“Executives launch disruptive initiatives to delight customers with bold moves and innovations. But they often fail to quantify the economic outcomes of differences in customer experiences.” –McKinsey’s Joel Maynes and Alex Rawson
At Advocamp in San Francisco this month, marketers gathered to hear about the great migration to customer centricity. Companies like Tesla Motors were held up as marquee examples on how to deliver an awesome customer experience.
“Surprise and delight is key to understanding why Tesla works,” says Mark Organ, CEO of Influitive, which hosted the event.
In turn, Organ says this leads to “an army of advocates going nuts on social media” praising Tesla cars and services to their peers. The big idea is that sales sprouting from powerful customer experiences perpetually feed themselves.
That’s why companies are starting down the difficult path of transforming a corporate culture into a customer-centric one and standing up customer-experience programs that promise to get everyone marching in the same direction.
It’s too bad this road is paved with failures.
At a recent roundtable of customer-experience leaders, fewer than half could say what 10 points of net promoter score would be worth to their businesses, write McKinsey principals Joel Maynes and Alex Rawson in a report, Linking the Customer Experience to Value (March 2016).
Without quantifiably linking customer experience to business value, mapping out a course with successful waypoints, and directing investments accordingly, a customer-experience program risks running out of momentum, McKinsey consultants say.
Inside the customer experience program
Losing momentum will be crushing. It’s hard enough selling an entire company on the concept that the customer experience should be the driving force for every department, every employee. Old metrics and models need to be replaced with customer-centric ones. It’s a sweeping change for a company.
“You need permission to change the status quo, and this is a hard one,” says Forrester principal analyst Laura Ramos, speaking at Advocamp. “It requires you to put the customer first and to understand that what’s in it for them is more important than what’s in it for your business.”
McKinsey’s Maynes and Rawson suggest companies start a self-funded customer-experience program with three to five hypothesis about the business outcome of a better customer experience. For instance, airlines might want to focus on capturing a greater share of trips and trip revenues and on lowering the cost to serve, they say.
The customer-experience program should have a graded short list of customer pain points and opportunities to improve the customer experience. This list of ideas will sprout from customer surveys, focus groups, interviews, etc. Using historical customer data and net promoter scores as the measuring stick, companies can track business outcomes over time.
Connecting the dots
While business outcomes from a better customer experience largely depend on industry, there are a few concrete cases, McKinsey says. They come in the form of near-term reduction in the cost to serve, such as fewer calls, escalations and technician visits.
By linking customers to a net promoter score, and a net promoter score to a business outcome, companies can test whether an idea to improve the customer experience moves the needle.
There’s more to this, of course, but the general idea is to take an analytical approach to a customer-experience program – not jumping in blindly.
“Executives launch disruptive initiatives to delight customers with bold moves and innovations,” say McKinsey’s Maynes and Rawson. “But they often fail to quantify the economic outcomes of differences in customer experiences, so their efforts end up having clear costs and unclear near-term results.”
Tom Kaneshige is editor of Five2ndWindow, Penton’s independent news site helping marketers and line-of-business executives get ahead of the digital disruption happening to the customer experience. You can reach him at email@example.com.