“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 studies
are 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
