According to McKinsey research, many customer-experience transformations stall because leaders can’t show how these efforts create value.
The authors, Joel Maynes and Alex Rawson in their article: ‘Linking the customer experience to value,’ contest that the reason is that they fail to quantify the economic outcomes a of a customer-centric strategy in customer experiences; more satisfied customers, increased loyalty, a lower cost to serve, and more engaged employees.
Building an explicit link to value
When establishing a link to value is done well, it provides a clear view of what matters to customers, where to focus, and how to keep the customer experience high on the list of strategic priorities.
Companies investing to improve the customer experience must be clearer about what it is actually worth and exactly how the improvements will generate value.
To construct this link, start by defining the customer behavior that creates value for your business and then follow customer satisfaction over time to quantify the economic outcomes of different experiences. Several steps can help.
Customer outcomes:Start by identifying the specific customer behaviour and outcomes that underpin value
Customer-experience data analysis: The next step is to link what customers say in satisfaction surveys with their behaviour over time.
Leading customer-experience companies use these data to estimate the value, at an enterprise level, of moving 5 percent of their dissatisfied customers to a neutral status.
Look forward: Successful customer-experience programs look forward, not backward, in assessing the link to value.
Monitor outcomes: Quantify the value of the customer experience is to track outcomes over time for each customer segment that matters.
What matters to customers
A company must create a model of what matters to customers; a short list of customer pain points to eliminate or fix, and a view of opportunities to innovate as seen from the customer’s perspective.
A number of actions can be taken.
Focus on customer-satisfaction issues with the highest payouts and then focus your portfolio of customer initiatives on achieving that goal to maximize the return on your investment.
Build a model of customer satisfaction that links perceived and operational performance on each journey with costs and revenues.
Set priorities for key areas to improve. Once you know the journeys to focus on, assemble a cross-functional team to dig into possible initiatives to improve your performance. What pain points or opportunities will help you differentiate your company? Where do you want to focus first?
Operational surveys, focus groups and the voice of the employee will help you gather the experience of those who know customers best—the front line.
Once you have listed the pain points, size the potential impact of each, using three measures: reducing the cost to serve, capturing longer-term revenues and loyalty, and improving overall satisfaction.
Identify opportunities to innovate and disrupt. While eliminating pain points for customers is important, it is equally critical to identify areas where you can differentiate your company from competitors as customer expectations change.
Designing a roadmap
Many customer-experience efforts lose momentum because the path to impact is too slow or too vague.
To overcome that risk, successful efforts construct road maps that calculates each initiative’s expected value, time to capture, and cost to implement.
The exploration of what matters most to customers should unearth the value of initiatives under consideration and help to crystallize a short list of priority efforts.
With that in hand, convert an initiative’s overall potential impact into an expected value by combining the severity of an incident or opportunity with its frequency in order to prioritise improvement initiatives and retraining if required.
Focus innovation resources on important customer-experience journeys where you have a large gap against competitors or on reasonably important journeys where the gap is narrow or unclear.
Look at your operational data for digital-innovation opportunities. Which customer journeys drive the largest number of calls?
Then assess these ideas against the customer-satisfaction model to estimate the potential impact.