Three Ways Traditional Customer Experience Measurement Can Damage Loyalty

While measuring customer loyalty is relatively easy, improving it is often much harder. Unfortunately,
traditional approaches to Customer Experience Measurement(CEM) such as Net Promoter benchmarking,
CSAT tracking or Customer Effort Scoring are often designed and implemented in ways that do more
customer loyalty harm than good. These approaches typically miss the mark in three ways.
Let’s review each briefly.

Faulty Metrics

One of the core tenants of CEM is to gather feedback at every point along the customer experience
journey. This typically involves breaking down each customer touchpoint into distinct experience
attributes that can be measured separately. The notion is that by measuring and maximizing these
attribute scores, the customer experience and resulting loyalty will be enhanced. The big problem
with this approach is that the attributes tracked have rarely been validated as drivers of customer
loyalty and therefore fail to have any impact on it. Instead, operational measures of service quality
and process compliance are tracked, yielding little insight or improvement.

Misguided Mechanics

Despite that CEM programs are intended to gather feedback that can be used to enhance
customer experiences, they are often designed and implemented in misguided ways that
alienate customers. This happens because traditional CEM providers often fail to recognize
that requesting and acting upon customer feedback is actually a crucial part of the customer
experience itself.  They are so focused on extracting data from customers, they lose sight of
CEM’s ultimate purpose.  As a result, traditional CEM providers often damage customer loyalty
in the process of gathering feedback on it with no-reply emails, pestering reminders and poor
follow-up on complaints.

Feedback Manipulation

Perhaps the most disheartening shortcoming of traditional CEM approaches is how frequently
they are manipulated by company employees. Most commonly, this occurs when front line
employees or managers are rewarded or held accountable for a single CEM metric, such as
satisfaction or likelihood to recommend. In response, they become primarily focused on extracting
a perfect feedback score from each customer, rather than making an effort to understand and deliver
on their unique needs. In fact, it’s become quite common for front line employees to implore their
customers to “be sure to give me a perfect score or it will count against me.”  Manipulated CEM
metrics may briefly boost internal benchmarks, but won’t deliver the consistent growth and
profitability that comes from genuine loyalty.

 

The HUMAN Brand:  A Better Way to Measure and Manage Customer Experience

book_humanbrand-(3).jpg

To assist companies and brands in building stronger customer loyalty, our firm has developed
and refined a unique HUMAN Brand CEM methodology focused on understanding and significantly
improving customer perceptions and loyalty. Unlike traditional CEM methods, our HUMAN Brand
metrics and feedback process are built around the foundational drivers of human social perception
and loyalty: warmth and competence.  Importantly, our methodology has been detailed in an 
award-winning book, as well as validated and cited in over 200 peer-reviewed academic research papers.

More specifically, our work with a multi-national supplies distributor over the past several years
provides a tangible example of the sustained customer experience and loyalty improvements that
can be achieved with our HUMAN Brand methodology. The HUMAN Brand CEM process involves
three key steps and the following case example illustrates each.

1. Benchmark Customer Experience Assessment & Segmentation

Benchmark-Segments.jpg

To begin, our firm gathered benchmark experience feedback from over 8,000 customers to
create a foundation for ongoing tracking and improvements.  This benchmark study captured
customer warmth and competence priorities, perceptions, emotions and loyalty. In addition,
the study identified five distinct attitudinal segments of customers, each with very different
priorities, perceptions and loyalty.

Our analysis of the benchmark customer data revealed that while our client was exceeding
customer expectations on several competence dimensions, such as competitive payment
terms and electronic billing, they were falling short on critical warmth dimensions. So despite
that the majority of customers were quite satisfied and loyal, certain segments were still
being inadvertently alienated by poor and inconsistent experiences.

2. Ongoing Tracking by Touchpoint & Segment

Based on these findings, a HUMAN Brand customer experience tracking program was
implemented. The program included personalized correspondence and an early alert system
that routed customer concerns to a dedicated problem resolution specialist that would follow-up 
personally within 48 hours. During the first year, over 16,000 customers provided feedback and
over 1,000 experience issues were proactively identified and promptly resolved through the
tracking program.

In addition, operational changes were made based on the timely feedback received.
These included simple but greatly appreciated improvements, such as increased inventory in
certain locations, reduced supplier drop-shipping and enhanced website search features.
Customers responded with double-digit increases in satisfaction, willingness to recommend
and loyalty.  Importantly, these significant customer experience and loyalty improvements have
been sustained over the past four years.

 

humanbrand_clientperformance.jpg

3. Personalized Communication & Support by Segment

 

2018-Segments.jpg

The strongest customer experience and loyalty gains were achieved with customers in the
Frustrated Reliability Seeker and Indifferent Supplies Avoider segments.  This was accomplished
with communication and support that was tailored to the unique warmth and competence priorities
and perceptions of these customer segments.  These personalized experiences are critical to
achieving stronger loyalty, as they demonstrate a deeper understanding and commitment to
customer priorities and needs.

As a result of this targeted communication and support, our client experienced a dramatic shift in
the proportion of customers in each segment.  In particular, the most loyal and valuable segment,
Committed Supply Partners, grew from 30% of customers to 45%.  At the same time, the most
troubled and unhappy segments, Frustrated Reliability Seekers and Indifferent Supplies Avoiders,
declined from 20% of customers to only 8%.

 

Significant Financial Impact

Our client found clear financial benefits from improved customer experiences, as those accounts
reporting the strongest loyalty spent 36-107% more on  supplies with them annually. In addition,
their most loyal customers contribute fully 65% of annual revenues, as shown below.

Chart7-1024x405.jpg

 

Perhaps most importantly, our HUMAN Brand CEM methodology provided measureable impact on
revenue, as illustrated by the structural equation model shown below.  This analysis indicates that for
every 1 point increase in warmth and competence perceptions (on a 7 point scale), customer loyalty
to the client increases by .91 points.  In addition, for every 1 point increase in customer loyalty
(on a 7 point scale), annual revenue increases by $356 per customer – a 12% increase!

 

Impact-on-Revenue-(1).jpg

 

Testimonial.jpg

 

Unlike other CEM methods, the HUMAN Brand process goes well beyond competence-oriented
attributes of customer experience to assess the warmth and intention dimensions that drive loyalty
and trust. In addition, it identifies exactly which customers should be addressed with personalized
experience enhancements. As a result, our HUMAN Brand measures deliver much more in-depth
insights that can be acted upon with greater precision to achieve lasting improvements in customer
experience, loyalty and revenue.

For a more in-depth discussion of this case example and HUMAN Brand customer experience
measurement, please download our white paper here.

View Original Article

Recent Content