Customer Experience Competency #4 - Prove the ROI Connection between Experience and Growth

It is natural to encounter some cynicism about how “experience” drives profitability and growth. This competency helps you to make the connection. And it gives you a language set for embedding the ‘customer score’ into leadership conversations – so it becomes as heralded and easily talked about as sales goals, revenue and profitability.

The challenge with much of the “customer work” is that it is perceived that there is no clear (simple) metric for understanding progress in numeric business terms. Business leaders manage by the numbers and it is reasonable for them to want a gauge for this work.

We inadvertently have complicated matters by introducing surveys as THE metric we want leaders to manage to. In our quest, to make this connection, there has been a proliferation of smart analysis done to establish correlations between ‘lift’ in survey score results and increase in loyalty and ultimately customer profitability. Smart work – but really complicated – and it still leaves leaders questioning the connection.

Many companies don’t go back and prove out if the hypothesized correlation between survey scores and growth delivered. If they do, the results are presented in a mathematical equation that fail to inspire widespread leadership action or clarity on what actions to take. These mathematical equations still do not deliver an easily understood connection between customer focus efforts and the “show me the money” business impact – which nearly every customer experience leader receives at some point.

During my crusades as Chief Customer Officer, especially inside enormous companies like Allstate and Microsoft, what began to resonate and cut through and create a connection with leaders between experience and profitability is something I call simply this: Customer Math. In my book, Chief Customer Officer, I gave it the handle “Guerrilla Metrics” because it really does help you in your quest to elevate customer metrics to the same level as sales goals and quarterly revenue targets. But you need to explicitly drive the connection between how these two are connected to get leaders to pay attention. Guerrilla Metrics does that for you.

And here’s why: It’s simple. And it’s powerful for leaders to talk about.

Creating the competency for managing customers as assets builds passion across the organization and establishs a simple rallying cry for leaders. It gives your leaders a galvanizing message to help people understand the end game with customer experience. That means being diligent about how you measure the growth or loss of that customer asset.

STEP ONE:

Establish this Simple Version of Customer Math for Your Business

STEP TWO:

Create the Connection between Experience and ROI

The power in creating the connection between the expansion and shrinkage of the customer asset

is in the deliberate connection to the experiences that impact customer math performance.

To accomplish this, collect and map customer feedback gathered from sources aross your customer lifecycle to identify experience failures and which experiences and interactions drive customer and revenue departure.

These sources are rich in helping you identify the trouble spots:

Feedback acquired through contacting lost customers.
Trending of complaints
Closed loop feedback with ‘detractor’ customers (if you employ Net Promoter)

If you do not actively conduct departing customer conversations, I strongly suggest that you begin now. Because explicitly making the connection between the volume and value of lost customers and the experiences that drove their revenue out the door is what leaders need to explicitly create the connection between experience and money. That experience drives growth! When you make this happen in a simple and explicit manner – you will get the attention of leaders. Customer growth and customer asset management will (finally) become as important and be discussed with the rigor of sales goals and quarterly revenue targets.

Often the response received when introducing customer math to an organization, is “oh we do that – we track retention.” The challenge is that those numbers are embedded somewhere in the sales score cards or a line item in a proliferation of other score card items. And retention rates have the risk of delivering a false positive – if you are standing steady at 70% retention, leaders don’t think about the incremental growth and profitability that could have been realized if the customers who left hadn’t. If you are holding steady, you are constantly working just to fill the leaky bucket of that customer asset flowing out the bottom.

Take Action: Reconcile “Customers In” with “Customers Out” to know how well you are managing customers as an asset of your company.

Go the the post Managing Customers As Assets to get more specifics on what comprises a good starting set of Guerrilla Metrics and a worksheet to determine where you are now.

Critical Checkpoints: For many companies, since every silo frequently has varying definitions, putting together these simple articulations of “incoming” and “outgoing” customers requires: