Annual CX Goals: Stop Selecting “Good, Respectable Numbers”

I met with the CX task force for a global business machine company to start the action planning process after completion of a process assessment and a multi-country customer satisfaction survey. The stated output of the meeting was a goal for improvement and an action plan to achieve it. When the discussion started, one of the executives immediately championed a specific goal: ” I think we should have a 3% increase in satisfaction and loyalty.” I could not restrain myself and retorted, “Great, why 3%?” He replied, “It seems like a respectable, yet doable target.”

The Problem: A Top-Down Approach

At the moment, the overall approach in most companies is a deductive approach going from the general to the specific. This often leads to the creation of an overall goal and then developing several sub-actions, which hopefully will result in achieving the desired overall goal. 

Once the goal is set, people start looking for “doable” actions that will result in the desired output. The difficulty lies in the fact that once there is an overall goal, the action plan is constructed to get there – but in most cases, there is only a general connection between the goal and the actions taken.

Do we pick the most prevalent, the easiest to fix, or the squeaky wheel?

When deciding which issues to address to reach the goal, most companies choose the most prevalent problems or those that have been escalated to management. The team feels that these issues will automatically provide the desired outcome.

Why doesn’t this approach work?

• The most prevalent points of pain (POP) may not be doing much damage, such as a five-minute delay at rental car checkout. On the other hand, a similar delay on check-in at the airport can create a strong emotional reaction if the customer is late for a flight and their emotions are elevated..
• The most prevalent issues are often not the most important – one must examine prevalence, damage, and ability to quickly rectify the issue when it occurs
• Issues escalated to executives may be neither prevalent nor severe for most customers. However, this has to be quantified and investigated. We have found that many squeaky wheels deserve little or no grease.

The following chart, from a global communications company, illustrates several of the above issues:

• The most prevalent problem (meeting promised delivery dates) does much less damage, on a per-problem basis, than the failed commitments or unreturned phone calls from sales reps.
• On the other hand, the second more prevalent problem — product availability within the desired time frame — is prevalent but does no damage. While customers would like the product to always be available, they are willing to order in advance if there is a reliable timeframe, so a massive investment in more inventory would not have any real payoff.
• Getting sales reps to return phone calls requires no capital expenditures, just management attention. So, this second most damaging problem (putting 2.4% of customers at risk) can be fixed with little investment beyond management time.
• Some of the most damaging issues are often not complained about or even reported on surveys unless the customer is prompted. Issues about misleading marketing or sales rep tactics or competence do twice the damage of many others but are seldom reported due to fear of retribution, reticence to get staff in trouble, because it’s industry practice (everyone does it), or belief that the action was intentional

The overall point is that there must be a quantification of the probable movement in satisfaction among the customer base for each of a set of potential actions.

With no quantification of the sub-goals and process measures to track progress, at the end of the year, the company measures the overall metric and either has met it or not, but often there is no way to explain what worked and what didn’t.

A Better, More Rational Approach

The deductive approach starts with identifying issues that are causing damage to loyalty as well as opportunities to create systemic intentional delight. The opportunities are first inventoried based on three dimensions:

• volume of customer affected
• severity of impact
• overall revenue damage of POP and/or delight opportunity

All three must be considered before selecting issues to attack. Candidate issues are evaluated for difficulty and cost to address (capital expense, policy or process change) as well as ease of tracking progress with an available process metric.

For example, in a global delivery company, we found that the customer had to call multiple times to obtain invoice adjustments, and some of the requests for change seemed to fall through the cracks during investigations. We determined that if the original staff person receiving the request was both empowered to make the decision and provided with the necessary guidance (what I call a flexible solution space) and information to evaluate the request, the action was immediate and no cases “fell through the cracks” or needed to be escalated. The streamlined process was a win-win-win for the customer, company, and employee. Further, the process metrics of number of calls per adjustment and time spent investigating issues were both credible metrics to indicate improvement. The ultimate satisfaction survey showed that the adjustment POP (point of pain) had almost completely disappeared.

The same approach can be applied to creating delight with education or connection, training the front line and then allowing them to choose when to do the education/connection.

Example Scenario for Target Setting: Identifying the POP and Delight Opportunities

Assume 200,000 total customers and the following information on points of pain.

The Satisfaction Index for this company will be 85% if the above 8 issues describe most of the causes of dissatisfaction. (The NPS score calculation could be a bit more complex.)

