Saturday, August 16, 2014

Forrester’s Next-Generation Customer Experience Index

Let’s take a break from our recent series of problem-solving posts to familiarize ourselves with Forrester Research’s recent enhancement to its Customer Experience Index (CXi).  

Recall from previous posts that we introduced a couple of simple and preliminary measures to consider when establishing your company’s customer experience initiative.  As mentioned in those posts, no satisfaction measure in and of itself, is a slam-dunk indicator of how your customers assess their experience with your organization.  Indeed, this blog strongly recommends that the measurement method for your customer experience initiative adhere to the following two guidelines: 1) regardless of which metric or metrics you select, the measurement must occur on an ongoing and consistent basis, and it must be directed to a widespread sample of your customer base.  Sporadic measurements and / or surveys sent to a limited number of customers will be of little use in supporting your CX strategy and tactics, and consequently, will be a waste of resources (i.e. your budget).  2) Relying on a single survey metric is dangerous.  In a previous post, for example, we looked at an MIT report that was (rightly) critical of the often catch-all “rate your satisfaction” type of question.   As we’ll discuss in more detail in a forthcoming post, your CX activities need to be informed by a measurement framework that is rigorous enough to capture the various facets of customer feedback at key points in time, while also being intuitive such that it’s understandable to those in your company who are not familiar with consumer research.

Let’s now turn our attention to Forrester’s recent introduction of its updated CXi.  Forrester introduced the original Customer Experience Index in 2007.  To quote Forrester, “That original CXi successfully captured the essence of customer experience quality (emphasis mine): how customers perceive their interactions with a company…” (1)  The original index contains three related metrics: how effective the brand is at meeting customer needs; how easy it is to do business with; how enjoyable was the experience.  I personally like this index because it captures both the left brain component of an experience (ease and met needs) with the desire of the right brain (an enjoyable experience).  According to Forrester, the next generation CXi “…measures how well a company delivers customer experiences that create and sustain customer loyalty.” (2) 

The enhanced Customer Experience Index purports to link the customer’s experience with the resulting loyalty (and revenue, or lack thereof).  It does this by deconstructing loyalty into three components - retention, enrichment, and advocacy - and then using an index made up of the 3-E’s 1) Effectiveness - did customers get value from the experience; 2) Ease - did customers get value without difficulty; 3) Emotion - did customers feel good about the experience.  

To add rigour to the CXi, Forrester assigns a weighting to each of the E’s based on the relative importance to specific industries.  Companies in the entertainment industry for example (amusement parks, theatres) would have a relatively higher weighting associated with the Emotion component of their CXi, reflecting the “feel good” nature of these experiences.  

The calculation of the index itself is relatively straightforward.  For each of the E’s, subtract the percent of bottom box responses (e.g. a 1 and 2 on a 5 point scale) from the percentage of top box replies (4 and 5).  Then, sum the result from each metric and divide by 3 to get a raw index number.  From this, Forrester would apply its proprietary industry related weighting mentioned in previously.  

I suspect that Forrester’s Next-Generation Customer Experience Index will be a significant contribution towards the continuous advancement of CX in many organizations.  We’ll visit the CXi again in an upcoming post on designing your framework for measuring customer experience.

Introducing Forrester’s Next-Generation Customer Experience Index, June 26, 2014.  Forrester Research Inc. Page 2.


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