Frustrations with CX today and NEXT-GEN approaches (Part 2)

The Problems with CX today: a recap

In the first part of this post, we cited the following reasons why current approaches to Customer Experience (“CX”) measurement and change management, have all but lost the attention of the C-suite…

1) CX programs, in general, FAIL to clearly and simply connect the dots to what C-level executives 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 a 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— who are often frustrated by stagnate scores, anaemic response rates and general poor visibility into customer perceptions at the individual store level.

Before we start to solution, it’s important to quickly discuss the current role response rates and key driver analyses play and why they are missing the mark for so many retailers.

The Feedback Gap

The traditional approaches to collecting feedback—whether receipt-tape invitation, email or SMS—have seen a steady decline in participation over the past several years, as time-poor consumers are simply not willing to take the time to engage with these cumbersome and often painful methods.  It’s pretty ironic that these are often referred to as “Satisfaction” surveys – talk about a bad customer experience.

As we explored in a previous post (What Retailers can Learn from the Last Presidential Election) the net outcome of this is low response rates, that tend to capture in most cases only extremely good or bad experiences.  This is especially painful for store operations teams and field management, as it leaves them blind to the majority of customer interactions.

The key to being recognized is to be 10% better than average all of the time”. – Shep Hyken

Continual improvement at the store level, requires customer feedback pouring in by the minute for each and every location, enabling ops manager to quickly understand how their execution and levels of customer engagement are impacting their sales while providing the ability to measure the immediate impact of corrective actions taken.

If the majority of stores can then begin to make these incremental improvements, week over week, month over month, the aggregation of continuously meeting and exceeding expectations is how retailers can systematically move the needle on fundamentally important KPIs, like same-store sales growth.

And if we really want to re-capture the attention of the C-suite, isn’t better to be able to show a 0.75% lift in same-store sales growth, as opposed to a 4 point lift in NPS scores?

So, what does NEXT-GEN CX look like?

Where today’s CX programs foster a primarily “reactive” mindset to CX measurement— waiting quarters for trends to develop often focusing on customer complaints and customer resolution—NEXT-GEN CX is focused on speed to insight and simplicity enabling retailers to be more aggressive, more precise and more agile. Exactly the traits needed to survive in a world where continuous evolution has become the new norm.

CX Blog Image.png
NEXT-GEN CX In Action: Customers who answered YES, when asked if this simple associate behavior was performed, spend on average 24% more

Real-world example: “Did our associates offer to start a fitting room for you today?” is one of the simple questions asked by an apparel retail client of ours on the payment terminal during checkout.

With an 83% response rate, they learned in just three weeks that customers who responded YES spend 24% more versus those that responded NO, which also turned out to be the #1 driver of customer spend in-store.

Just as eye opening, this retailer quickly discovered execution on this behavior varied by over 60% across their 600+ stores, representing over $54M in lost sales over a 12-month period, just taking into consideration the impact to average transaction value (ATV) alone.

“While I wouldn’t say I was surprised by the result – that’s the reason we asked the question – it’s just that we could NEVER measure these types of behaviors with enough precision to do be able to do anything with it, much less predict the economic impact.”

—COO, apparel retail client

A Recipe for Success

If we break this down a bit further, there are several important takeaways from this example:

  1. SIMPLICITY is the ‘secret sauce’ of NEXT-GEN CX

Making it simple for customers to provide feedback yielded an 83% response rate, opening up this retailer to hear and learn from the once silent majority of customers.  Store managers know now exactly where to focus— which stores, which day(s), which shift(s), as well as how much money is being lost as a result of inconsistent execution.

  1. DIRECT CONNECTION TO SALES and items purchased is a MUST

The power and benefits of collecting customer feedback and perceptions tied to directly sales and items purchased, in the moment, cannot be understated.

