Are you really
listening to what your customers are saying?
Too many companies squander the treasure
that is customer feedback. The solution is systematically measuring the
customer’s voice and integrating it into a culture of continuous feedback.
Customer-experience metrics have proliferated over the past decade, and
chances are that your business relies heavily on one or more of them. But many
companies struggle with metrics. For some, the problem is a disconnect between
the metric and business performance; for others, it’s a loss of confidence
among frontline workers when the metrics don’t seem to explain big swings in
customer satisfaction. Further, in some companies, there is confusion about
whether transactional or relational measures matter more, and, in others, a
simple lack of results from too much focus on one top-line metric.
Linking customer experience
to business outcomes
McKinsey principal
Alfonso Pulido explores why a customer’s end-to-end experience is the best way
to gauge his or her overall satisfaction.
Complicating the problem, many companies struggle with
collecting, analyzing, and acting on feedback. Many B2B companies, for
instance, gather customer feedback only through sales channels, missing
important insights from users and influencers. Finally, many companies don’t
have the culture to loop customer feedback through the front line to improve
behavior or connect it to innovation.
Taken together, these complications leave many companies
tone-deaf to the voice of the customer and represent a formidable barrier to
building the foundation of a successful customer-centric strategy. Happily, our
experience shows that it matters less which top-line metric a business relies
on; almost any one will do. Rather, what matters is how the business inserts
the metric into a systematic capability to collect, analyze, and act on
feedback in an effective and complete measurement system of the customer
journey. Building that system can take time, but gains to a customer-centric
culture and the bottom line can accrue quickly.
Journey-centric
customer-experience measurement
Consider the experience of one international utility
that aimed to break up its metrics logjam and build a truly customer-oriented
culture. While its approach started with a top-line metric, it shifted past
practice by putting a central focus on key customer journeys as the bedrock of
its system. First, the company moved beyond measuring touchpoints and homed in
on customer-journey feedback. A journey such as “I join” for new customers
incorporates several touchpoints (for example, making initial contact, signing
a contract, and receiving a first bill). The shift in focus gave the utility
for the first time an end-to-end view, in real time, of how customers joined.
This helped the company act on client feedback such as “my gas meter is not
registered properly” or “I do not understand my direct-debit reassessment”
within a few hours by calling the customer, fixing the problem, and in this way
turning negative customer feedback into promotion.
Second, a new platform for operational feedback
automated surveys, analysis, and role-based reporting that created a hardwired
backbone for a customer-centric culture. For the first time, not only did the
marketing department have customer insights, but so did a large number of
employees—for example, those in all call centers. Moreover, the same system was
applied across countries, enabling best-practice exchanges on multiple levels
of the organization. Finally, the utility put the new insights to work with a
continuous-improvement mind-set that directly encouraged frontline workers to
close the loop with customers. This also forced actions onto meeting agendas
and performance-management systems across the company. Although the system was
only recently implemented, the utility has seen real payoffs in better customer
experiences, more loyalty, and lower costs. Following full implementation,
company executives expect about $50 million in improvement in earnings before
interest, taxes, depreciation, and amortization from revenue gains and other
cost reductions.
In our experience, three core elements are critical for
transforming a middling approach to customer-experience measurement into a
value-creating system.
Journey-centric feedback. The heart of journey-centric measurement is the
organizing principle of measuring customer experience at the journey level, as
opposed to looking only at transactional touchpoints or overall satisfaction
(exhibit). Our research finds that customer journeys are significantly better
correlated with business outcomes, such as churn, than are touchpoints . Obtaining feedback about customer journeys—say, for
the overall purchase journey, not just a point of sale, or for the issue-resolution
journey, rather than just a customer-care interaction—becomes foundational
(though it is possible to retain a top-line metric that combines the journey
scores for ease of reporting and overall progress).
One important advantage of measuring journeys over
touchpoints is the ease of tying operational key performance indicators (KPIs)
to the system. For example, from a customer perspective, one of the most
important KPIs that data show matter in an issue-resolution journey is the time
from issue to resolution. This KPI links closely with the journey that might
start from the first moment the customer or company identifies a problem and
then moves all the way through resolution, so it can be linked to a customer’s
satisfaction with that journey. If the company is looking only at a
touchpoint—say, a call interaction—then the total elapsed time until resolution
never will appear as an element that drives customer satisfaction, nor will it
become a focus for improvement.
In addition to tying operational KPIs to journey
feedback, another essential effort is building organizational and cultural
elements into the foundation of a measurement system. These elements include
clear and broad transparency of customer-experience measures and feedback, as
well as employee feedback. Best practice is to think of employees’ journeys in
the same way as customer journeys and to create a parallel path for collecting,
analyzing, and acting on their feedback. In our experience, better employee
experience and engagement translate to better customer-experience performance,
and employees are crucial actors in helping to convey what the customer is
really experiencing.
Hardwired backbone. Just as companies invest in enterprise-resource-planning systems
to collect, measure, and report finances, so investment in technology is
necessary to support a superior customer-experience-measurement system.
Numerous vendors provide a variety of functionalities and price points for
these platforms to integrate the customer-experience-measurement strategy into
day-to-day work routines. Hotel companies generally led the way more than a
decade ago on seeing the value of hardwiring ways to capture customer
experiences, but today businesses as varied as Apple stores and Mercedes-Benz
dealerships see these platforms as more than mere survey infrastructure.
