Sunday, May 25, 2014

Customer Feedback System - Transaction Survey - Part 2

Recall way back, several posts ago when, as the new CX manager Widget Inc., you completed an initial assessment of how your employer stands stacks up against customer expectations.  One of the glaring holes you discovered is that the company does not have a systematic method to collect ongoing feedback from customer transactions, and respond to those instances where customers are less than pleased with their experience.  It’s now time to fix that, and your first “win” as the CX manager is going to be the design and implementation of a robust “find and fix” system.  As mentioned, this is going to serve as the foundation for all subsequent CX activities you undertake.

Let’s start the design of the survey with a look at the “quick and dirty” journey map we developed to illustrate the approximate approach a customer (in this case a young male) takes in completing an online purchase.  As mentioned in a previous post, there’s much more to a journey map than what we’ve captured in this sample, but this content will suffice for developing our first transaction survey.   Take a look below at the journey map, and notice the red circles placed at what I’ll refer to as “moments of truth.” (MOT).  These MOT were identified in the course the customer interviews we completed in developing our journey map.  As we’ll see when we discuss journey mapping in more detail in future posts, gathering customer and employee input is critical to developing a realistic depiction of what typically unfolds in the course of a transaction.  So, for this exercise, let’s assume we met with a handful of 21-34 year old males and, in plotting their journey, they indicated their expectations at each step.  It’s those expectations they identified as critical in the process that we’ll define as our Moments of Truth...getting these “wrong” can run the gamut from mildly annoyed to abandoning the transaction altogether.

Developing a survey questionnaire is as much art as science.  It’s useful to keep in mind that our overarching goal is not so much to analyze satisfaction feedback from each step or MOT, but rather, to understand how each of the steps in total contribute to or detract from the overall journey.  In other words, from a customer’s perspective (and we should always look at things through a customer lens),  she doesn’t typically isolate on individual components of a transaction.  Rather, she’s more likely to look at the totality of the overall experience or journey.  A traveler, for example, that just boarded a plane likely reflects on the entire airport experience and “gives points” for a smooth check-in, but “detracts points” for the hassles at the security checkpoint and the lukewarm cup of coffee she purchased.  So, as a result, she may conclude that her airport experience or “journey” (i.e. the online purchase experience in our example) was negative overall.

A caveat before proceeding with a first draft of your survey.  There’s a temptation to “ask everything under the sun” when sending a customer survey.  This is particularly the case when the questionnaire is vetted among multiple potential stakeholders (e.g. sales, market research, customer service).  Resist this at all costs.  Above all, surveys should adhere to the following two guidelines: 1) present questions to which the responses are “actionable.”  That is, ask yourself...”what potential changes will I be able to make using the results of this question?”  A related validity check for a potential question is, “so what?”  Two-hundred respondents say they’re considering buying a widget in the next 6-months.  So what?  Unless you can identify them by their name and contact information so you can subsequently market to them, this likely falls in the “nice to know category.”   2) this guideline flows from the first...respect your customer’s time.  Survey’s should be brief and designed to elicit only the information you need to address your issues...stay away from “nice to know” questions.

With the overall journey in mind, then, let’s develop our initial transaction questionnaire by focusing on the Moments of Truth we’ve identified.  I say initial questionnaire because there’s no rule that says you need to stick with your first version.  Indeed, take the time to test at least a couple of versions of the questionnaire over a 3 to 4 month period before “finalizing” it, and use this time to assess the effectiveness of your questions.  There are several approaches to formatting responses, and I’m going to suggest a version I’ve always found “actionable” -- the expectation and importance scale.  The objective of this approach is to ask your customers to rate a particular interaction along two dimensions: 1) did it meet their expectation? 2) how important was it for them to have that interaction meet their expectation?  This approach is particularly useful when you’ve introduced a new process and want to better isolate those steps that may be “make or break” with customers.  Below is an initial cut at a questionnaire based on the journey map for the online purchase.  In the next post, we’ll look at each question and a hypothetical report in more detail.