  • First, it greatly simplifies the organization’s efforts to quickly pinpoint the key drivers of customer spend and repeat visits—key tenets for improving comparable sales. As opposed to waiting years, retailers can learn in weeks the specific behaviors and onsite conditions that truly impact sales and not just the customer’s fleeting perception of ‘satisfaction’ or ‘likelihood to recommend’.
  • Second, it greatly enhances buy-in at the store-level when it comes to driving change by enabling field and store management to quickly and easily understand the immediate financial impact based on their current level of execution. Many retailers are actually seeing this change the dynamic between field and store management, bringing both parties on the same side of the table, aligned around truly representative feedback from customers with a clear understanding of the economic impact.
  1. SPEED to INSIGHT

Enabling the retail organization to hear from the overwhelming majority of customers drastically truncates the time it takes to see patterns and trends in the data, which greatly enhances the organization’s capabilities in two key areas:

  • The ability to improve day-to-day operations due to dramatically improved visibility into execution and perceptions, most importantly, with the ability to measure the immediate impact of corrective actions taken both on CX and financial performance; and
  • The flexibility and speed to measure the immediate impact of single and small store test & learn initiatives and pilots, building the financial business case for investment and at the same time reducing time to market for new initiatives.

NEXT-GEN CX: A compliment not a replacement

NEXT-GEN CX is providing retailers the ability to surgically leverage CX measurement across departments, supporting continuous innovation and test & learn initiatives, while at the same time providing store operations teams with the tools they need to drive change at the, all-important, store level.

As opposed to applying a blunt force “CX club”, NEXT-GEN CX is providing retailers with a “CX scalpel”, including a level of fidelity and precision measurement that takes CX from being a simple pulse of the customer to an indispensable instrument that can help fundamentally change the trajectory of the company.

So, am I suggesting that multi-location retailers completely dismiss and throw there current CX approach to the curb? Absolutely not! But what I am suggesting is that retailers take a long hard look at how they currently engage and collect feedback from their in-store customers and honestly evaluate the value this is delivering to the business.

And at a bare minimum, keep an open mind to some of the more innovative approaches for collecting feedback from your customers and ingraining this into the DNA of the organization.

Read Part 1 Now. 

__________

We’ll be at NRF – if you’re heading there and would like to book time with us, you can do so here.

Alternatively please feel free to reach out to Sam via email or LinkedIn at anytime.

Frustrations with CX today and NEXT GEN approaches (Part 1)

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.

0 (2).jpeg
CX was mentioned 2,710 times in US earning calls in Q3 2019.

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…

Screen Shot 2019-11-28 at 10.53.28.png

 

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.

Read Part 2 Now

_________________

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:

Attending NRF 2020?  We’d love to see you there!  Book a session with the team today.

What can the last US election teach us about Retail in 2020?

Cast your mind back if you can to the November 7th, 2016 presidential election.  Hillary Rodham Clinton is on the precipice of defeating Donald Trump to become the first female President in the history of the United States.  Time Magazine has just published an article in which no less than seven highly-esteemed polling organizations predict a Clinton majority.  Celebrations are already beginning.

Yet as history would soon reveal, the experts in this case got it wrong.  Very wrong.

When pressed for an answer as to how they got this so wrong, the polling experts’ explanation was Non-Response Bias (NBR), in which the results of a study are skewed by a disproportionate sample base.  Put a bit differently, people who do not take surveys are not represented in the results.

Where the pollsters fell down was in assuming their data set truly represented the national opinion.  They failed to consider that a large (and influential) portion of the public simply hadn’t responded to their pre-election polls at all.  They preferred to cast a different kind of vote – straight to the ballot box.

So, how is NRB impacting Retail?

While the political landscape of 2016 might not immediately present itself as a direct analogy for the state of contemporary retail, dig in a little and the parallels start to reveal themselves.

Current estimates suggest that in the last 20 years, the median response rate for feedback surveys for all businesses has dropped from around 20% to just 5%, with many brick and mortar retailers falling well under 1%.  At the same time, the rate by which customers are more likely to ‘vote with their wallet’ is higher than ever.

96% unhappy customers won’t complain, 91% of those customer will simply leave and never come back – 1st Financial Training Services 

The DANGER of the ‘Silent Majority’ caused by NRB 

The truth of it is retailers and political pollsters, both, struggle with a common issue: the vast majority of people today simply don’t have the time and aren’t willing to engage via traditional survey methods, whether it’s printed on a receipt, emailed, or even an intrusive text.  Instead, the tendency of the ‘Silent Majority’ today is to simply ignore these requests for input, and this poses a major problem for any business that wants to hear what their customers think and adjust accordingly.

