Linking the customer experience to value

By Joel Maynes and Alex Rawson

http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/linking-the-customer-experience-to-value?cid=other-eml-alt-mip-mck-oth-1603

Great article

Many customer-experience transformations stall because leaders can’t show how these efforts create value. Patiently building a business case can fund them, secure buy-in, and build momentum. 

The road to failed customer-experience programs is paved with good intentions. Executives are quick to see the end-game benefits of a customer-centric strategy: more satisfied customers, increased loyalty, a lower cost to serve, and more engaged employees. But they often fail to understand clearly what a superior customer experience is worth and exactly how it will generate value.  

Building an explicit link to value: Companies investing to improve the customer experience must be clearer about what it is actually worth and exactly how the improvements will generate value

• Develop a hypothesis about customer outcomes that matter. Start by identifying the specific customer behavior and outcomes that underpin value in your industry.

• Link what customers say to what they do. The next step is to link what customers say in satisfaction surveys with their behavior over time

• Analyze the historical performance of real customer cohorts. Using customer data linked to survey respondents, analyze customers you designate as satisfied, neutral, or dissatisfied over a period of one to two years

• Look at the trend to take a forward-looking view. Successful customer-experience programs look forward, not backward, in assessing the link to value.

• Track outcomes. In our experience, the best approach to quantify the value of the customer experience is to track outcomes over time for each customer segment that matters.

What matters to customers: To do this well, a company must create a model of what matters to customers, a graded short list of customer pain points to eliminate or fix, and a view of opportunities to innovate as seen from the customer’s perspective. A number of actions can be taken.

• Focus on customer-satisfaction issues with the highest payouts. Customer-experience break points are not standard across industries.

• Build a model around what matters to customers. End-to-end customer journeys, not individual touch-points, are the unit to measure when setting priorities for your customer-experience investments.

• Within journeys that matter, size and set priorities for key areas to improve .Once you know the journeys to focus on, assemble a cross-functional team to dig into possible initiatives to improve your performance

• Identify opportunities to innovate and disrupt in competitive white spaces. While eliminating pain points for customers is important, it is equally critical to identify areas where you can differentiate your company from competitors as customer expectations change