Do you remember those public service announcements that used to run on late night TV; “It’s 11 O’clock, do you know where your children are?” Let me ask you; “It’s 11 O’clock, do you know where your customers are?” Do you know how they feel about the fundamentals of your relationship; value, price, ease of doing business and overall experience? Would they recommend you? These issues are the most powerful driver of growth. In fact, firms that get this right, grow at 3.8 times the pace of the average successful firm. Further, when you know the answers to these questions, you can price your products and services more effectively without the fear that accompanies guesswork pricing. Customer experience management and measurement is a vast topic, so we will peel off just a layer in this article and talk about profitable growth implications of getting right.
A well-constructed customer experience measurement program provides you with information about what your customers value most, their priorities, about how you serve their needs and how they feel about the value exchange, the pricing of your offerings. These are probably the two most valuable things customers can tell you, their priorities and the value of the exchange.
We always say that the CEO’s dilemma is NOT having good ideas. Everyone brings them good ideas, which on the surface would improve the business. There is a sea of good ideas. The challenge is knowing how to prioritize those ideas and knowing which to implement first. Knowing customer priorities greatly reduces this challenge. If you are in touch with your customer priorities, you have their vote as to what is most important–and this is more than just nice to have. Collected properly, it tells you which strategic ideas to implement first that will drive their experience most. This is a road map for how to create the best customer experience with the least amount of investment.
Further, enhancing the customer experience is the most reliable way to proof your customer base against defections. Retaining customers is the most powerful way to grow. It is like a force multiplier for sales. Not only does sales NOT have to replace defecting customers, customers serve as an auxiliary sales force. They serve as referral sources to drive new customers to your sales force or to your site.
Beyond driving sales, good customer experience data provides information on your pricing position. Customers will tell you how they feel about the value exchange they are getting and whether they feel it meets their needs. This will enhance your ability to manage pricing performance effectively. The default action when pricing is to price too low. In fact, most of us are pricing too low normally because the cost of pricing too high, a lost customer, is more than we are willing to risk. However, by measuring customers’ experience, including the value exchange or pricing, we can price in confidence. This in turn gives us the free cash flow to generate more value for our customers and invest in some of their priorities, which we discussed above.
This is why firms that win at customer experience grow so much faster. Not only do they know the customer’s priorities so they can invest in them, but they have the free cash flow to invest in them. If you think you can’t afford customer experience measurement, you’re wrong. The truth is you can’t afford NOT to do it, and to do it properly and reliably. Remember, your competitors may be doing this.
To get started with customer experience measurement:
Determine who your customers are and how they break down into segments;
Determine what you need to know about your customers. There are five questions we always ask but there is more you may want to know;
Design a survey instrument and data collection approach appropriate to number and type of customers you have and the type(s) of information you are seeking;
Field the survey in such a way that seasonality, geography and other variables are properly accounted for; and
Produce a formalized report for your organization to empower the people that create the customer experience and pricing to act on the learnings of the research.
I hope you found something to apply to your business in this MBR. Let me know either way.