Monday, May 19, 2014

Customer Feedback System - Transaction Survey

We’ll begin laying the foundation for our Customer Feedback System by developing two “foundational” surveys: Transaction and Win / Loss.  Hand-in-hand with the deployment of the surveys, we will also implement a “closed-loop” response method which will assure that: 1) customers’ problems are flagged and receive a prompt response; 2) the root cause of the issue is identified and “fixed” to prevent a recurrence of the problem.

Before starting our customer experience quest, a brief “word to the wise.”  Maintaining a robust CX initiative almost always necessitates some heavy lifting that will require collaboration with other functions in your research, IT, as well as sales and service channels amongst others.  However, it’s critically important (i.e. it cannot be emphasized enough) that there be demonstrated leadership and support from the company’s senior management.  This is particularly the case if you’re tasked with implementing CX in a mid to large size organization, and / or a company that is strongly sales driven.  Such organizations do not always emphasize the importance of satisfying customers, tend to tolerate churn, and are otherwise relatively short-term focussed.  Implementing CX in these companies is a significant challenge, and therefore, it’s absolutely critical that executives “walk the talk” in order to have a realistic chance of success.

With that bit of advice out of the way, let’s now proceed by dividing the explanation of the foundational surveys and closed-loop system over the next few posts.  We’re going to assume your organization does not have an established “find and fix” system, so let’s begin there.  Why?  As mentioned in a previous post, while customers are typically first attracted to your company because of its brand appeal, consumer reviews, pricing, or quality perception, they often defect because you have somehow made things difficult for them (i.e. they must spend unwanted time and effort to continue using your product or service).  So, before enhancing the company’s experience, we must first make sure the organization isn’t inadvertently driving clients away and not proactively addressing their problems.

To illustrate the transaction survey and associated closed-loop system, we’ll begin by developing a basic journey map.  Journey mapping is a fundamental tool in your CX kit, and we’ll explore this very useful diagnostic in more detail immediately following the closed-loop discussion.  At this initial stage, we’ll define the journey map as those steps and touchpoints your customer completes in order to execute a transaction.  Subsequently, we’ll expand the map to include the accompanying internal items your company must execute at each step in order to support the transaction, and, very importantly, the emotions your customer may experience throughout the process.  A key endgame of journey mapping is to systematically identify those “pain-points” that may hinder either your customer, or your staff, from executing a particular process in a satisfactory manner.

Let’s use a simple online purchase transaction, and corresponding journey map, to develop our transactional survey.  To capture the “journey” a customer experiences in completing an online purchase, have a look at the sample map below.  A typical online purchase likely contains a few more steps than I’ve  noted, but again, the idea here is to convey the concept and the link to your transaction survey.   In the next post, we’ll interpret the journey map and proceed to draft a survey questionnaire focusing on the purchase transaction.

Saturday, May 10, 2014

Customer Feedback System

A broad scope of satisfaction related evaluations, comments, and ratings, collected at key points in time, is the lifeblood of an effective customer experience initiative.  This is because you must have a very deep and thorough understanding of the various interactions customers have with the organization if you are to respond to ongoing issues, as well as proactively anticipate and develop potential new offerings.  Ideally, this feedback is systematically collected throughout the customer’s tenure with the company -- from the prospect stage up to an including the end of their association with the firm.

To further optimize this system, the satisfaction-related feedback should be associated with other transaction-related data (e.g. purchase price, discounts / margins, frequency, recency, etc.) to realize a comprehensive view of the customer’s relationship with the organization.  Developing such a customer feedback system is a significant undertaking that likely requires collaboration with various stakeholders, including systems vendors, IT, marketing, finance, among others.  In addition to collecting this information, the organization would also need to invest in the expertise and tools necessary to analyze the data, draw insights and propose recommended actions.  

Several noted companies have in fact developed these capabilities and, as a result, have realized significant improvement in their overall operations, including the customer experience.  In his book, Competing on Analytics, author Thomas Davenport profiles how Best Buy uses a variety of data to enhance the relationship with the customer.  Writes Davenport, “(Best Buy) used analytics to determine, for example, the impact of pricing changes not only on short-term sales velocity, but also on the overall customer experience (emphasis mine), and its long-term impact on customer perception and sales.  It even studied the behavior in each segment of frequent returners - people who commonly seek to exchange products or return them as defective - to learn how to better satisfy these customers (emphasis mine).” (1)

The image below is a high-level view illustrating the “architecture” for what such a comprehensive customer feedback system could look like.  Given the importance of this topic, the next several posts will be devoted to an in-depth discussion of each of the system’s components.  As mentioned previously, a systematic method to collect customer feedback must serve as the foundation of a CX initiative if it is to be successful.

