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Are Popular Customer Experience Metrics Just “Immature”, Or Do They Have Bigger Challenges?

by Michael Lowenstein on June 15, 2016

Michael Lowenstein, Ph.D., CMC Thought Leadership Principal, Beyond Philosophy

Based on insights from the Temkin Group report’s State of CX Metrics, 2015, a recent LinkedIn infographic post by CXPA co-founder Bruce Temkin labeled customer experience metrics as “Immature, But Improving”. This is a very revealing, and very disappointing, conclusion. The reasons for this determination are even more of a concern.

While most (64%) of the 193 companies with $500M, or more, in revenues included in the Temkin Group study said they think they are “good” at collecting and calculating CX metrics, a number of problems facing these programs were cited:

– Limited visibility of CX metrics across the organization (58%)

– Lack of taking action based on CX metrics (57%)

– Poor communication of CX metrics (41%)

– Lack of resources for tracking CX metrics (39%)

– Too little compensation tied to CX metrics (36%)

All of these results suggest a looming crisis in confidence in current metrics, as well as for the corporate function providing them.

In addition, even companies that considered themselves good at measuring customer experiences indicated that they had “blind spots” due to non-inclusion of such groups as new customers (39%), long-term customers who had not made a recent purchase (35%), and defected customers (16%). This last statistic is particularly troubling since identifying churn factors is often a Rosetta Stone to drivers of customer risk.

Temkin’s infographic blog also offered-up report statistics on the most actively used metrics: Satisfaction (89% transactional metrics/84% relationship metrics), Likely to Recommend (77% transactional/81% relationship), and Customer Effort (52% transactional/53% relationship)

From my perspective, what is most distressing is that, after so many years of use and acceptability across a broad range of industries, the array of popular, broadly collected CX metrics seem to get so little respect. Part of this may stem from these metrics having such limited application and value. Although it will likely generate some argument within the customer experience research and consulting communities, I’d suggest (as I’ve often done) that these metrics have significant granular actionability challenges:

– Satisfaction:- Principally passive, reactive, superficial and attitudinal in nature; largely dealing with physical, functional aspects of value delivery and experience; the metric is weakly correlated with customers’ share of spend among brands they use

– Recommendation – Extensive research has shown that recommendation is not universally applicable, that is to virtually all industries and purchase situations. Certainly, its results cannot be applied to other areas of marketing decision-making and effort, such as branding and positioning, product and service assessment, or loyalty program development and refinement. Further, it gives no guidance around customer life-cycle issues: targeted customer prospecting and acquisition, customer risk mitigation, and recovery of financially attractive former customers.

– Customer Effort – A measure that is largely limited to elements of service performance, not the overall experience; studies have determined that, as a CX metric, it is focused on the past and narrowly deals with only a specific attribute or incident rather than with the complete landscape of performance

Namely, at the end of the day these antecedent metrics tell organizations too little about emotions the customer transactions and relationships create, what memories they evoke, or how they will drive, or have driven, downstream behavior. Further, they are principally macro measures, and limited as enablers for taking detailed, granular experience action.

None of these customer experience metrics takes brand favorability and volume/type of positive and negative informal online/offline word-of-mouth into consideration. And, as many consulting organizations have determined, today these factors are critical for both understanding leveraging downstream customer behavior. Advocacy and bonding, principally based on positive/negative customer word-of-mouth and impression of the brand or vendor as a result of experience, has tremendous power and potential to create desired high-end customer behavior. Word-of-mouth behavioral impact, however, is a double-edged sword; and customers’ negative communication, as much as praise, can have a damaging effect on other customers and non-customers, as well as the communicating customer.

As a group, CX researchers have often been labeled as risk-averse, even complacent, when considering augmentation or replacement with more real-world, more contemporary, and more actionable metrics such as customer advocacy. Though the Temkin Group’s recent study identified a modest rise in CX metrics competency and maturity between 2014 and 2015 (and, given that any improvement is better than a decline), most (around 85%) of the programs have been identified as “weak” to “moderate”. I’d respectfully submit that, in 2016, and irrespective of industry, that’s not nearly good enough; and these kinds of results portend real contribution and role challenges for the profession.

If the true goals of customer experience optimization and enterprise customer-centricity are to generate more positive levels of stakeholder behavior – higher individual share of wallet if we are speaking about customers – then using popular stand-alone performance metrics like satisfaction, effort, and recommendation are perhaps the least reliable and actionable methods for getting there. This may be a somewhat controversial statement, but it’s also well-proven.

Republished with permission from CustomerThink.com

Michael Lowenstein, Are Popular Customer Experience Metrics Just “Immature”, Or Do They Have Bigger Challenges?

Michael Lowenstein provides strategic consulting, research design and in-depth, leading-edge analysis that helps clients deliver outstanding business results through deeper customer experience, communication, relationship, employee and brand equity insights. Beyond Philosophy provide consulting, specialised research & training from our Global Headquarters in Tampa, Florida, USA.
Michael LowensteinAre Popular Customer Experience Metrics Just “Immature”, Or Do They Have Bigger Challenges?