Last week I enjoyed attending Medallia’s Best Practices Forum, the annual customer conference for the provider of Customer Feedback Management Solutions.
Medallia is an interesting story, having climbed into a leadership position in the EFM industry in the past few years. Now the company is approaching 300 employees, has opened offices in London and Buenos Aries, and launched an Institute for CX certification. A recent $35 million investment from Sequoia Capital will be used to build out its platform and expand its market presence.
Medallia is probably best known for its work in the hospitality industry, but in recent years it has scored some big wins in retail, high tech and other industries. Some of my favorite brands can be counted as Medallia customers, including Four Seasons, Nordstrom, O2, … and a certain famous tech company that would prefer not to be mentioned.
CEO Borge Hald leads an impressive executive team including Michelle de Haaff (VP of Marketing, formerly from Attensity), John Abraham (GM of Medallia Institute, formerly with Satmetrix) and Juan Pablo Dellarroquelle (VP Engineering). The company has grown and improved its product, but the strategy remains very much consistent with what Borge told me a few years ago in an interview. In a word: Action!
Anyway, from the conference I picked up three insights I wanted to share.
- Customer-centricity starts from the top
This point was hammered home in a rousing keynote by Jim Donald, CEO of Extended Stay America, a hotel chain that was basically circling the drain before he was brought in to turn things around. In 2012, J.D. Power rated ESA one of the worst in the industry.
OK, so you can probably guess that things got better under Donald’s leadership. How? Well, Donald started by appointing himself “Chief Guest Service Representative” and going out of his way to visit the hotel properties and connect with employees. He also had to work creatively with suppliers and investors to solve severe financial issues. Donald’s strategy for success:
- “Have a fish story” — leaders must tell a memorable story, compelling the organization to change.
- “Never be bigger than the front line” — flip the org chart and put the front line people on top
- “Go where you’ve never been before” — Donald traveled 100K miles in first 100 days to meet with employees
- “Communicate to everyone” — Donald says he puts out a company-wide voicemail every day
- “Encourage risk taking” — employees must know they have the freedom to fail
- Action drives improvements in customer loyalty
Borge shared some interesting statistics to kick off the event, as part of its customer benchmarking study. Multi-channel feedback is growing, with 65% of customers now collecting feedback from non-survey sources, such as email, mobile, social and mobile. Mobile survey adoption is highest in retail (24%) and hospitality (18%).
Collecting feedback is one thing. Doing something is another. Medallia’s benchmark study found that:
- 82% of customer recover customers when they have “detractor alerts,” vs. just 18% when they don’t
- Higher Medallia usage (days used per month) is correlated with higher NPS
- Customers that communicate insights across the organization have NPS of 53, vs. 41 when they don’t
- CX feedback is going mobile
I’ve written before that I think the EFM industry has been too much in love with surveys, and not listening enough to “digital body language.” Still, surveys are not going away. To combat survey fatigue, companies are shortening surveys and relying on text analysis of verbatim comments. This is especially important as more customers use their mobile devices to respond to emails. One technique I like a lot: give the customer a simple “one-click” email survey to cast their vote, and then on the web page ask for more feedback if they have the time.
But this just scratches the surface of the possibilities that mobile (mainly smartphones) represent. Medallia is even exploring how mobile apps might be used to get non-buyers to contribute their input. One possibility: Near Field Communication could enable consumers to give feedback by tapping a poster on their way out of a store or restaurant. In general, I was pleased to see that Medallia was looking at mobile as a source for innovation, both in feedback collection and distribution. Watch this space!
I’ll close with one final point about metrics. There were some interesting discussions about how to measure CX. Most said that NPS was a popular metric that was part of the mix, but not the “one” metric used. One company found that a simple average LTR (Likelihood to Recommend) was easier for the org to understand. Another B2B company said that NPS was fine as a top-level metric, but didn’t work when used at an operational level. My view: use whatever you can validate is linked to the business outcomes you seek. If NPS works, fine. But don’t adopt it just because it’s popular.
Disclosure: Medallia invited me to this event, gave me a free pass and paid my room expenses. This post is part of my independent coverage of industry trends and is not meant as an endorsement of any company mentioned. Medallia has been a CustomerThink sponsor within the past year.