Analytics and customer experience: Are you measuring the right thing?

1st Feb 2010

While the primary influences of customer experience are attitudinal, analysis can generate improved performance. But according to Peter Simpson the focus is on measuring and analysing perception against expectation in three key linked areas.

Exponents of the value of improving customer experience as a way of enhancing business performance have a real dichotomy. To win the argument to invest in a customer experience improvement programme, they must convince the CFO of the business. That means focussing on numbers, with a convincing set of data substantiating the link between the investment and the ROI it will yield. The argument needs to be steeped in rationality. Yet to implement the programme the focus is on words; winning the hearts and minds of those whose behaviours one seeks to change.
Art and science
The argument as to whether marketing is an art or a science has raged for years. It is interesting that long-term brand appeal is built primarily on emotion not rationality. The great TV ads are primarily emotional in nature; think of Guinness and its sea horses; does it matter how long the wait for the wave actually was, the point is that waiting pays off. Interestingly the same is true of oratory; Winston Churchill did not say how many owed how much to how many less; it was the idea that counted. People buy and recall ideas. Numbers were put to the sword in '1066 and all that'.
Emotional and rational
It is clear that people make emotional decisions in the main. They may think that they are making rational ones, or even post rationalise them. I would argue that an emotional decision is the sum of a number of rational trade offs. One example is whether we choose the highest interest rate for our savings or the lowest premium for our insurance. It is clear that the majority do not, but will take name awareness, features, security, recommendation, history and a range of attributes into account. We can summarise this as perception of the brand or indeed the experience of it. It always strikes me as odd that we often decry so called emotional decisions; deciding not to invest in Icesave seems to me to be an entirely rational brand trust decision.
Customer experience measures 
It seems to me that a similar approach is likely to be most helpful in developing analysis of customer experience. Customer experience is also very much about perception. In essence it is a measure of external perceptions against external expectations, not internal measured results against internal standards.
What are we measuring against
What we measure to define experience
It is not terribly helpful to know that we answered the phone in 8 seconds against a standard of 10. The customer might have expected 10, but perceived to be waiting for 12. Why? Largely because of prior, perhaps negative, experience of the brand, but more likely because the call was unsatisfactory when the connection was made – i.e. the customer did not get what he or she wanted.
Three numbers to analyse
The key question then in using analytics to help improve customer experience is to ensure that we analyse the things that matter to customers. Customers will be much influenced by the recency and frequency of their interaction with the brand and these are key members for us. But the focus is on the emotional response to those interactions.
Hence, we argue that the key numbers for analysis are three:
  • How did you feel about your interaction with us today?
  • How do you feel about us as an organisation?
  •  Would you recommend us to your family, friends and colleagues?

