Customer Experience Valuation: The Key
I must begin by apologizing to consistent readers of this blog for the lapsed time between posts. A little thing called “doing business” took quite a bit of time this past week.
I am compelled by both emails received on the past post regarding the customer experience success™ equation (Putting a Valuation on Customer Experience Success™) and outcomes from recent projects, to specifically identify the Key component in the use of the customer experience success™ valuation score.
From the feedback received, knowing this possibility to put a valuation on customer experience actually exists raised more questions than answers. The one very tangible benefit of this is: if you know the valuation of your customer experience and that value is used to determine the worth of your company’s intangible deliverables (which usually account for between 40 and 80% of a company’s total valuation upon sale) this small, yet extremely valuable, use of the customer experience valuation is limited to the event of selling a company.
I personally foresee where it may eventually supplement the use of CSIs (Customer Satisfaction Indexes) and NPSs (Net Promoter Score) as part of a public company’s quarterly report to the Street. However, those processes are simplistic and generally accepted so they will most likely remain in vogue for quite some time I’m afraid.
Once the Street wakes up to the fact that EVERYONE is reporting high CSIs and NPSs with little differentiation between them, certainly not enough to account for major shifts in buying patterns, then there may be a cry for a new moniker of how well a company is actually doing relative to their customer experience. When that time comes, we’ll be hereJ. See my article, “The Myth of Customer Satisfaction, Net Promoter Scores – and other one-stat wonders” at www.arthurgroupinc.com/news.html to learn about an entire industry where this is already the case.
To recap the path we have walked to this point, called customer experience success™:
Reason for the Process
Delivery of a “single enterprise-wide repository of meaningful, actionable and valid customer experience knowledge assets” simply has not occurred to date outside of a number of companies I can count on both hands. Adding a meaningful valuation to that knowledge base for a company to show financial worth to their stakeholders . . . never existed before.
In the 1982 book, In Search of Excellence, Peters and Waterman start a chapter on “Close to the Customer” by stating the fact it appears contrary to all logic to think a chapter has to be written showing the value of staying close to and understanding your customer base. However, as they concluded in 1982, most companies consider their customer base nuisances at best. The key differentiation they found between highly successful companies and less successful companies was integration of actual practices necessary to get “close to your customer.” Market research of all types, not just customer satisfaction research, was one of those practices.
This gap still exists in today’s world, yet the impact of fragmentation and customer-directed action upon companies’ businesses has only grown.
Review of the Process
As a refresher from an earlier post (“Are We Practicing Customer Experience Success™ or Doing Market Research” – March 14, 2008) the requirements for a customer experience program to be more than market research projects are:
1) A commitment to an on-going campaign (minimum three years).
2) Involve new technology resources for data-gathering in addition to typical methodologies (refer to earlier post “Where Customer Experience Came From”).
3) Information has to be data warehoused from all interactive touch points between the company and customers/potential customers.
4) It has to incorporate, integrate and provide analytically sound results from BOTH hard and soft metrics. Again, hard metrics are defined as anything generated from the server or box side of data gathering, soft metrics are defined as anything resulting from a customer’s actual input.
5) Analytically, it has to use the statistical power available to us today.
6) It has to be benchmarked against other findings for similar processes and within the competitive environment.
7) And finally, the impact of the output has to be able to be implemented across corporate silos or departments within the company.
The Equation
See earlier post: “Putting a Valuation on Customer Experience Success™.” Applying an actual valuation numeric to your Total Customer Experience is a reality now.
Now: The KEY to Success!
One of the reasons I selected “Your Customer Experience Experts” as the tagline for The Arthur Group Inc, is because the majority of companies with whom we work invariably say at some point, “well, you’re the experts in this, what should we do?” You need to understand that most of the time this question is raised, the “you’re the expert” portion is not a compliment. It is more of a threat. The “what should we do next” portion of that question is sometimes partially cloaked, sometimes openly stated, with the threat of – “and if it doesn’t work, we know where you live.”
Rather than running away from the truth in the statement, I embraced the truth for my company’s tagline. Yes, we are experts in customer experience! Nothing to be ashamed of there. Once you’ve done many thousands of project and campaign initiatives across all types of industries in a specific area of expertise (customers), you SHOULD know more than 99% of everyone else about that area of expertise.
As far as the remainder of that statement (“what should we do next”) . . .
I have been in several meetings recently where companies are looking at their specific scores and bemoaning less than stellar evaluations of their customer experience. These are large firms with multitudes of other research findings piled on their desks from industry leading vendors and consulting organizations.
