The Problem with Boiling CX Down to a Single KPI
With Customer Experience (“CX”) now, undoubtedly, considered a critical component of retail business strategy — notice the tremendous spike in mentions of the term CX on Earnings Calls since 2010 — more and more analytics experts are turning a critical eye toward some of the most popular KPIs being employed to measure experience and customer loyalty. And, frankly, it has not been all that flattering.
For example, The Wall Street Journal’s widely shared piece ‘The Dubious Management Fad Sweeping Corporate America’ really ruffled some feathers earlier this year, with detractors and fans (pardon the pun) taking to the LinkedIn comments section to debate the merits of Net Promoter Score (“NPS”) founded by Frederick F. Reichheld back in 2003.
Academic research, by the University of Cambridge, has raised significant concerns about NPS’s inability to accurately predict actual customer behaviors and loyalty.
And while such criticisms are often valid, they tend to gloss over just why such metrics may have been widely adopted in the first place.
In Partial Defence of the Single-CX KPI
Prior to NPS, there was arguably very little in the way of a recognisable ‘metric’ by which to quantify customer experience. Traditional indicators of performance such as sales per square foot and same-store sales growth, while remaining dominant in the boardroom, didn’t really encapsulate or fit in with the philosophy underpinning the emerging practice of Customer Experience.
The growth of tools like NPS and OSAT helped to bring customer experience to the attention of the C-Suite, because they provided a simple indicator of growth that could be tied to financials.
In a tweet in response to the WSJ article, Nate Brown, CX leader and founder of the CX Accelerator community, wrote…
The Achilles Heel?
As CX has begun to be taken more seriously, not surprisingly, the expectations around what it needs to deliver have also increased.
However, the continual decline in customers’ willingness to provide feedback through traditional survey invitation methods (receipt-tape, email, SMS, etc.) combined with the inadequacies of today’s approach to CX is causing many programs to the lose the attention of the C-suite. This is happening primarily due to four reasons:
1) CX programs, in general, FAIL to clearly and simply connect the dots to what C-level executives really really care about: increasing revenue, reducing costs, and improving profitability.
2) Current approaches to CX do very little, if anything, to support rapid innovation and test & learn in-store, which is critical to success in today’s rapidly changing retail environment.
3) CX today promotes a very “reactive” approach which has the business constantly looking in the rear view mirror with slow developing insights and trends, as opposed to instilling an aggressive, offensive mindset that puts the organization on the front foot.
4) Even when combined with key driver analyses, today’s programs are deemed as NOT ACTIONABLE by store operations teams—often voicing frustrations with stagnate scores, anaemic response rates and general poor visibility into customer perceptions at the individual store level.
Taking into consideration the above, for many organizations, it is time to sound the alarm regarding their approach to CX. The list of multi-location retailers filing for bankruptcy or now deceased is littered with companies that cited exceptionally good NPS and CSAT scores.
In the next follow-up post, we will be diving into what NEXT GEN CX looks like, how it is addressing the problems listed above, including real world examples, and how CX can help companies better compete in today’s rapidly evolving marketplace.
Sam McKeveney is the Head of North American Sales at TruRating. Sam works with businesses across the US + Canada, to help them understand how to take a pro-active approach to customer feedback in a rapidly evolving retail environment. To reach Sam, send him an email or feel free to connect on LinkedIn.
If you’d like to read more, why not check another recent post from Sam, on the dangers of relying on misrepresentative data:
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