I had the opportunity this last week to spend two days locked in a conference room with some of the smartest CX leaders I know. HoC hosts a CX Fellowship for a half-dozen advanced leaders, where we discuss challenges in their programs and co-develop solutions. This trip’s primary topic was hiring for a CX team. We are in the process of interviewing advanced CX leaders to learn how they staff their teams. (We’d love your help! To register, fill out this short questionnaire.)
Eventually, we turned our attention to the future and what we expect CX to look like five years from now. I’ve thought about this a ton and shared my perspective.
Most CX leaders share reports similar to, “Our NPS is at 30, rising two points. It’s highest on the west coast and for longer-term customers, but we’ve seen a drop in the Northeast. The top driver is on-time delivery, so we need to investigate the current situation there.”
It’s not bad, but it’s also not compelling. Did you notice that the analysis is restricted to survey data with no financial implications? That’s a missed opportunity, primarily created by a limited implementation of the protagonist’s survey platform. You can get away with that reporting today – but the CX leader of the future sounds very different. Here is what that future leader might say:
“Our Net Revenue Retention (NRR) last year was 103%, meaning our organic growth slowed to 3%. We know, of course, that our company’s top goal is to improve this organic growth, so we analyzed what is leading to that outcome – and what gets in the way.
“First, our survey respondents this quarter had an NRR of 105%, so it seems that the best way to drive faster growth is to get everyone to fill out our surveys! (Everyone laughs).
“Seriously, though, we looked at our data to see what we can learn about the leading indicators of NRR and improvements we to get back on the right track.
“For background, our promoters had an NRR of 108%, passives 102%, and detractors 85%. But that’s not the most actionable data, so we went deeper. We identified a chain of value. NRR is created by confidence, which is strongly impacted by our operations and, to a lesser extent, by our clients’ behaviors.
“Let’s start with confidence. As you all know, we started measuring confidence a couple of years ago. We now have a good bit of history, and it’s the best predictor of improved NRR. Sixty-five percent of our clients reported being confident, and their average NRR was 112%. Last year we retained 97% of confident clients.
“Those who do not report being confident had an NRR of 65%, primarily driven by high attrition. Of course, when a client leaves, their NRR is 0%. A lack of confidence in our company often predicts attrition. We also measure frustration, and that’s a reliable predictor of attrition. Forty percent of frustrated clients reduce spending with us, and an additional 35% attrit once they report being frustrated in two consecutive surveys. As you know, we’ve built a more thorough closed-loop program for frustrated clients, and we’re seeing early success in reversing stated frustration.
“The natural question is, what lowers confidence and creates frustration? Two top causes are operational issues – unaddressed complaints and missed delivery dates. Clients consistently forgive us when a complaint is successfully addressed within 72 hours. Their survey scores and, more importantly, their purchase behaviors remain strong. However, if a complaint goes two weeks without resolution, confidence plummets – as does NRR.
“We’re working closely with the customer service team to monitor complaints and ensure action and clear communications – a driver of confidence. It’s early, but we’ve reduced the average complaint from twelve days to ten through improved project management. Still far too long, but we’re making progress. We’re also working with engineering to address the top causes of complaints. They identified a specific resource to address any issues unresolved after a week.
“On-time delivery is the second highest cause of a lack of confidence. When on-time delivery drops below 85%, there is a direct correlation with a reduction in confidence. We don’t have to be perfect, but 85% is a consistent threshold. As you know, we’ve had delivery issues in the Northeast caused by supply chain issues. We are seeing a lack of confidence in our latest survey, so I predict our NRR to drop in that region. We’re working with account management to add more proactive communications for our customers in that region. This should help reduce frustration while we work on those issues.”
This reporting style requires a different approach to customer experience – one more grounded in business success than survey reporting. But the capabilities exist today:
- Net Revenue Retention (NRR) is a simple calculation comparing customers’ historical spending. It directly considers retention and upsells/cross-sell – two of the critical outcomes of an improved customer experience. To calculate it, you need to embed quarterly sales data per client into your survey platform. (Which is very doable and part of our Qualtrics implementation standard) NRR or another financial metric should be the focus of your reporting if you want to create business impact. Explore other questions in terms of how they impact NRR.
- Measuring Emotions, whether confidence, frustration, trust, or another, is gaining traction. Fidelity measures eight emotions, and Delta is also doing that (see below). We do this for many of our clients, identifying the emotions that most matter for their critical financial outcomes.
- Analyzing operational data is another missed opportunity in most programs. Integrating the presence and length of complaints helps you understand how these items – which won’t appear in your surveys – impact the outcomes your executives care about. At our Do B2B Better conference last year, Riccardo Porta of Dow referenced how complaints were one of their biggest drivers of CX issues and how they focused their attention on this critical issue. Similarly, Sam Wegman of Univar also shared how she tracks on-time delivery and links that to her survey outcomes. This is another standard of our Qualtrics implementations – integrating the operational and behavioral data into the analytics.
Here’s the good news: You don’t have to wait for the future to do this work today. By integrating financial, behavioral, and operational data into your survey platform and measuring emotions, you can perform all this work today. An advanced implementation partner can bring all of this to you. But the attitude and business focus? That’s up to you.