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Friday, March 31, 2023

If A Customer Experience Investment Doesn’t Look Good On Paper, Redesign The Paper

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Founder and CEO of ActiveCampaign, the Customer Experience Automation (CXA) category leader.

Picture this: The customer service representative on the other end of the phone has no knowledge of the free upgrade you saw in a social media ad last week. It takes an engineer to confirm that the superfast broadband sold to you a week ago isn’t actually available in your area. Your car dealership calls to tell you your vehicle needs a service, unaware that you brought it in last week to have a tire changed.

Why, in the age of data and digital experiences, do so many businesses neglect to connect the dots spread out across your interactions with them? Why do they make your customer journeys more repetitive, interrupted and generally more frustrating than they need be?

Anyone who’s been on the receiving end of a lazy customer experience probably has visceral answers to these questions. But behind them is almost certainly another, deeper cause that explains both your sub-standard experiences and the negative impressions you walk away with: It’s called quantification bias. I believe almost every business suffers from it. And in far too many businesses, customer experience suffers for it.

The Curse Of Managing Only What You Already Measure

My company’s platform helps businesses automate the customer experience. Through this, I’ve seen that quantification bias is so widespread in management that it often looks and sounds like best practice. It’s the habit of managing only what we’re already measuring and attaching greater importance to things already expressed through numbers (instead of concepts that are harder to pin down and quantify). 

The bias focuses attention on customer acquisition. The number of new customers and revenue represented are easy, obvious metrics; they encourage us to keep quantifying the customer acquisition process. We count the number of sales opportunities leading to new customers, the number of leads contributing to those opportunities, the number of clicks helping generate those leads and the number of impressions potentially contributing to those clicks. The journey toward becoming a customer is signposted with tangible numbers that we can focus our attention on improving.

Now, let’s get back to your experience after you become a customer: These experiences don’t make it onto the revenue dashboard as something to be tracked, accounted for and invested in because very few businesses have taken the time to quantify their impact on the bottom line. As a result, businesses often don’t invest in improving them because they haven’t established what the benefits of improving them will be.

Why NPS Isn’t The Same As Customer Experience Accounting

Businesses can tell themselves they’re monitoring customer experience because they know their net promoter scores and churn rates. However, these data points don’t tell us everything we need to know about the prevailing approach to customer experience accounting. They’re simplified, generalized and detached from the actual experiences that contribute to them. We tend to see these metrics as abstract expressions of the performance of the business as a whole, rather than products of particular types of experience that we should be optimizing around. And we only connect them to revenue when they detract from revenue (i.e., when a customer leaves). They’re not actionable in a way that motivates the business or makes a difference to each individual customer journey.

If we start accounting for customer experience in the same way we account for sales and marketing, what might we find? If we start quantifying the value that the experience of being a customer delivers for people, what patterns might emerge? We’d likely discover very quickly that cumulative value for the customer increases value for the business. We’d be able to identify the experiences that correlate most consistently with upsell opportunities and reduce the risk of churn. And we’d start to quantify the very powerful way in which advocacy born of customer experience drives sustainable growth.

Treating CX As A Marketing Investment

I make these predictions confidently based on my own experience of the growth of my company. We decided early on that we would treat customer experience as a marketing investment rather than a customer service cost. We then took a wide view of all the different ways that customer experience contributed to growth — and when you start to put numbers on customer experience in this way, it’s amazing what you can discover.

If new customers were previously using another automation platform, for example, we put in the hours to help them move over to our platform for free. We could easily spend 80 hours moving over an account that may only be paying us $1,000 a year. However, when you look at the stickiness of those accounts, it’s extremely high, and the recurring revenue adds up to a return on investment that I believe we’d have been lucky to get from a marketing campaign.

We’ve done thousands of strategy sessions for new customers and prospects, which has been a significant investment in terms of our resources. But we’ve unearthed customer pain points that have contributed directly to the development of our platform. What’s more, in location after location where we’ve taken this approach, we’ve seen communities of advocates appearing that are acting as ongoing, organic drivers of growth.

By finding ways to account for customer experience, you can unearth repeatable formulas driving revenue in a robust, predictable way. There have been many points in my company’s growth story when we’ve deliberately done things that don’t look good on paper, appear unsustainable and seem like a crazy cost to take on. We realized that the problem wasn’t what we were doing; it was the columns on the paper on which most people record these things. We changed those columns, changed how we accounted for customer experience and helped transform the way we deliver it as a result.

I’d urge any other business to do the same. We all suffer from a natural bias to pay more attention to the things we can quantify. When something’s as important to your business as customer experience, that’s all the more reason to account for it properly.

Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?

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