storm brewing in the distance
PHOTO: Lucy Chian

"Action is the foundational key to all success." ― Pablo Picasso 

CMOs and customer experience (CX) leaders beware: A faint but gathering sense of foreboding is in the air.

The most recent CMO survey found marketer optimism about the US economy has dropped to its lowest level in seven years with a drastic 80% of B2C companies feeling significantly less optimistic now than they did last year. The survey also highlighted that marketing budgets grew less for 2019 than they have in the last three years. Compounding these concerns is the fact that the number one objective from the C-Suite is driving growth, but over 60% of marketers say their top challenge is demonstrating the impacts of marketing (and by association, CX) on financial outcomes.

Gartner concurs, predicting that by 2022 profitability will replace customer experience as the CMO’s No. 1 strategic priority, reducing investment in marketing-funded CX programs by at least 25%. They also posit that while CMOs continue to view CX as a valuable way to drive that growth, many don’t prioritize metrics that demonstrate the value CX brings to the company. When asked about metrics informing marketing strategy, less than 6% mentioned key CX metrics such as Net Promoter Score (NPS) and lifetime value (LTV). Gartner warns that those who continue in this vein are most likely to see their funding cut.

The takeaway from these dire predictions? We cannot afford to be complacent. Both what we measure and what we do to make the measures effective and actionable will be equally important to customer experience programs going forward. 

Related Article: Agile Marketing Your Way Through the Next Recession

Common Customer-Based Measures

Most of the commonly used customer based-metrics are not new to the industry but that doesn’t mean they are not effective. These include:

Customer Satisfaction (CSAT) — This metric typically focuses on how satisfied a customer is with a single interaction, transaction or product. It generally involves a single question or very short surveys. Spikes in negative responses can help to pinpoint broken processes or issues with products.

Net Promoter Score (NPS) — This metric captures the likelihood that the customer would recommend the company to others. While the question of whether a customer would recommend is a simple one, the answers over time are influenced by multiple experiences. Thus, this becomes an indicator of satisfaction with relationship overall rather than with individual interactions.

Customer Effort Score (CES) — This metric tracks the effort a customer must put forth to complete a transaction to the desired end state. More broad-based than the CSAT measure, it frequently involves journeys that span channels and company representatives. CES is often touted as a telling CX measure due to the span of activity it can include.

Related Article: Sorry, There's No Secret Shortcut for Measuring Customer Experience

Adding Value to Customer Experience Metrics

There are several actions companies can take to ensure the CX metrics are effective.

Branch out and follow-up

Expanding beyond traditional measures can add significant gains. Customer lifetime value (CLV) is an estimate of the profit expected over the lifetime of the customer relationship. Measuring this against the cost of acquisition can highlight the ROI of marketing and CX activity. Upswings in CLV values as the CX program is enhanced or modified should be used to communicate the value of CX to the C-suite in concrete terms.  

Engagement and empathy metrics focus on measuring not only the what (feedback and how engaged customers are) but also on understanding the why (personal context). While some of these are not typically mentioned in CX metric discussions, they should be. Digging into engagement metrics can pinpoint problem areas that negatively affect the more common CX measures. These include social mentions, sentiment analysis, emotion scoring, survey and focus group participation, and customer review contributions.

It goes without saying that when customer engagement in these activities decreases, or any of metrics produce negative results consistently, it is a sign that action is needed. Performing root cause analysis, convening swat teams and developing action plans are all must-dos. Immediate individual follow-up should also be at the ready for extremely negative feedback, particularly when it occurs on social media. 

Incorporate analytics

Looking more closely at customer contributions in engagement and empathy areas can also tell us a significant amount about the why. Sentiment analysis, for example, can pinpoint the why with surprising accuracy, enabling empathy and generating customer insights that shape experiences. Natural language processing, text analysis and cognitive computing to identify and extract subjective information from varied sources including social media, complaint applications, video and audio tapes, and voice-of-the-customer feedback mechanisms are other examples. 

More sophisticated applications go beyond designations like positive, negative or neutral to assign nuanced mood designations. These designations can be correlated with historical behavior to predict immediate and future impacts based on the prevailing sentiment shown by the customer at any point in the journey.

Related Article: Sentiment Analysis in Marketing: What Are You Waiting For?

Eliminate misalignments and look from the outside-in

In its analytics playbook for customer experience, Forrester singles out misaligned metrics and inside-out thinking as detriments to successful customer experience. Inside-out thinking is when companies focus mainly on metrics that promote department or channel goals without incorporating customer-based metrics such as those discussed above. This might seem counter-intuitive to CX, however when less than 6% of marketers say that key CX metrics (e.g., NPS) inform their marketing strategy, it is a clear indicator these metrics are there only for show, not action. 

Misaligned metrics, where line-of-business owners measure their success with domain-specific KPIs that don’t translate across the organization, are also still quite prevalent. Examples include calls per hour in customer service or metrics that pit channels against each other for cross-sell or up-sell volume. 

Marketers can use the journey maps as starting points to look for both misalignments and inside-out thinking. Journey maps identify the business units responsible for each journey step. The logical, but rarely completed, next step is to understand the KPIs and MBOs [management by objectives] for each involved group and work to eliminate or at least balance out objectives that negatively impact CX.

Success in CX today requires a direct tie between the customer-based measures the company wishes to improve and the internal processes that must be implemented or modified to achieve these measures. Attaining this outcome-to-process association compels CX leadership to find innovative ways to not only take the measurements, but also to act on them.