By Marcela Lay | June 11th 2019
We are well into the experience economy: that's where customer experience has overtaken price and product as the key brand differentiator.
So it's hard to believe that brands today continue to create self-centric project briefs and request for proposals without any customer-centric KPIs.
Self-serving KPIs only allow for a myopic view of the desired results.
So what's the recipe for success?
- Get alignment from the c-suite on the right mix of customer-centric KPIs to ensure organizational adoption.
- Align expectations on long-term results instead of the unsustainable short-term results some companies chase.
Let’s break these two key concepts down - after that, you’ll be one step closer to being a customer-centric business.
1 / How do we get C-Suite alignment?
First, you need to understand the stage of customer obsession in your organization.
It's one thing to want your organization to enhance your customers' experience, but it's quite another to put it in practice.
This requires a shared Customer Experience Vision and Strategy to drive the decisions made by the leaders of each department when moving forward.
According to the 2017 eConsultancy guide around customer experience best practices, is the silo mentality that brings a significant obstacle when getting buy-in on customer experience improvements.
The only path to break organizational silos is to get the C-Suite to buy-in into Customer Obsession, so alignment and adoption are instilled from the top-down.
And you can only get the C-Suite to listen when you speak their language:
You need to understand what matters to each executive, what they measure, and a set of CX metrics that can prove ROI.
Let's analyze the critical stakeholders and what matters to them.
Critical Stakeholder: CEO
What matters the most to this executive: Company vision, competitive position, and growth.
A Forrester research confirmed how CX leaders lead over CX laggards on both stock price growth and total returns.
Critical Stakeholder: CMO
What matters the most to this executive: Brand awareness, engagement, loyalty, and advocacy.
- CX Leaders drive 4.5x willingness to pay a price premium from customers who have excellent experience versus very poor experience - Forrester.
- Consumers with an emotional connection to a brand have a 306% higher lifetime value, and will recommend brands at a much higher rate (71% vs. 45%) - prnewswire.com
- 61% of loyal customers go out of their way to buy from specific brands, and 60% will make more frequent purchases - InMoment
- Tempkin found a correlation between CX and trust, as well as consumers’ willingness to recommend a brand.
Critical Stakeholder: CIO
What matters the most to this executive: Technology innovation.
- According to a research by Deloitte, CIOs from High-Performing Companies (HPC) generally focus on CX as a competitive differentiator more than their peers.
- According to a report released by Dimension Data, the virtual assistants (chatbots) were voted the top channel growth focus for 2017 while the deployment of the Internet of Things (IoT) was set to double.
Critical Stakeholder: CFO
What matters the most to this executive: Long-term growth and ROI.
On Harley Manning’s Blog at Forrester, Manning discusses two studies, conducted one year apart, where five pairs of publicly traded companies were compared and where a company in each of the pairs had a remarkably higher score than the other based on Forrester’s Customer Experience Index during the period 2010 to 2015.
- “In two industries, cable and retail, leaders outperformed laggards by 24 percentage and 26 percentage points, respectively. Even in the industry with the smallest spread, airlines, the CX leader enjoyed a healthy 5 percentage point advantage in global revenue.” — Harley Manning, Forrester
- And according to Forrester’s Harley Manning, "a one-point score improvement in the CX Index can lead to an increase of $65 million in revenue in the upscale hotel industry."
2 / The 6 Customer-Centric metrics that demonstrate ROI
While business leaders default back to the most commonly used KPIs, there is a set of KPIs that can indisputably demonstrate the ROI in CX improvements.
These KPIs do a great job balancing out the self-centric business KPIs your company is tracking today.
Let’s take a look.
The fault-back KPIs:
- Net Promoter Score (NPS): NPS measures customer satisfaction and loyalty to a brand. It doesn't directly quantify the ROI of CX improvements, but only captures customer intent and visibility into issues.
- Customer Satisfaction (CSAT): It measures customer satisfaction to understand if the brand is meeting customer expectations, it can provide visibility into customer pain points.
- Conversion Rate: The percentage of total customers who transacted. How easily did the brand make it for the customer to convert?
- Customer Effort Score (CES): Determines the amount of effort a customer required to accomplish a task. The CES is a highly actionable piece of customer feedback.
Here are the KPIs that can balance out the self-centric business KPIs:
- Customer Lifetime Value (CLV): A long-term metric that supports sustainable results. The longer a brand retains a customer, the more revenue will be generated. Businesses with 40% repeat customers generate nearly 50% more revenue than similar companies.
- Customer Retention Rate & Customer Churn Rate: If the brand is not able to retain customers over time, a close look at the experience must be given.
- Up-Sell and Cross-Sell Rate: If the brand is providing an excellent experience to its customers, the customers will spend more in return. It is that simple.
- Average Order Value (AOV) & Average Revenue per Customer (ARPC): The more effortless the experience, the more revenue the brand will generate per customer and order.
And then, of course, the Customer service KPIs:
- First Response Time (FRT): The longer the time, the more frustrating it is for the customer and the bigger the opportunity to improve the process to show the customer we value their time.
- First Contact Resolution (FCR) Rate: The percentage of customers whose question or request is resolved on the first attempt. How simple and friction-free are we making the process?
- Resolution Time (RT): it assesses how many interactions are necessary to resolve a customer issue; it brings visibility into the customer pain points and the potential areas for improvement.
Being a customer-centric business is a proven strategy for driving long-term success. To achieve that success, make sure to:
- Lean into the critical stakeholders at the c-suite for support as it is at the crux of CX transformation.
- Define and track the right KPIs that demonstrate CX improvements ROI.
Once you get the c-suite to listen and to align to Customer Obsession, move to identify the necessary technology, people, and process required to achieve those goals.