Tag Archives: CX profitability

Why we need to rethink how we measure Customer Experience

There’s a rage of words between Ryanair and anyone measuring their Customer Satisfaction which presents a different score to what they believe it is.

Which! have a 52% rating for Ryanair. PA Consulting have them pegged even lower. Whereas Rate My Trip has a 92% customer satisfaction rating. Ryanair understandably support Rate My Trips’ poll.

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But forget the squabbling, the real enemy here is the lack of understanding of how customer satisfaction is calculated and inconsistency in collating and measuring customer satisfaction across sectors.

We all love Which! I was a subscriber for years, often checking the best product options (sadly often after I made the purchase). Which! has more proportion of their measure accounted for by price related criteria than other studies such as award winning behavioural based EXQ which has found it to be much lower in studies.

Often a suite of criteria are presented with equal importance (again EXQ has identified that is never the case). These measures are then wrapped up and badged as overall Customer Satisfaction. So it seems what Customer Satisfaction is often whatever the organisation using it wants it to be.

This isn’t unique to Ryanair. I’ve met numerous insight managers who do not agree with the criteria used by others to measure their performance.

If you asked a customer what the criteria should be and how much weighting to apply to their situation, I am sure you would receive back as many combinations as customers asked.

But many consumers place high value on these satisfaction measures in their choice criteria, assuming they are all the same. But the are usually unaware of the wide and varied ways companies collate and grade customer satisfaction.

‘Satisfaction’ as a measure of performance also provides an unreliable indicator for companies to track, according to studies completed by Prof. Dr Phil Klaus, world leading academic on customer experience. No one said it was an indication of profit, but many companies do share CSAT at board level assuming if it goes up, so the company will be more profitable.

Ryanair could be the most profitable short haul carrier around but have the lowest satisfaction rating. If they operate a budget airline then something has got to give. In their case it’s the experience of the customer. Is it sustainable? Perhaps yes. This year’s poor Customer Service has delivered a 20% increase in share price YoY for Ryanair. No one states you have to be nice to your customers.

So Customer Experience practitioners should be cautious about  presenting Customer Satisfaction increases as a sign of business profitability improvement. In the Wealth Management and Private Banking sector studies show those topping the customer satisfaction polls are way off the pace when it comes to corporate profitability rankings.

Affected behavioural change is a very reliable measurement approach because it’s an ‘actual’. Whereas satisfaction is a measure of a customer’s sentiment at a moment in time. Similarly, NPS measures an intention to be actioned. They do not reflect what customer’s are or will actually do. Measuring the impact of a behaviour change is an actual.

We can measure CX impact on behavioural change, so why do companies prioritise satisfaction?

It’s an easy one to put to customers. They get it. However, if you discuss the concept of ‘context’  capturing customer satisfaction, most admit they struggle to associate satisfaction with anything more than the here and now they are asked about.

So if a purchase went well the customer might feedback a high score. However, if part of that transaction was the reassuring returns policy which then turns out to be useless, they cant go back and correct transaction moment score even though it was influenced by the perception of the returns policy.

VoC platform providers like satisfaction as well. It’s a one question solution. It’s easy. It’s relatively unchallenged. It can be asked across channels and compared between journeys, segments and other variables. It’s a commercially viable currency for them.

Is there a more accountable measure available?

There is a much more reliable customer experience measure. One which presents 90% accountability of what CX drives customer’s decisions. One which has been proven to be 90 times more reliable than CSAT and NPS in identifying what drives customer’s decisions. One which would enable both Which! to reflect more accurately the complex set of criteria customers use to inform decisions and is based on ‘actual’ contribution to the company rather than a sentiment score such as satisfaction.

This measure is known as Experience Quality Measure (EXQ). It’s not widely known about because it’s an academics measure for customer experience. We found it a few years ago and now find it fascinating. Academics are interested in discovering the truth rather than headline scores so it’s a more ‘spikey’ data set to work with, but so much more informative. !0 years or so a group of academics agreed CSAT and NPS weren’t reflective of the truth, with a less than 1% reliability of customer’s actual decision making being attributed back to scores provided on these measures, so the pursuit of a more accountable measure led to the creation of the award winning EXQ.

It was identified there are 300 drivers which influence 100% of our decision making. It’s complex. But further studies discovered over 90% of decisions can be identified through just 25 of these drivers. At this level it becomes a study to be put to customers, as we have now done several times. 

What does EXQ deliver?

  • Identifies which customer experiences matter most to customers decision making
  • Highlights the importance of each of these drivers (typically 8-9 drivers account for 66% of decision making)
  • Identify the customer experiences companies deliver which have almost no impact on customer’s decision making – creating immediate opportunities for saving
  • Because we collate ‘share of category’ decision making we can highlight how your score benchmarks to your competitors and what drivers that is based on. This provides an indication of true differentiation, as perceived by your customers. As well as expected experiences for the sector
  • Provide cross-border comparisons to enable groups to make truly global customer  comparisons
  • We use an award winning academic research designed to get the truth of customer experience
  • It’s a one off study which is not reliant on tech platforms so can be delivered in 6 weeks
  • It’s a study and not a tech solution, so the cost is comparable to a few focus groups

In EXQ studies we have run with clients, we highlight the 25 most important customer experience behavioural drivers. What is often surprising to clients is that what really matters most to customers is very different to the areas the company has invested it’s marketing budget on. The decision is then whether to accept the new insight and rethink the strategic choices they make or to bury it and pretend it never happened and hope it doesn’t come back to haunt them. We’ve run studies where both outcomes have played out!

EXQ is not for the faint hearted, but it is for those driving for successful in CX. Studies have been run with over 1,100 companies around the globe which highlight the best performing EXQ companies achieve a 600% ROI from CX. Although only 3% achieve this.

For more on EXQ click the link below. Or contact Christopher Brooks at Lexden to find out how with just 6 weeks (and a fraction of the cost of CSAT) you can have a CX which will refocus your CX efforts around ‘what matters most’ to your customers and what drives your bottom line.

If you are considering this option, it might be worth undertaking a ‘comparison’ study using EXQ to identify what really drives profitability. EXQ can also informs what customer behavioural drivers deliver CSAT and NPS scores – which can be most revealing. This time in two months you can have the answer for the equivalent of a months VoC running costs.

But it EXQ isn’t for you, when it comes to measuring CX be sure that 1) it reflects what’s important to your customers decision making and 2) you are certain of the impact on profit of chasing CX targets.

Posted by Christopher Brooks, Customer Consultant, Lexden (London)

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Lexden helps deliver effective customer experience insight, strategy, content and creative activation clients seeking sustainable profit from customer experience.

 

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