(1) Competing on Analytics by Thomas Davenport,

Sunday, May 4, 2014

Customer Satisfaction - A Useful Metric?

We’ve now completed our preliminary customer experience assessment, and we have a high level sense of where the company is serving customers well, as well as an understanding of the problem areas.  One item that needs to be addressed, and in fact is our first priority, is the establishment of a customer transaction survey, and an accompanying closed-loop find and fix system.  This will serve as the foundation of our CX operations.  We’ll discuss the closed-loop approach in much more detail in future posts.  For now, let’s start with the design of a transaction survey.  A timely article discussing customer satisfaction appeared in the Spring 2014 issue of the MIT Sloan Management Review.  The authors focus on the relationship between satisfaction and customer spend.  Because of the instructive nature of this publication, here’s my summary of the key findings:
  1. The relationship between customer satisfaction and spending is very weak
  2. The Return on Investment on increasing customer satisfaction is trivial to negative
  3. What matters is how customers rank your brand in satisfaction relative to your competitors
A key finding from the article is that, academic research consistently finds a positive statistically significant relationship between satisfaction and business outcomes such retention, share of wallet, referrals and stock performance.  The problem is that the relationship between satisfaction and spend is weak.

The authors go on to identify three related issues...
  1. There is a downside to continually devoting resources to raising customer satisfaction because it’s difficult to quantify benefits of increasing satisfaction...the costs typically outweigh the benefits.
  2. High satisfaction is a strong negative predictor of future market share.  The article sites McDonalds and Wal-Mart as two of the more notable examples of this phenomena.  Both companies enjoy significant share in their markets, yet they trail competitors in customer satisfaction.  Why is this?  The authors argue that, gaining share typically comes from attracting customers whose needs are not completely aligned with the company’s core target market...these companies serve diverse markets with various expectations of customer satisfaction.  A significant implication arising from this issue centers on the idea of benchmarking.  Specifically, benchmarking best-in-class performers is usually not appropriate because these companies are typically niches brands with a focused customer base.
  3. Knowing a customer’s satisfaction is not predictive of future spending and how it will be divided among competing brands.  Because of divided loyalty among multiple brands, improving customers’ share of spending with your brand represents a far greater opportunity than efforts to improve customer satisfaction.
The article concludes by asserting that what matters is the relative rank that your brand’s satisfaction level represents vis-a-vis your competitors.  From this, the prescription that follows is that you must track the percentage of customers who give your brand their highest satisfaction rating among all the brands they use.
In a similar vein, the book Loyalty Myths also makes a similar case about the often misleading nature of customer satisfaction ratings.  The authors state several points that are similar to those made in the Sloan Management Review article...
  1. For almost all business enterprises worldwide, greater than 85 percent of their customers would be classified as satisfied.  As a result, satisfaction (the absence of dissatisfaction) is typically not a point of competitive differentiation.
  2. Customer satisfaction needs to thought of as falling into one of three general categories: dissatisfied, merely satisfied, and delighted.  It is not until customers achieve this upper level of satisfaction - delight - that satisfaction meaningfully influences loyalty.

I’ve also had first-hand experience with the shortcomings associated with customer satisfaction ratings.  Working with a well known brand that consistently attained top-five satisfaction ratings among competitor brands, I dug into the customer retention data and was shocked to learn that annual defection rates over several years exceeded 50 percent.

So, what are we to make of these well documented findings regarding customer satisfaction?  I personally think that asking customers if they are “satisfied” with a product or service is misleading simply because the term “satisfaction” is fairly subjective...does it mean the customer is pleased? loyal? an advocate? exceptionally delighted?  Who knows...and so relying on satisfaction as a customer experience metric can be dangerous.  In future posts, we’ll try to develop alternative measures that are more insightful and informative.