How To Build & Measure Customer Value: Focus on the Right Metric
It’s common sense, right? Deliver a great customer experience and your customers will not only return for more but are likely to spend more per transaction, post about it on social and become lifelong Ravers for your brand.
Trouble is, we all know in our hearts this is the case – but being able to associate the definitive economical value of shifting the dial is a tricky business. Throw some archaic systems, disparate data sources and a fast-paced environment into the mix and you have a recipe for a failing CX programme and disengaged team – why be passionate about customer experience when we have no idea what the impact is on our bottom line?
McKinsey & Company wrote in Spring that it’s essential to link your customer experience to customer value if you want land to a successful programme and we couldn’t agree more. How can you expect your business to buy into delivering customer-driven transformation without it? It sure would be a lot of effort to go to!
We often find ourselves in a chicken and egg scenario. How can we prove the value of a customer-centric strategy before we’ve done it? A structured approach to a self-funding business case can help you get over this hurdle.
Research has shown that the most successful customer programmes are self-funding. By proactively asking your customers for feedback at pertinent points of their journey with your brand, you will gather buckets of actionable insight to get started with. Ask your customers how they feel about their experience with you and let them talk about it in their own words.
Listen to what they have to say, in the words they want to use, in the channel they choose. This drives up response rates as everything is brought into the customers world and by asking for feedback directly after an interaction you’re engaging them in moments that matter. Higher response rates are critical to obtaining a true representative sample, otherwise you’re only hearing from that 1% who took the time to engage with you.
The benefits of this approach are more than two-fold – feedback given directly after an experience is delivered is more honest, accurate and richer in the good stuff – actionable insight. Better still, give your customers the opportunity to give you feedback around the clock. Utilising cutting-edge, innovative Listening Post technology will ensure you are always there for your customer, even if your contact centre has shut up shop for the evening. It’s about creating frictionless experiences, if you can support this all within your customers’ world – within their favourite app for example – even better!
So, what next? You’ve mapped your customer journey and you’re asking customers how they feel about their experience. You’ve got real-time customer feedback coming through thick and fast. You’ve got your strategic customer vision. But how do you get from one to the other?
You will need to maintain momentum and buy-in across the business, as transformation will nearly always raise questions about your policies, cross-functional working and investment planning. Stagnant programmes and flopped VOC initiatives are hard to re-invigorate but luckily there are some steps you can take to future proof your success.
5 Steps to Determining Customer Value
- Define which customer behaviours translate to value within your business & quantify the economic outcomes of different experiences
- Link what your customers say to what they do – link their feedback to additional data you have (retention figures, cost to serve, upgrades, referrals, etc)
- Use customer feedback & historical performance to understand the impact – for example, how likely is a satisfied customer likely to churn vs. a dissatisfied customer?
- Use this to create a forward-looking view
- Track outcomes over time for customer segments that matter most to your business
To set priorities & determine Return on Emotion for improving your CX, you absolutely need to be able to link your customer metrics to business outcomes. So, you’ve conquered the first bit! Huzzah! You know what customer value means to your business. You’ve got your data. You know how satisfied customers vs. dissatisfied customers are likely to behave. How do you go about transforming your business into a customer-centric, continually improving, machine? This next bit is super important:
5 Steps to Building Customer Value
You need to base your priorities for initiatives & opportunities on how important they are to your customer. Create a model for what matters to your customers.
Pick off some of the near-term measures first – where can you decrease calls into the call centre, reduce escalations and repeated engineer visits? Tackling these first will remove costs from the system and pain points for the customer. These items will fund your medium and long-term initiatives.
- What does the model you have created suggest about the value of customer satisfaction improvements over time?
- Identify opportunities for disruption and innovation using digital technologies. Map these against what your competitors offer and plug the gaps
Empower Employees through Customer Conclusion
Finally, get your internal customer communications team on board and tell the world! Empower your employees by removing roadblocks and listening to their voices. Close the loop at scale with your customers, by pro-actively telling them about the wonderful changes you’re making by actioning their feedback.
The icing on the CX cake, of course, is being able to demonstrate the positive Return on Emotion, quantify the economical difference you have made and anchor your programme long after inception.