“Life can only be understood backwards, but it must be lived forwards.” -Soren Kierkegaard
Even after decades of study (and oodles of actual studies), the “Customer Experience” remains a top focus for large and small companies alike. Work from McKinsey about the consumer decision journey (references below) is just one of many recent examples. Millions of dollars and labor hours, and prodigious efforts, are spent on the subject.
From time to time, clients ask—usually around the annual budget-setting cycle—“What should our priorities be in evaluating customers’ experiences? What’s the first, most important thing we need to understand?” My answer often echoes Kierkegaard’s assertion above: To best understand and prioritize, begin at the end. Although this list doesn’t include every possible flavor of CEM study, here’s my ranking and rationale for some major types:
1. Understand Churners/Defectors/Disconnectors
Three standard aims of these studies are:
- Why did they leave (pushed or pulled)?
- Where did they go?
- Would they come back? (hint: many would)
But why put this at the top of the list?
- Like the Little Dutch Boy, you must plug the holes in the dam: High attrition rates require high acquisition rates just to maintain the size of your customer base—and that can get expensive.
- Many wounds are self-inflicted, some are easy to fix: Pick that low-hanging fruit.
- Know when and why you lose customers to specific competitors.
- While the reasons people leave are not always the same as the reasons they stay, fixing the former may go a long way to keeping your customers in the fold.
2. Understand Current Customers
They are the source of current revenue and profit—not to mention paychecks and bonuses. Even simple information about satisfaction based on level of product usage (volume) and specific products used (“Is subscribing to our internet service an upper or a downer?”) can be very enlightening. There are many ways to gain useful knowledge here, for example:
- The McKinsey paper posits that as good and bad events occur, customers may enter a Loyalty Loop: If, at a minimum, experiences nearly meet expectations, they don’t search and remain “loyal.” A price increase, bad customer service or a competitive offer can disrupt this, as can small annoyances over time. So one focus can be ensuring customers remain in that Loyalty Loop…and if they are not, figuring out how to get them back there.
- With later follow-up, a company can discover key tipping points (e.g., 4-6 months before the end of a mobile phone contract, or two and four years into auto ownership) when it’s optimal to bolster loyalty with a proactive contact or offer.
3. Understand New/Upgrading Customers
So we now know why customers leave and maybe something about why they stay. What next? New customer studiesare the reverse of a churn/defector study: Your new customers are probably someone else’s defectors. You’ll discern why they came to you, what attractants and promotions really work, if they were pushed or pulled, where they came from, and among other options:
- What was their purchase decision process like? Short or long, involved or impulse? How and why did their path end with you?
- What was their experience during the sale itself? How were they treated? What was their opinion of the salesperson and others?
- The “on boarding” experience: early disappointments and successes; that first monthly bill; so far, so good?
- How do we find more of them?
4. Understand Prospects and the Market as a Whole
These studies place your finger on the market’s pulse, and how your and the competition’s changing images are linked to marketing programs, new product introductions, etc. It is the realm of Brand Trackers—illuminating awareness, familiarity, attractiveness of and openness to your brand, why prospects don’t chose you, and whose image is rising and falling. (FWIW, note that McKinsey’s scheme questions the relevance of the traditional funnel approach, which assumes consumers frequently go through a systematic and active re-evaluation of alternatives. That leads to often-expensive awareness building and promotions, and a possibly misallocated budget.)
Understanding the marketplace is critical. Knowing where you are ahead and behind the pack tells you what the game’s score is today. So if it’s that important, why list this last? It can be more imperative for your company to make sure you have your own house—product, price, customer service, systems, etc.—in order first, before you try to acquire a new customer. Some years ago, Ramada had to pull an advertising campaign called “No Surprises”: Apparently, guests were still finding too many.
Without a solid, well-running process in place, a customer’s journey with you may be short indeed!
About the Author: Randy Hanson, Vice President, Market Strategies International
Join Mark Willard of Market Strategies and Mary Lee of AAA for “Revolutionizing CX: How AAA Turned Satisfied Customers into Loyal Advocates” at TMRE 2014 in Boca Raton (2:30 p.m. on Tuesday, October 21). They’ll share how a new measurement program and a built-in, closed-loop system revolutionized AAA’s member experience program and empowered employees across the organization to make immediate and lasting improvements in customer experience. And, visit the Market Strategies team in Booth #508. Learn more about TMRE 2014 here: http://bit.ly/1pEaxzO