Having worked with these companies for enough time to know their business goals and objectives, when asked my evaluation of why their scores have slipped, my recourse is “My crystal ball was a little fuzzy this morning so I cannot say for sure. What I’m left with is whoever you are currently taking advice from as to your strategic direction and tactics has been giving you some bad advice. It may be working for internal departments of the company (although that is a questionable hypothesis) but it certainly is not working for customers of your business.”
The key part of that response is that “it certainly is not working for customers of your business.” As one executive who pulled me aside following a meeting described it, “we lost our way.” This company knew what they should be doing to achieve the key to success and chose not to apply the key in a meaningful manner. Hence, should there be real surprise when their customer-facing product or service is out of whack?
This brings us to the Key to success in customer experience. The key is two-fold:
1) Cognitive learning
2) Experiential adaptation
I know, you thought this was going to be easy again. Sorry.
Cognitive learning in a business occurs much the same way that it occurs for an individual. This should not be surprising since businesses are comprised of many individuals. There is a slight twist to the process called internal politics, but even that occurs within an individual and their reaction toward cognitive learning.
The process goes something like this. Needs are determined, facts are gathered, analysis takes place to identify what might work, what might not work, and whatever is kept allows learning to occur. The individual or the company now knows something they did not know before about the topic at hand.
Experiential adaptation also occurs in a business much like an individual. This is the zest, the passion, the drive, the zeal that a company or individual has to be the best, to achieve world-class levels of performance, to become the standard-bearer for a cause, etc, all of which drive creative output, strategic direction and tactical deliverables. This is where the proverbial rubber meets the road. This is what the customer, in our specific example, actually sees and responds to.
The perfect combination of these two keys within a company produces what we call true Customer Experience Intelligence. The ability to hold this perfect combination over time within any company is a continuous quest among the very best.
When you think about it, it just makes sense. After all, if you only do one of the two parts of the Key, you look something like this:
* Cognitive only = knowledge without action = ludicrous or lazy,
* Experiential only = action without knowledge = lunacy.
If you spend time, money and effort to learn something without actually applying it or making any attempt to apply it, you look either ludicrous or lazy. Inversely, if you have all the “fire-in-the-belly” to be the best and refuse to do the learning required to be the best, well . . . lunacy is the best word I can use to describe that situation.
When a company asks us to assist them in hearing and understanding the voice of their customers and employees, we deliver that with rock solid, battle-proven, “take-it-to-the-bank,” statistically valid and meaningful methodologies and processes. How far can we then, as the external provider of much of the cognitive learning surrounding the customer experience, inundate that within a company and create meaningful experiential adaptation?
Without leadership’s sincere desire to work with us in integrating this learning into the very fabric of corporate life (experiential inundation), we are reduced to providing a few examples of how other companies have addressed issues successfully – and then we leave the room. That is where 95% of all cognitive learning in the corporate world regarding customer experience is left.
This is not all bad and I do not mean to report it as a good or bad thing. My reporting of this is simply a reflection of the way life works within the overwhelming majority of companies and throughout industries. Personally, based on massive past history experiences AND cognitive learning, I do not believe this sets up companies to optimally achieve success.
Some companies have become wonderfully adept at turning a single meaningful market research project into a year-long journey of meaningful change within the company. And we of course love to see the customer consulted in even the tiniest measure for any company because we know the impact that even a taste of excellent customer input can have on a company. However, this is the exception rather than the rule.
I’m sure there are some executives reading this wondering, if I say listening and hearing the customer through this process called Customer Experience Success™ can produce real market success, why I appear to be ducking the issue of accountability.
Can I be blunt? Ok.
Do you know how much companies typically spend on all forms of market research, usability and customer experience work? On an annual basis, far less then what they pay ONE senior executive (including perks, benefits, bonuses, etc, for the bean counters in the audience).
Think about that for a minute. It quickly “appears” then that the ceiling for inviting customer and employee voices to the Board room for decision-making input into strategic and tactical direction. Direction which impacts customers, employees and ultimately the company; that ceiling is the amount leadership is willing to pay themselves.
Again, not saying this is right or wrong, just observing facts in motion and stating them. I can already hear the indignant, “but we’re the ones who have to put that knowledge into action” ringing back at me through the fiber in my internet connection.
And with that response and my quiet “you are so correct,” I rest my case for accountability regarding the value of whatever my company produces for any and all companies, including those who qualify for the Customer Experience Success™ program. Refer to my two-fold Key to success. One without the other simply will not work.
So, if you wonder how the process means more than just a valuation of intangible assets for a company on the sales block, the Key is the answer. All we do, in its simplest form, is help a business NOT “lose their way” because of lack of cognitive learning, understanding and unguided experiential adaptation. That balance beam, that tightrope of customer experience, is the ultimate Key to its success.
