There has been a lot of hype around Customer Experience in the last couple of years, with a renewed focus on businesses moving back to their core purpose of designing and developing products and services for customers that meet and exceed their needs. This is not to say that driving efficiencies within businesses needs to change, but rather it needs a more balanced approach of understanding that the fundamental reason you are in business is to serve your customers, today, tomorrow and in the future. Given all the noise around CX it makes sense to start to understand what drives good experiences and how to measure them. But can CX be measured?
CX Metrics for Long-Term Engagements
Businesses are traditionally very good at measurement – just look at KPIs, KPAs, Operational Metrics, Financial Metrics etc. There are often plenty of dashboards, spreadsheets and reports to measure, and manage key areas within the business which more often than not, drive efficiency of some description. But can CX be measured with this same short-term quantitative approach? Initially CX teams were challenged as many CX projects are by their very nature, long-term engagements.
With a “never-say-die” approach, CX teams rose to the task and designed and developed metrics that your business can use to get a grasp on where you currently are and what needs to be improved. It is worth noting that not all CX initiatives can be measured quantitatively. Due to the nature of the projects being multi-disciplined, it is not always possible to get a numeric representation of the impact of the initiative but rather the impact is felt by the business over the long-term.
Defining Customer Experience
Our understanding of Customer Experience varies from business to business and this has resulted in a couple of alternative definitions of CX. What is worth noting is that they all talk about the key tenets of CX, which is how customers feel about their interactions with your business across their engagements with you.
The definition we will be using is from Matt Watkins – a leading Customer Experience author, from his book The Ten Principles behind great customer experiences: “The customer experience is the qualitative aspect of any interaction that an individual has with a business, its products or services at any point in time.” Watkins explains “I use the term qualitative to reflect the fact that an experience is perceived by an individual’s sensory and psychological faculties…”
Watkins also notes that the experience does not start when “customers” start to use the services or products a business markets, but rather it spans every interaction that an individual may have with a business or its product/service and is not subjected to a single interaction in time. In other words it includes exposure prior to the purchase, during and long after the product or service has been consumed. It also includes peer influence and how the brands are perceived in the market in general. The customer experience is all encompassing and includes every business discipline from marketing, design, interaction, user experience, instore, etc.
Knowing Your Customer is Key
Interesting there is a difference of opinion when it comes to the experience that customers actually had with businesses. A study done by Bain & Company, stated that “Only 8% of customers who were surveyed said they received a superior customer experience, while 80% of the companies surveyed believed that the experience they were providing was superior.” So how did the companies get it so wrong?
We believe one of the key reasons is a disconnect between what customers actually want and prioritise vs what companies think the customers want and prioritise. Gaining a deep understanding of your customers is absolutely fundamental to delivering an experience that is unique, branded and drives positive emotional engagement with your customers. Loyalty and advocacy is a subject for another post.
Can CX be Measured?
Now that we have a bit of background and definitions, you may now ask, so can CX be measured?
Measuring customer experience is an art. It does not need to be complex, but the right questions need to be asked in the right time frame to get a real understanding of how customers are feeling about your business. It is not as simple as sending out an SMS, or email to gauge how their last interaction was, because this is simply an indicator of the interaction at best, and the consultant at worst. CX measures are split between Quantitative and Qualitative and a good balance is needed to understand your customers ever evolving needs and wants.
So how do we know what experience our customers are having? The answer lies in adopting key customer experience practices, such as:
- Customer Personas: Having a clear understanding of who our potential consumers are in their everyday worlds and what they want, need and expect. What are their preferences and why, who socially influences them and why, what do they seek and why, etc
- Customer Journeys: Setting clear objectives and identifying the full sum of experiences that a customer will have with your company from awareness to advocacy.
- CX measurement: Adopting effective methodologies and tools to measure and report on your customer experience
- A CX team: A dedicated team and a desire to create change for the customer. It is important that the team is suitably senior so that CX projects are driven at the right level.
Understanding the Value of CX = Understand the Consumer Landscape Today
We live in a digitally driven era that focuses on convenience, instant gratification and perception; people are becoming more conscious and aware of environmental activism; and we like to seek out the things that stretch our budgets and search for new ways to ‘get more for less.
We are complex beings and it is important for organisations to understand what behaviours, attitudes and perceptions customers have in their social circles. This has a direct influence on the decisions and perceptions customers have when purchasing and interacting with products and services. A mistake that many organisations make is in the perception that if they run a short-term campaign / project for customers, it will increase their level of customer experience in the long–term which has a direct correlation to loyalty. This is not the case.
