming customer-centric, your customers must be placed at the centre of your organisation. This requires embedding customers into your organisation’s vision and strategy.
This also means customer experience should be integrated into your organisation’s performance management scorecard and process, with the same amount of focus as your financials. This is vital, as we all know ‘what gets measured, gets managed’.
This integration will also ensure Executive focus and adequate investments are prioritised on improving the customer experience and designing products and services that meet customer expectations.
In our experience developing a customer-centric Balanced Scorecard framework is the most effective and comprehensive way to achieve this.
There are different interpretations and implementations of Balanced Scorecards. However, if designed and implemented properly as a performance management system opposed to a KPI dashboard, a Balanced Scorecard can truly align and improve customer focus across the organisation.
For example, it translates and connects your organisation’s vision, strategy, operational plans and individuals’ performance across your organisation’s four key strategic focus areas. This means that everybody in the organisation is collectively accountable for achieving performance improvement across your Financials, Customers, Internal Processes and People.
2) Develop clear CX objectives
We see so many companies jumping into developing operational KPIs for customer experience, like ‘wait times’ and ‘Net Promoter Score’ (NPS), without having conducted a top-down review to understand what is driving performance.
Others embark on developing objectives without having a clear understanding of their customer segments, their needs, motivations, behaviours and customer journeys.
Having these customer knowledge gaps can result in the wrong investments being made in unprofitable customer segments or components of the customer journey that have a minimal impact on the customer’s level of satisfaction and loyalty.
Prior to crafting your CX objectives, it’s important to take a step back to understand what customer performance means to your business and your customer preferences, and what you need to measure to achieve these performance outcomes.
3) Transition from monitoring metrics towards performance management
We find many organisations monitor one or two customer metrics, such as NPS or Customer Satisfaction (CSAT), for transactional performance reporting opposed to strategic performance management purposes.
Whilst transactional reporting of measures is important to report company performance and understand directional performance, it can be challenging to understand root causes and obtain a complete picture of what is driving performance. This is because it focuses on the metric itself, and the ‘what’ rather than the ‘why’.
Developing an effective performance management approach for CX requires a comprehensive process to monitor, analyse and continuously improve performance. This includes developing a methodology for the metrics that transcends the simple mathematical equation towards having an understanding of the primary and secondary drivers and externalities influencing performance, and having access to a comprehensive range of data and insights.
For example, Customer Satisfaction might give you a customer’s self-report rating of how satisfied they are with, or their propensity to purchase, your organisation’s products and services. But it does not provide you with the actual outcomes of customer behaviour.
4) Integrated strategic view and review of performance
Developing a top-down view of CX will identify and translate how your top-level metrics cascade and translate across each level of the organisation. For example, you may have CSAT as a top-line metric; the next level down might be the service component of CSAT for your Contact Centre. Each team may also have a CSAT measure of service and then operational KPIs like wait-times and first-call resolution. Developing a top-down view will help ensure you have identified the correct measures and these measures support each other, i.e. they are mutually supportive rather than mutually exclusive.
In the same way, having an integrated Balanced Scorecard view of performance across your People, Financials, Customers and Internal Processes will enable you to understand how each performance area interrelates.
For example, say wait times are important to your customers and hiring additional resources is the only way to improve this metric. But your finance team is not measured against this metric; rather they are measured against optimising costs via reducing head count. In this instance, the finance measure would adversely impact the achievement of ‘wait times’ and therefore be mutually exclusive.
5) Collective accountability for CX performance
Customer experience metrics, like NPS and CSAT, often feature in organisational and individual performance scorecards like disparate metrics that do not link to other performance areas and are often evaluated in a subjective way. For example, they subjectively evaluate how individuals and business units have demonstrated a commitment to the customer.
Developing integrated metrics for customer experience across the business and making the Executive team accountable through performance targets is vital to achieve collective accountability in delivering an integrated and consistent customer experience.
We often get asked how back office teams, like finance, procurement and product, contribute and can be measured against improving the customer experience. This is achievable if you review each area of the business to understand how they directly or indirectly contribute to delivering services to your customers.
For example, procurement manages all suppliers for an organisation and some of these deliver services to customers on behalf of the organisation. This means procurement would need to ensure the customer experience is assessed as part of their supplier selection and performance management processes and scorecards.
6) Prioritise measurement effectiveness over ease of measurement implementation
We find organisations often choose to implement measures that are easier to implement or are already in existence, over those that more effectively measure how to improve customer experience performance.
For example, organisations opt to implement customer advocacy metrics, which are often simple to implement and measure but have many flaws. This is because they often focus on the measure itself rather than addressing the root causes. Also, most only measure transactional customer touch points as opposed to customer journeys, making it challenging to shift the customer’s overall experience with an organisation.
To sum up, the most vital way to measure and improve your customer experience and performance is to integrate the customer into your organisational strategy, performance scorecard and employee KPIs. This requires evolving from a transactional and siloed measurement approach towards developing an integrated performance management system to drive continuous improvement and align strategic efforts.
Forrester, 2018 US Customer Experience Index
Cited by CMO magazine, November 2018, Forrester Predictions Event 2019 Event, Sydney