Achieving Higher Profitability and Cash Flow by Measuring Customer Experience (CEX)

Transcription

1 Achieving Higher Profitability and Cash Flow by Measuring Customer Experience (CEX) Frank Sanders, President CSM Research, Inc. Measuring CEX is a Key Differentiator Improving customer experience drives higher customer retention, higher profitability and more new customers through referrals. Increasing customer retention by 5% increases profits by 25% to 95% - Bain & Company Higher Customer Retention Revenue Growth Higher Win Rate Higher customer satisfaction scores equals revenue growth of 10% to 15% - McKinsey Customers are 5.2X more likely to purchase from companies with a great customer experience Temkin 2 1

2 What CEX process can do... Identify what customers are truly loyal with the lowest risk of defection and the greatest opportunity for revenue expansion What customers are unenthusiastic about the value delivery and may be receptive to a competitor s sales pitch What customers are dissatisfied and highly likely to defect 3 End Result of CEX How do you accomplish this? Highly Differentiated Value to Customer Higher Retention More Referrals New Accounts Exceptional Profitability & Cash Flow Employee Enthusiasm 4 2

3 3 Simple Steps in Research What? is it you need to know? Who? has the information you want to know? How? can you effectively and efficiently find that information? 5 What do you need to know? The first step in any research project is to identify your question, hypothesis, and/or objective by understanding the knowledge gap. Step 2. Explore and define current state Step 1. Define End Goal Current Knowledge End Goal Missing Knowledge Step 3. How to Gather Missing Information 6 3

4 Case Example. Step 1. Define End Goal Increase new customer acquisition Step 2. Explore and define current state How do you attract and retain your current customer base? Step 3. How to Gather Missing Information 1. Measure current customer experience 2. Understand competitive landscape & market needs 3. Define barriers to acquiring new customers 7 Who has this information? The second step is to determining where the information you are looking for resides. Sample size and segmentation model will drive the creation of the customer contact list and the reliability of the results within breakouts Evaluate customer base to determine: Is segmentation required? By Geography, Product, Customer Size, Customer Type, etc. Customer complexity / dynamics It is usually necessary to survey more than one respondent per customer 8 4

5 Case Example. Manufacturing Company produces 3 distinct product lines across the US. Due to the regional differences, the sales force/operations has different approaches and management styles per region. Have 1400 customers with a key influencer and daily operational contacts within each one. How many surveys should I do? East Central West Total Product A Product B Product C Total What is the best way to get that information? This question is the meat of the research plan, how you execute the study will determine the type of responses received. Online Surveys vs Phone Surveys Advantages Cost-effective and fast for collecting large amount of surveys Very convenient Enables viewing of pictures, graphs, etc Almost immediate feedback Disadvantages Restricted question types Low response rate Short and ambiguous responses Non-response bias Advantages High response rate In-depth responses Very convenient to the respondent by scheduling time Customer speaks freely Relationship building due to higher perceived value over online survey Disadvantages Requires telephone contact Requires higher budget commitment

6 What is your population size? Case Example. >1,000 Open ended Feedback is Important Open ended Feedback is Not as Important Budget Constraint Mixed Methodology is Ideal Online Surveys Online or Mixed Methodology 80/20 Rule: Phone Survey Online Survey for the Remaining <1,000 No Budget Constraint Phone Surveys 11 After deciding on the approach, the survey creation is the final step before deploying your CEX study. Map out the customer journey Keep survey short Stick to end-user terminology Question Development Question Type Paired methodological approach Avoid dozen specific detailed questions, instead ask half dozen direct questions Overall Satisfaction, Strengths and Improvements at beginning Self-serving questions in the back Question Order

7 Case Example. Mapping Out the Customer Journey drives the creation of the questionnaire Becomes Customer Sales Process Implementation Customer Service In- Process Lead Time Quality Responsiveness Fulfillment Delivery Communication Billing May have transactional surveys for key areas and/or Annual relationship surveys to understand the complete customer journey 13 Key CEX Questions. 1. Overall Satisfaction The key indicator and primary driver of many other indicators 2. Strengths - What are the key drivers of customer satisfaction, and therefore customer loyalty and revenue growth? 3. Improvements - What are your company s weaknesses? What performance issues do you customers indicate drive lower satisfaction? 4. Functional Touchpoints rating and open-ended follow-up 5. Future business indicators What portion of your clients future business with you is at risk for issues within your control and issues outside your control? 6. Net Promoter Score (NPS) A key indicator of your company s sales vitality through new account acquisition Rate satisfaction with product consistency Rate satisfaction with product quality Rate satisfaction with product color

8 Dimensions of CEX Value Customer Experience (People / Relationships) / Value) Based on the data, the team can address and identified challenges along multiple dimensions Contracts and Agreements Customer Relationship Management Customer Intimacy Lean Operations Operational Excellence (Process / Execution) Supplier Value Delivery (Supply Chain / Data Exchange) Best Par Below Today Future 15 Getting Value from Customer Responses What the Customer Said I want to talk to the right person in a timely manner. What the Customer Meant Wants someone with specific account knowledge and wants to talk to this person quickly Potential Company Response Dedicated account teams organized by customer importance

9 Improvement Action Plans Road Maps Defining key change initiatives to support growth and profitability objectives thru increased value delivery Process Improvement Collaborative across the business processes that ensure effective and efficient product and information flow across the supply chain Operational Improvement Leveraging Lean tools and techniques to improve ontime delivery, increase throughput and reduce costs Improved Customer Experience Development of on-line technology tools / portals that deliver valuable information and education to customers 17 If you ask yourself these questions then you should be doing research What can we do to improve cash flow? Why are we not hitting our growth targets? Is my M&A valuation accurate? What are our competitors doing better than we are? How can we improve the valuation of my company? Why aren t we getting more referrals?

10 Achieving Higher Profitability and Growth by Measuring Customer Experience (CEX) Frank Sanders, President CSM Research, Inc