So, how, exactly, is NRB dangerous for retailers?

Imagine a pyramid, if you will, with executive strategy and company direction at the top, mid-level management and corporate decision making in the middle, and day-to-day operational decision making within each store at the bottom of the pyramid.

NRB permeates it all. Informing strategy and company direction based on a biased, anaemic representation of the customer base can set companies back years.

The NRB Pyramid
The Impact of NRB: a lack of feedback impacts all areas of your operational decision making.

Today’s trickle of feedback often means project teams and various departments are slow to react as it often takes quarters for patterns and insights to develop.  To add insult to injury, testing new initiatives in store also takes much longer than it should delaying time to market, ultimately, making the organization appear sluggish and behind the times.

But, probably worst of all, NRB results in huge blind spots and a general lack of visibility into operational execution, associate behaviors and customer perceptions at the individual store level—where the rubber meets the road for the majority of our clients with most seeing 85% of sales coming through their stores.  What’s the old adage, “Your brand is only as good as your last customer experience.”

Actually, I rather prefer Warren Buffet’s version, “It takes 20 years to build a reputation and five minutes to ruin it.  If you think about that, you’ll do things differently.”

Well, to be able to do things differently, to become more agile, and to get better connected with the heart of the customer base, companies must find a way to tap into the ‘Silent Majority’ caused by NRB.

But, what do you do when the majority of your client base is seemingly inaccessible?

Awareness is Half of the Battle 

The good news is that a number of providers in the CX space are increasingly aware of the issues inherent with traditional feedback methodologies and the resulting biases.  By working with a provider that is transparent about these issues – and pro-active in terms of providing ways to counteract them – there’s an opportunity to tap into that once ‘Silent Majority’ and in turn gain a competitive advantage.

Here’s a selection of points to consider if you’re looking to build an effective customer feedback program that accounts for and has the potential to eliminate NRB.

  1. Examine where your data is coming from

When looking for a partner or vendor(s) to support your CX efforts, consider where the data being collected to support their recommendations is coming from.  How large is the audience being polled?  Are you receiving enough responses to be actionable on a daily, weekly or monthly basis?  Is your data at risk of being unrepresentative and misleading, NRB?  Are you collecting enough data at the store level to support in-store test and learn and pilot initiatives in real-time, thereby improving the agility and ability to adapt more quickly to a constantly changing retail environment?

  1. Revisit your goals for the program

While many CX platforms are very good at focusing on feedback that allows for ‘brand level’ analysis, building a data set that can be used at a ‘store-by-store level’ is often the greatest challenge and, frankly, the biggest gripe of most store operations teams.  Look for providers that are able to give you both a brand overview as well as more granular store level precision.

If the ultimate goal of the program is to drive measurable improvement, having visibility (ideally down to the hour) into execution, associate behaviors and customer perceptions for every store will be critical.  While most KPIs are rolled up to the brand level, improving performance starts within each individual location, which requires the ability to tap into the thoughts and perceptions of the majority of customers that shop that location each day.

  1. Explore the potential of collecting feedback at point of sale (POS)

Collecting feedback as part of the checkout process has proven to yield the highest customer participation rates in the industry, with many retailers experiencing response rates well over 65% depending on the placement of the question(s) within the payment journey.

Note: To ensure the highest possible response rates with minimal interruption, asking one question per customer (with a set of rotation questions throughout the day) is a best practice.

Another critically important benefit of integrating surveys directly into the payment journey is the immediate understanding of the link between Customer Experience and sales.

Having the ability to share with each store how their individual level execution and the customer experience they are creating impacts their financial performance, specifically, is the key to improving store performance each and every day. And it’s this aggregation of continuous small improvements across the estate which will drive those brand level KPIs through the ceiling.

So, the next time you’re considering whether your CX data collection practices and resulting datasets are fit for purpose, think back to those pollsters on the night of November 7th, 2016.  If something doesn’t feel quite right, perhaps it’s time to ask, am I missing critical information that could fundamentally change the trajectory of our organization?

____

Sam McKeveny is the VP Enterprise Sales for North America.  If you’d like to reach out to him, he’s always happy to discuss how TruRating can help you or your business – try him by email or feel free to connect on LinkedIn.