Interaction today 
This is crucial. It is the day to day measurement of perception against expectation, and enables daily tracking of customer experience. Analysis should track both the customer’s previous answers and, in a person to person interaction, the performance of the agent. This data should then be viewed in the context of the operational performance on the day; were systems fully functional, was there a particular call flow issue?
Seasonal adjustments need to be made - noting time of day, day of week and seasonal patterns. This matters not only to operational design and capacity planning, but to the behaviour of agent. For example, in retail banking the nature of calls and attitude of customers calling at 9.00am on a Monday morning for a quick account check is quite different to a call on a Wednesday afternoon for a service need discussion. It is important that agents are trained to appreciate and respond accordingly and operational design accommodates these differences.
Customer satisfaction
This is a wider concept. How people feel about the organisation as a whole, takes into account not only day to day interactions but the total set of experiences and perceptions of the organisation and its brand. The customer will be influenced not only by his or her experiences but also by the experiences of others. This is because brand associations are a reflection of the individual’s personality. People wish to be seen to have made good choices in the eyes of others.
Whilst customer satisfaction tracking surveys will provide meaningful numbers for analysis, it is likely that qualitative research will be required to better understand customer attitudes and motivations.
We know that customer satisfaction and loyalty are closely linked and that they are correlated through the Net Promoter Score to business performance.
In a separate article we shall analyse in more depth the true relationship between loyalty and business performance across various business and activities. Satisfaction is clearly linked to both longevity and frequency, value, volume of cross sales and repeat purchase. We shall explain the mechanics.
Key to understanding the benefits of customer experience is measuring and analysing recommendation. We know that people only recommend if they are highly satisfied; satisfaction in its own right is not a motivator.
There are two aspects of recommendation which require analysis. Firstly, the characteristics and motivation of the recommendee. In sum, people recommend for altruistic reasons and also to build esteem in their social group. They like to be seen as early adopters. We also want of course to look at the value of our recommendee; there may be a correlation between their value to the organisation and the recommender.
Secondly, we want to understand the value of recommendation to us both in terms to reduce marketing costs and increased customer flows, including the performance of recommended customers compared to those joining by other means.
Analysis has much to offer customer experience. Of course, we should measure and analyse operational aspects of improving customer experience. In particular for call centres: average handling time, time to answer and number of lost calls are vital data to ensure operational efficiency, together with sales per call. There is nothing in the argument that says optimising systems and processes is not a critical aspect of customer experience.
However, the real value arises from considering the perceptions of customers against their expectations on day to day and long-term horizons, in conjunction with their behaviour vis a vis recommendation.
In sum, we are looking primarily at the value of the organisation to the customer rather than the traditional, value of the customer to the organisation.
Peter Simpson is a marketing and business consultant, and chairman of Smith and Co. He was one of the founders of first direct and was its commercial director for many years, winning multiple awards for marketing, customer service and product design. His business philosophy is simple; treating people with respect at all times maximises the value of the enterprise for all stakeholders.

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By Fizzback
01st Feb 2010 12:43

Very interesting article, Peter.  At Fizzback, we'd echo a number of your key points.  We ask over 1.5 million consumers each month the questions that you mention, carefully nuanced depending on the lifecycle stage in question (e.g., retail sale vs. customer service call) and the consumer's previous feedback history with the client in question.  Critically, we allow consumers to express themselves in natural language, employing our own artificial intelligence technology to turn consumer emotion into actionable business intelligence.  Heads of marketing, customer care and retail are able to see at a high level what drives positive and negative experiences, prioritising areas to improve, and are able to drill into emotionally rich verbatim customer comments, giving them a clear sense of how they're making their customers feel.

Your point regarding measuring performance versus consumer expectations is well made.  We'd also suggest that in asking for feedback, companies are setting an expectation that they care, and are prepared to do something about the feedback they receive.  All Fizzback clients have automated workflows in place to follow up with consumers intelligently.  Complaints and questions are immediately routed to specific teams in customer service and/or the retail outlet they transacted with.  We've found that around 40-45% of detractors can be turned into promoters by calling them and quickly resolving their issue, and as such we've seen huge increases in advocacy at retailers such as The Carphone Warehouse and Phones 4u.

We believe too that it's also critical to align employees behind these numbers.  Fizzback is used to drive the performance scorecard and bonus payments of many thousands of retail store employees and contact centre agents.  With response rates of 20-40%, employee-level feedback is used for coaching ensuring that every employee knows what it takes to delight a customer.  As a result, we've seen remarkable improvements in key metrics such as advocacy, first call resolution, retention and cost to serve.

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By Neil Davey
04th Feb 2010 14:45

Thanks for your comments and I'd like to emphasise one particular point you make, and one that is held as common wisdom - that customers with a complaint can actually become more loyal customers by having their grievance dealt with to their satisfaction.

I would suggest that - despite your assertion that by asking for feedback companies are setting an expectation that they care, and are prepared to do something about the feedback they receive - the reason for the swing in opinion towards advocacy, is actually because most customers these days expect their feedback to come to nothing. At best they may receive a stock letter/email promising that the matter will be investigated.

Sad, but true!

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