Amongst the commonly cited motivations for
digital transformation, improving the customer experience has the highest
unrealized potential. The promise of transformative results may be a powerful
motivator, but so far, those hoped-for results have proven elusive for the
majorities of companies. It doesn’t have to be that way. A more systematic
approach to building customer experience data into the digital strategy puts
the focus on better customer outcomes, not just technologies. Richard Owen, CEO
of Satmetrix, offers his insight on how to improve customer management.
When we launched the Net Promoter Score (or
NPS®) over 15 years ago, we demonstrated financial linkage for investments in
customer experience with this innovative metric. The goal was to break through
the reticence of corporate leaders to invest hard dollars in uncertain,
hard-to-measure future returns from their customers. The immediate visibility
of operational streamlining, or cost reduction, would be at least considered in
the context of the impact on customers and their lifetime value. In that
regard, the adoption of the Net Promoter Score® as an ideal measure of the
loyalty of customers was a success. Thousands of companies now measure NPS as a
critical operating metric and held their leadership accountable for NPS
improvement.
However, if our measure of success is
improvement, the results have to be considered less than satisfactory.
According to our benchmarks, the average company has only increased their NPS
performance by 2%. More alarming, frequently cited NPS results by companies
themselves (often in earnings releases) rarely bear scrutiny, often due to the
lack of quality and process behind their metrics.
So if the first wave of customer-centric
enthusiasm has gained us executive attention, but not necessarily business
results. Will digital transformation represent a second opportunity for
success?Digital Transformation vs. Disruption
Many established enterprises identify the
risk of massive disruption through new entrants as at least one of their
motivations for transformation. Disruptors do seem to provide a better
experience to customers, as demonstrated by higher NPS than incumbents, so that
battle could easily be imagined as a conflict over superior ways to delight the
customer. Uber vs Taxis, Amazon vs retail are often cited examples.
However, it’s a mistake to attribute the
sky high NPS of these businesses to a process of digital enablement or
transformation. Rather, it is a product of their radically different business
model. They are digital natives – “not digital transformists” – taking
innovative approaches to exceeding existing customer expectations. Established
large businesses cannot typically follow that path.
What they can do is combine a willingness
to innovate within the realities of their own business with a focus on the
creation of better customer experiences (higher NPS) through those innovations.
If this has eluded most businesses over the past decade, what have we learnt
and what can we do better?Management, Know Thyself
Perhaps unsurprisingly, meaningful
improvements in the Net Promoter Score are more likely if a business significantly
lags behind peers in basic customer management. In that eventuality, the
introduction of the NPS metric into the management framework for the company,
together with leadership focus on the customer experience, may well be
sufficient to get results. Getting from very poor to average in your industry
is less about science, more about attitudes.
For the majority of companies, improvements
require focus of resources and a broad strategy to engage the entire
organization in a transformative effort. Put differently, companies need a
sophisticated, data-driven view of how they can improve their NPS and at what
cost, together with an ability to influence the culture of the entire
organization so such changes are feasible. Neither task is trivial, but both are
achievable when firms acknowledge the nature of the opportunity and go about it
in a methodical fashion.It’s the Journey, Not the Destination
Customers do not consider their
interactions with a company as tied to the organizational structure of the
company. They have tasks to complete, such as purchase, renewal or service, but
most of the time those tasks cut across modes (retail, online etc.) and
departments (sales, manufacturing and so on). To understand how to delight
those customers as they engage in their journey, firms must measure their
performance along all aspects of that journey, weigh the relative importance of
different interactions on the customer, then focus resources on those areas
where improvement yields the greatest benefit.
One size does not fit all (…) so firms need to focus on high potential or high profit segments
Companies face several surmountable
challenges in this undertaking. First, different customer segments have
different expectations and needs around the customer journey. One size does not
fit all, and more to the point, few companies are capable of creating promoters
out of all segments of their customers. So firms need to focus on high
potential or high profit segments; map out the ideal journey for those
customers and optimize the journey for that group – potentially at the cost of
other segments. That also means accepting that a high aggregate NPS might mean
nothing compared to the performance of individual segments.
That view of the customer requires an
organization of customer feedback and KPIs in an integrated design – one that
reflects and accurately documents the customer journey. More often, companies
survey their customers for feedback in an ad-hoc fashion, with different
departments working to optimize their own needs often in ways that conflict
with others. Re-structuring the data view of the customer around the journey is
not technically herculean, but it runs across organizational and ownership
boundaries and requires a unified design. Politics can easily go against logic.
There is an art to data design around the
customer journey. Different types of survey feedback, operational key
performance indicators and customer financial data need to align around this
new viewpoint, or the connections between the customer perspective and the
firms’ execution won’t be optimal, or even sensible.Let’s Get Engaged
The best data is of limited value if it
can’t be put to work in the organization. Once upon a time, researchers did an
annual presentation of customer experience feedback and NPS to the board of the
company. Today, the notion of annual data seems absurdly slow, the idea that
experts are needed to “translate the findings” feels like job protection.
Instead, data democracy – the idea that every employee should be able to act on
information – is an expectation of any analytic system.
Leaders will leap ahead to social models of
information sharing – an expectation that goes beyond millennials wedded to
Facebook or Twitter – but at the very least employees need timely data around
their impact on the customer experience, how they compare with peer groups and
what to do to improve. Sales teams need complete and current views on their
customers’ experience; everyone needs information that shapes their
participation in building a great customer experience.Take the Plunge
Customer
journey thinking, employee engagement driven. The digital transformation of the
firm is tied to NPS improvements directly through this strategy. Leaders will
think less of digital transformation as the driver of customer experience,
rather prioritize the customer view of the journey and employee data needs as
the driver of the digital investments.
