At our conference this year, I talked about the Holy Grail of customer attitude measurement—proving the benefit by showing the financial returns from high levels of satisfaction, loyalty, etc.
This is important because, if we want the customer experience to be taken seriously at board level, we need to join the grown-up conversation. We need to talk pound signs (or dollar signs, or Euros).
My main message was that it's dangerous to see this goal as a Holy Grail. Mythologising the quest for proven links to financial outcomes makes it seem impossible, attainable only by the chosen few—the Galahads of customer service and business intelligence.
My view is that Percival is a much better Grail knight for us to model our quest on. He only had to ask the right question when he had the chance.
So what is the right question? Ultimately what we want to know is “if I invest £x in improving satisfaction, what will the payoff be in improved profit?”. But couched in those terms, it's an impossible question for most businesses to answer. Does that mean we should give up? No.
I think we can make big strides towards answering the question simply by looking at the implicit causal links embedded within it, and breaking the question apart to make them explicit. Ulimately we are looking at a three step causal chain:
- If I invest £X* , how does that change our performance?
- How does our performance affect customer perceptions?
- How do customer perceptions affect their behaviour (in ways that improve profit through increased sales or reduced cost)?
I'll go into more detail in a follow-up post, but in a nutshell I think we can answer those by:
- A combination of guesswork, experience, and experiment.
- Well targeted event-driven surveys linking satisfaction to specific, tangible, experiences and behaviours.
- An aggregate based on all the bits and pieces of the jigsaw we can lay our hands on. (e.g. How much do complaints cost to handle x how many more complaints we get from dissatisfied customers, what does one inbound call cost x number of extra calls for dissatisfied customers, acquistion cost x difference in actual retention rate)
So I think that most organisations could get their hands on the Holy Grail, or at least a convincing estimate of it, if they approach the quest in the right way. But do we have any evidence that the journey is worth it?
Results from January's UKCSI, which we conduct on behalf of the Institute of Customer Service, show that there is such evidence. The full analysis is available on the ICS website (read the executive summary as a good starting point), but one of the key charts is this one. It shows the strong link between customer satisfaction in the Retail sector and sales growth. Amazon, John Lewis, and other retailers generating great customer experiences, are growing faster than their less successful competitors.
Perhaps it's time you started finding your own path to the Holy Grail?
* Or make changes which don't require investment!