We generally find that about half of customers who say they are not loyal will actually leave. Therefore, if this company has a 15% attrition rate, half of all attrition is due to problems. The other half is due to “the grass is greener elsewhere,” or there is no longer a need for the product.

Key point: NPS or satisfaction or loyalty indices do not translate directly into the complete picture of lost sales or attrition. Normally, there are two parts: dissatisfaction and a shift in the customer’s needs and preferences. This target-setting activity is aimed at impacting the overall NPS/satisfaction index and not overall attrition, though that translation can be done.

Delight Actions That Could Increase Loyalty (and Word of Mouth Referrals)

The basic questions the CX team must answer are:

• Which POP can we attack, and how much movement in the satisfaction or NPS metric can we achieve?
• For delighters, what are policy or process actions we can take? For example, where can we improve onboarding and education, check-in calls, or emails asking “how it’s going?”
• If we are successful, how many customers will we affect?
• How much improvement in the overall satisfaction metric will fixing the POP or creating delight for those customers produce?
• What is the sum of these incremental improvements, and therefore the resulting satisfaction metric (assuming no other major factors impact the marketplace)?

Estimating the Impact of the Four CX initiatives

The following chart assumes we attack POP B, D, and F with a moderate impact on the first two and elimination of the third item, like the invoice adjustment in the above example. We then also implement aggressive, proactive, multichannel education for 20,000 new customers at a moderate expense.

We would expect, if the above four actions are performed as expected, to see a 5.5% increase in loyalty and satisfaction, resulting in a Market At Risk of about 10% of customers rather than the previous 15%.

Action Planning

Action planning consists of selecting the initiatives, estimating their individual and joint impact, and then outlining the action plan. This includes assigning accountability and defining the process and outcome metrics. This protocol must be formal and, for cross-functional issues, include all major functional areas of the company.

Once the key priorities have been established by executive management, a cross-functional team uses the priorities to brainstorm specific actions that will optimize the impact on the customer. This brainstorming will start with a large number of quickly developed ideas (ideally from multiple cross-functional groups) and then distill the many ideas down to three to five priorities across the company. (The CEO of Toyota Motor Sales USA once noted that no more than five initiatives should be selected because more would greatly diffuse management’s attention.)

For the corporate-level action planning to be successful, a single owner of the overall plan must be identified. Rossman, in The Amazon Way, argues that unless one person is responsible, no one is responsible.² It is up to the responsible objective owner to get the other function managers on board and cooperating. For each initiative, an action plan, schedule, resource requirement statement, and process metrics should be articulated. As noted above, an additional aspect that can be very helpful is to conservatively estimate the number of problems that will be prevented if the action plan is implemented, and then to be sure to track the problems using internal operating systems, reporting process metrics – complaints will often be only 10% of the total number of problems encountered.

Progress reports should be submitted quarterly. For example, in the business services company, invoice adjustments were an expensive dissatisfier. The company established the parameter of invoice adjustment calls and developed an estimate of the cost per call. When calls declined, the finance department immediately gave CE credit for cost savings, even before the survey showed happier, more loyal customers. Ideally, all actions can be completed within six months.

Impact Tracking

Accountability is critical to positive CE impact — what gets measured gets attention. Therefore, process measurement should be in place to give monthly feedback on the impact of improvements (ideally weekly, which is what I’ve seen in business services companies and restaurant chains). Additionally, a periodic, focused, customer satisfaction survey asking only about the POP being addressed can be conducted quarterly.

When the Target is Met, Celebrate and Move On

Celebration should be consciously directed at three separate audiences: the action team, all other company employees, and customers. The fastest way to win support is to give lavish kudos to the action teams and their leaders. This creates the incentive for other employees to volunteer for the next set of teams. Jeanne Bliss calls this the Tom Sawyer approach to getting others to do the heavy lifting.¹ This same approach of sharing credit is also a standard practice of effective internal CX consultants. Make your client look good – and the CE leader is primarily an internal consultant. 

Summary

Target setting should not be an arbitrary “sounds like a good, respectable number”. Identify each component of dissatisfaction or opportunity for added delight and conservatively quantify the probable impact of your actions. Add up the impact, and the result should be your proposed target. This is very simple but not always easy.

Notes

1. Bliss, Jeanne, Chief Customer Officer, Jossey-Bass, San Francisco, 2006.

2. Rossman, John, The Amazon Way, Clyde Hill Publishing, 2016