Wednesday, June 17, 2009

Customer Experience Pt 6 – Measuring Outcomes

Post series written by Andrew McMillan (Principal Consultant at Charteris specialising in customer experience). Before joining Charteris, Andrew had a 28 year career with John Lewis and spent the last eight years of that career being responsible for the quality of service and selling across the UK department stores.

So, we have identified what business culture is and put that in the context of the overall operational structure. We have looked at how to explicitly shape that culture and engage both existing and new employees with the internal culture and how it is externally reflected to deliver a defined and distinctive customer experience. That should be enough then. Well sadly it usually isn’t. The first challenge given how intangible culture can be is to measure if anything is getting better for the business and its customers, otherwise what’s the point? For some businesses that can actually be the starting point in this process i.e. identifying, through measurement, what you want to improve and then taking action on the factors that are most likely to affect it.


Writing generically, as I’ve said several times before, it’s impossible to be prescriptive on what should be measured. The one common rule however is to try and predominantly measure outcomes rather than the actions that lead to them.

Using measurement as a starting point for the whole programme can be a useful and often essential discipline as it can also help create a business case for embarking on a programme to improve customer experience and the internal culture that supports it. Depending on the business you are in, directly correlating financial business performance to improved customer experience can be a challenge. However, for most businesses, the two most tangible benefits are likely to be:

Customer loyalty, defined as repeat business from an existing customer base and....
Customer advocacy, defined as word of mouth marketing to increase market share

Any business that requires documentation of a customer transaction should find these measures fairly easy to track and consequently it is relatively straightforward to assign financial benefits to improved customer experience. However, many businesses don’t have the ability to track individual customer transactions with the consequence that any actions to improve loyalty and advocacy have to be based more on common sense, gut instinct and often ‘a leap of faith’ rather than hard figures.

Perfect Sense

Of course it makes perfect sense that if you offer a great experience that is better than your closest competitors you will engender loyalty within your existing customer base, grow market share and you will see turnover increase. However, without each customer transaction being documented a hard-nosed Finance Director will always question whether an increase in turnover can really be attributed to an improved internal culture and customer experience or other factors. I believe that is the stumbling block for many organisations trying to find financial support to embark on such a programme and one of the reasons for the commonly held belief that service in the UK is getting worse while efficiency of process, products and services are generally getting better.

Other measures can go some way to mitigate this and the key two are:

Direct customer feedback and......
Mystery shopping

Customer feedback is essential for any business looking to improve their customer experience. This can be collected through comment cards, focus groups, exit surveys, telephone polls and perception surveys from recent customers. However the questions you ask can determine the results you obtain and need to be crafted to reflect a blend of the service that was delivered, the overall experience and the consequent perception of the business (and therefore the likelihood of future business and recommendation). At its simplest a question such as: ‘were you satisfied with your transaction today?’ will be much less revealing than: ‘how did you feel about the way we treated you today?’ The first will identify if the customer was satisfied, whereas the second will tell you how likely the customer is to return and recommend to others, which is so much more important.

Many businesses stop at customer feedback, but it’s not really enough. If you have been truly aspirational in the ambition for your customer experience you need more. Customers will, quite naturally and perhaps subconsciously, base their feedback on comparisons with your competitors. That’s not to suggest their views aren’t important, but the results inevitably will be based on their satisfaction compared with similar experiences and consequently won’t help you achieve a point of differentiation – in other word you’ll stay in the game, but no more. If you really care, that’s not good enough which is where mystery shopping comes in.

Mystery shopping offers you the opportunity to measure performance against goals that existing customers can’t even imagine, or at least it does if you customer experience ambition is high enough. Mystery shoppers should be directed at delivering a combination of objective and subjective feedback, but most importantly, if you have identified an aim for customer experience development that will be a unique point of differentiation for your business, unlike real customers, they can be directed to report on your progress against that aim.

Even More Measures

So that’s what we measure externally, but part of this programme is based on the internal culture so that must be measured too. For the Finance Directors/business case, the hard measures must be:

Staff turnover.....and
Staff absence

It’s obvious that a happier workforce is likely to be more stable and have less absence and any business can put some hard figures around both measures. However, less defined but just as important, is the staff survey which will put some detail behind the high level hard statistics. As with the customer surveys the questions you ask are key to the results and questions such as: ‘do the facilities at work meet your needs?’ and: do you think this business is well run?’ will identify the organisation’s efficiency, questions such as: ‘does your line manager value your contribution?’ and: ‘do you have a best friend at work?’ will tell you much more about the culture you are creating.

Wherever possible, both external and internal measures should link back to an individual’s performance and next time we shall explore the benefits that brings.


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