Commentary

How to avoid the traps in customer experience measurement

Victoria Bough, general manager for Customer Experience Solutions at Periscope By McKinsey, explores the key steps and traps to avoid in transforming a middling approach to customer experience measurement into one that delivers impact and creates value.

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July 18, 2017

By Victoria Bough, GM, Customer Experience Solutions, Periscope By McKinsey

The impact of customer experience initiatives must be measured in order to justify additional investment. However, measurement approaches are often reactive and tactical, with executives investing heavily in measurement systems built on incomplete and inconsistent sets of metrics.

These measurement systems are costly, complex, and do not allow leaders to understand whether and how their initiatives are yielding results. In many cases, leaders end up focusing on fluctuations in the top-line metric rather than the root causes of customer dissatisfaction. Their systems are difficult to use, do not quantify the link to value, and do not provide insights on how to improve actual customer experiences.

These leaders are now seeking a measurement strategy that aligns their customer experience metrics into a unified model that operationalizes their customer experience strategy.

The core steps of measurement success

In our experience, three changes can transform a middling approach to customer experience measurement into one that can deliver real impact and create value.

The first step is to define a measurement framework that starts with a top-line metric and then links this metric to customer journeys and touchpoints within those journeys. The concept of customer journeys is often used to drive customer experience improvements — but measuring satisfaction by journey can be complex because journeys are fundamentally cross-functional in nature. Ultimately, measurement has to be anchored in how customers traverse the journey, not the way company functional silos operate.

The second step is to implement a single software solution that can capture customer feedback on a daily basis from multiple channels and integrate survey results, social media posts, and operational data into comprehensive, role-specific dashboards. Critically, that system must be able to process data in real-time, so the root causes of outcomes can be established quickly, enabling rapid decision making across the organization and a culture of continuous improvement. The best systems provide advanced text analytics, link satisfaction scores to operational data, and provide sophisticated closed-loop capabilities so that customer complaints can be addressed in real time.

Finally, the last but most important step is to implement the cultural and behavior changes that ensure that insights from the measurement system drive real change. Overcoming organizational inertia requires cultivation of a continuous-improvement mindset at all levels. Organizations must create the mechanisms to close the loop between front line workers and customer feedback, and then use the data to change the design and execution of the customer experience processes that drive experiences. Best practices include agile processes such as daily huddles, rapid test-and-iterate processes, and transparent real-time feedback.

Watch out for the measurement traps

When implementing the three steps outlined, I have seen leaders fall into a number of traps. Defining an integrated measurement framework, implementing the right system, and creating a continuous-improvement culture are critical to the success of any customer experience measurement strategy, but they are no guarantee of success. Here are the most common measurement traps:

Navigating with no “North Star” — It's important to define a single top-line customer satisfaction metric across the business. This metric acts as the scoreboard over the playing field, where everyone can see whether the company is winning or losing in its mission to improve the customer experience. Just like a football team, the organization is then unified behind a single shared objective. Companies that do not define a North Star metric end up debating decisions much longer than necessary.
Measuring by silo – Customer journeys are cross-functional by nature. Measuring satisfaction for a specific group makes it difficult to address real customer issues.
Using redundant and conflicting metrics — Many leaders find that their organizations are tracking metrics that are no longer used by anyone in their organization. They are often afraid to remove these metrics because they do not understand why they were created. For example, one company tracked customer satisfaction two, five and 10 days after its call center was contacted — and nobody could explain why. In our view, the only metrics that should be tracked are those that are linked to the top-line North Star metric.The best practice is to quantify the relationship between each metric and the North Star metric.Do not be afraid to eliminate metrics that are no longer relevant.
Myopically self-obsessing — See the bigger picture; it's not just about you! Customers often stress endlessly over their top-line metric. This ignores the rest of the market and opportunities to learn from others. Benchmark your company against direct competitors as well as against best-in-class companies from other sectors. It may point to customer experience initiatives you can replicate to improve your own business. For example, a major retailer was inspired to innovate a new digital capability after seeing the banking sector pioneer its new digital capabilities for depositing checks.
Not linking to value — Quantifying the financial impact of improving a specific customer experience is essential. Customer experience initiatives need to be linked to changes in customer behavior such as increased purchases, higher renewal rates, or reduced service requests. One company launched an enterprisewide customer experience transformation before quantifying the expected financial benefits and then had to hit pause to rectify this oversight for the CFO.

If you successfully avoid these traps, you can concentrate on designing an integrated measurement framework, implementing a real-time measurement system and establishing an organizational culture that supports substantial and continuous improvements in customer experience.