Customer experience doesn’t mean giving customers what they want – that is simply a hygiene factor for customers. It means understanding the customers’ real needs so organisations can create and measure emotional and behavioural experiences to build better, lasting relationships with their customers.
Broad Key Consumer Trends:
What Do Customers Value?
The examples below highlight various customer values that are prevalent today, and show how some organisations responded to them in engaging ways.
Customer value: Digital: ‘If it’s fast, convenient, personalised and gives me a good deal – it’s value.’
Case study: Starbucks
Starbucks continues to be a well-known brand both for their coffee and for the experience they provide. The Starbucks mobile app offers a great customer experience that meets customers’ expectations and makes them feel like VIP’s. With the app, you are now able to customise and pay for your drinks at home or on the go before you arrive. On arrival, you bypass the queue, collect your coffee and it is personalised as your name is written on the cup. To sum up, efficient and effective service that works for customers. It makes the experience feel personalised, quick and keeps customers coming back for more.
Customer Value: Eco-friendly: ‘If I can do my part and choose to support the environment – it’s value’
Case study: Coca – Cola
Coca-Cola have introduced a concept called ‘Plant Bottle’. It is designed to make customers question the impact of plastic on the environment and to encourage large enterprises to change the way the world thinks about plastic bottles. These bottles are the first of their kind as they are made from fully recyclable PET plastic as well as partially made from plants. Using an eco-friendly approach to their packaging allows customers to feel less anxious about their contribution to pollution.
Customer Value: Financial Impact: ‘If it makes your money go further – its value’
Case study: FNB’s Entertainer App
FNB have partnered with ‘The Entertainer’, an app which allows users to get 2 for 1 discounts on different categories of entertainment, dining, lifestyle and leisure offerings. FNB have understood the financial pressures that their customers are under and have adopted the offering as a way for their customers to spend on the ‘luxuries’ at a fraction of the price.
These trends are by no means exhaustive and we have listed them to give you a couple of themes to think about. They illustrate how organisations are tapping into what is important to people, building and creating meaningful and engaging products, whilst being mindful of the total experience an individual has with their brand. Organisations and brands therefore need to be in tune with these shifts in order to keep abreast of how they choose to offer their products and services. In other words, without understanding the external factors that consumers are affected by, organisations will find it challenging to design meaningful and valuable customer experiences.
Basic Methodologies For Effective Measurement On Your Customer Experience
Once you have understood how consumers experience their everyday worlds, it is a good idea to start adopting effective CX measurement. Measuring customer experience effectively requires a combination of qualitative and quantitative approaches, as you not only want to get statistical relevance in your reporting, but more importantly you want to understand the “why” of behaviour. Thus, there should be an overlay of CX metrics and consumer behavioural metrics in the methodologies you choose.
Chosen Methodologies Must Yield Financial and Operational Results
What is also of great importance when deciding what methodologies to adopt, is to remember that CX measurement decisions need to be linked to tangible financial and operational performance results. Your company must see financial growth from your efforts. All chosen measures need regular scrutiny to ensure they meet current company objectives and CX project goals. New methodologies should be engaged if and when prevailing metrics fail to deliver.
Most Widely Used Quantitative CX Metrics: NPS, CSAT, CES
Her are three basic customer experience measurement methods your organisation can start adopting when beginning your journey of improving and measuring customer experience. These methods will provide your organisation with insight into consumer behaviour as well as identify gaps and improvement areas.
The quantitative customer experience methodologies all involve customer feedback surveys. It is one of the quickest and most cost-effective ways of gaining customer insight based on the experiences they have had, or wish to have with your organisation, however, surveys should not be used in isolation and consumers are becoming increasingly jaded about “score for KPI” type surveys that simply seek to measure the experience without any options for deeper engagement or closing the feedback loop.
NPS – Net Promoter Score
NPS is a tool used to understand the likeliness a customer will recommend your company to someone else. It is usually asked as a question in a customer survey and uses a scale of 0 – 10. Customer scores are then placed into one of three categories against the 0 – 10 scale (0 being the least likely and 10 being the most likely).
0 – 6: Detractors
7 – 8: Passives
9 – 10: Promoters
An open – ended question is then asked to customers to justify their score and provide their opinions.
How To calculate NPS:
Formula: Total Promoters – Total Detractors / Total sample x 100 = NPS score
NPS is used as an efficient method to track how your customers feel about your business.