Rather, these companies regard them as a true method to translate data into
operations and as essential to achieving impact.
These systems make important contributions to creating
value. First, they make it possible to tap many more customer voices beyond the
individuals with whom the business interacts the most. Moreover, they provide
an analysis engine that can incorporate all kinds of data: survey results,
social-media posts, and linking operational data. Finally, they enable
action-based reporting. In other words, not only does the user gain
transparency into results, but also the system offers recommendations for
specific responses when certain issues are flagged. Companies hardwiring a
backbone for customer feedback typically see their net promoter score jump 10
to 25 points in the first year.
Continuous-improvement mind-set. Change is difficult. Organizational inertia is
hard to overcome, even for companies with a strong customer orientation. In our
experience, there are two areas where establishing a continuous-improvement
regimen matters most in achieving a superior customer-centric mind-set. The
first is at the front line, with employees closing the loop with customers on
direct feedback, then using that insight to change the way the process is
designed or executed. When this does not occur, the cause is sometimes a
failure of performance management around customer-experience improvement, but
often it involves a “muscle” that hasn’t been trained and role modeled.
Implementing this change is largely about influencing
human behavior. Our research has consistently shown that effecting this type of
change requires real behavioral role modeling. This must come from leaders and
supervisors, new rewards and consequences, improved training in how to act, and
a strong conviction and understanding among employees about why the change is
important for the customer, for themselves, and for the company.
The second important area of impact is making feedback
part of an approach to continuous improvement in service design. Product
companies long have known that rapid iteration using customer insights is the
way to get to a winning product, but service companies have rarely invested the
same way in service design. For designers and engineers in marketing or
research and development, it is necessary to create a pipeline of feedback and
actions, rather than merely reporting metrics, so the customer’s voice is
always present.
Getting
started and lessons learned
This kind of transformation can take time—often 18 to 24
months to fully realize the bottom-line gains—but the benefits to a company’s
culture can begin accruing quickly as the system is put in place. One
particular value of journey-centric measurement is that it does not require
going all in at the beginning across the customer life cycle. Businesses can
build the complete system, end to end, in one journey at a time and then roll
out more broadly as they build momentum or free up resources.
Whatever starting point management chooses, there are
common pitfalls. Lessons learned from these can help ensure that establishing a
journey-centric customer-experience-measurement system gets off to a strong
start:
·
Think systematically. Metrics are simply data points. Think
of each as a medical test, such as an X-ray or CAT scan, that serves as one
input in making an informed diagnosis. In business, as in health, the goal
isn’t to focus on the test but to figure out how to heal whatever has gone
wrong throughout the entire system. It may seem intuitive, but it bears
repeating that securing a number is not enough. Businesses must be ready to
take that feedback and use it for change.
·
Don’t fret about the metric. Businesses often
agonize over whether they have the right metric. But our research shows that
whether a company is using a net promoter score, customer-satisfaction score,
customer-effort score, or another popular metric of the day, it matters less
which score customer-experience managers choose than what they do with it. No
one metric is the best for all businesses or customer journeys, and
best-in-class operators generally choose the metric that is most predictive of
their desired business outcome, which can vary by industry.
·
Show me the money. Getting the most out of any metric
requires linking that measurement to financial value. That linkage helps
business leaders set priorities on the changes that will deliver the greatest
bottom-line impact and stimulate conviction at all levels of the organization.
It’s of little use to choose a typical net-promoter-score scale (say, 0–6, 7–8,
9–10) if moving customers from 7 to 9 doesn’t actually deliver any improvement
in financial metrics such as likelihood to churn. In tying action to metrics,
businesses must establish clear and well-understood break points.
·
Close the loop. Metrics reflect the state of business
at a particular point in time. Actually improving customer experience requires
closing the loop with customers to fix individual concerns and to celebrate
frontline successes. It also requires closing the loop on core issues by
applying the feedback to the journey level, analyzing the KPIs, and rewiring
the organization to fix the root causes of any problems.
·
Listen to the front line. Leading
customer-experience companies systematically improve operations by
incorporating employee feedback on perceived customer experience and problem
areas. This requires a shift in thinking that goes beyond conducting focus
groups or meetings between senior management and frontline workers. It requires
applying to employees the same operational-feedback platforms used for
listening to customers. Although employees and customers point out similar
problems, employees uncover root causes, while customers only report on
symptoms.
·
Focus on alignment. Successfully establishing a new
measurement system in the context of a broader customer-experience
transformation depends on cross-functional alignment.
Marketing, operations, IT, and even human resources in some cases are essential
to have at the table, jointly committed to the company’s customer-experience
vision.
Customer-experience metrics are everywhere, but relying
on them isn’t the same as truly hearing the voice of the customer. Rather,
investing in an effective and complete system to measure the experience of the
customer journey is the way to reap the rewards of customer feedback.
About the Authors
Harald Fanderl is a
principal in McKinsey’s Munich office, Kevin Neher is a
principal in the Denver office, and Alfonso Pulido is a
principal in the San Francisco office.
The authors wish to thank Ralph Breuer and Whitney Gretz for their
contributions to this article.
http://www.mckinsey.com/business-functions/operations/our-insights/are-you-really-listening-to-what-your-customers-are-saying?cid=other-eml-alt-mip-mck-oth-1604
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