It is an important indicator because it allows your organisation to understand:
- The likelihood of your customers recommending your organisation to another person
- Whether your consumers are feeling better or worse about your organisation
- A total score to benchmark future results against
CSAT – Customer Satisfaction
CSAT is an indicator that tracks how satisfied your customers are with your organisation’s products and services. It is measured by asking customers to rate their experience based on questions relating to a specific service, product or interaction with the organisation. Asking the right questions at the right juncture is key to gaining an understanding of satisfaction levels.
How to calculate CSAT:
Customers rate their experience based on their overall satisfaction using a scale of 1 (Completely Dissatisfied) – 5 (Extremely Satisfied). Their total scores are then calculated and converted to percentages giving you an overall CSAT score.
CSAT is used as it allows your organisation to track and measure your customer satisfaction over time, enabling you to respond to specific areas.
It is an important indicator because it allows your organisation to understand:
- Which parts of the customer journey need improvement
- Where internal processes are not aligning and creating gaps
CES – Customer Effort Scores
CES is measured based on asking customers to rank the ease or the effort of their experience either in completing certain tasks or with a specific product or service. Questions are rated using a scale of Very Easy – Very Difficult (either 1 – 7 or 1 – 10).
How to calculate CES:
Once all customers have responded results are calculated by taking the mean of all responses to each question.
CES is used to measure a specific component of a customer’s experience.
Most Widely Used Qualitative Methodologies Used to Understand CX.
Qualitative insights are often used in conjunction with quantitative metrics. The scores you derive from your measurement programme will be just that – scores. They will give you an idea in some cases where the experience is challenging your customers, but do not tell you why, or what they expect. This is when qualitative methodologies are used. They are also extremely useful in co-creating solutions and services as well as getting a deep understanding of the drivers of key individual behaviour.
Groups of 8 to 10 individuals, or customers. Usually segmented across pre-determined criteria such as personas or archetypes, segments, and other identifying groups. These groups seek to understand the why of customer experience and often co-create and co-design solutions and future products. Digital focus groups are also now available for difficult-to-reach audiences.
are used when a deep understanding of individuals’ preferences, behaviours etc are warrantied on a one-on-one basis. A rich source of information can be gleaned and again co-creation and co-design can be used to drive ideation around future products and or services.
Panels or MRocs
online or digital solutions that can be very cost effective in capturing qualitative feedback from your customers on an ongoing basis.
Calendar / Diary / In-Environment Studies
These tend to be tracking in nature and allow participants to reflect on the everyday use and engagement of your products whilst going about their lives.
Measuring your customers will allow your organisation to gain insight into how customers rate their experiences with your business. When you overlay the qualitative insight, you will gain a deep understanding on where to create long-term investment in your customers.
Start With These Simple and Effective Steps to get Buy in and Drive Change:
- Assign a CX team: Create a customer experience team responsible for designing, measuring and delivering customer insight that the business can use and action. The team is collaborative in nature.
- Research, design and develop:
- Create a set of insight objectives – what you want to understand from your customers, individuals and potential customers.
- Design and develop a research programme that will give you not only what you need to measure but also what you seek to understand. This will be both quantitative and qualitative.
- Choose your CX metric/s: Pick the CX measurement/s that align to what you are trying to understand, you can use all three, or any combination of them. Test & iterate.
- Gather insight: Quantify your results and measure them against your business / customer objectives to identify gaps and areas for improvement.
- Present your insights and design: Drive insights with your team, and once you have buy-in from senior leadership, identify areas in the business where changes and or developments need to be made. Prioritise these by impact on the experience, duration and cost.
- Collaborate: Get the team engaged and measure key deliverables across the customer journeys, ensure that the results are shared internally, and adjustment made as and when required. Iterate.
- Refine: In order for an organisation to adopt a measure, it does require consistency and buy-in from employees however, it is essential for companies to recognize when a chosen measure no longer meets goals, and then to refine one’s choice of measure.
Interact RDT has a wealth of experience in helping companies identify, measure, design and manage customer experience initiatives. Born in 2004 to a business world that was waking up to the age of the consumer, we have partnered with some of the biggest names in South Africa. We specialise in Customer Experience, Market Research and User Experience, and if you need assistance in getting to know your customers better, design better products, services and interactions, including digital – make contact with us.
Watkins, M. 2012. Ten principles behind great customer experience. United Kingdom: Pearson Education Ltd