Distorted View: Four Reasons Why Your Customer Measurement Program May Be Failing You

Customer insight The Verde Group

I’ve previously written about the four biggest mistakes companies make when implementing a customer measurement program, and how companies can achieve much better customer insights by avoiding these common errors. And it’s critical that they do — our Verde Group research shows that from 2004-2014, the average company had 18.7 percent of its revenue at risk due to poor customer experiences.

The truth be told, there are more than four — and the next group is equally egregious. Here are four more ways companies are sabotaging their customer measurement initiatives.

Conducting ‘how much do you love us’ surveys

The customer satisfaction survey — it’s hard to think of another marketing research practice that is so widespread yet so damaging. And not just for one reason:

The numbers are skewed. There is a bias (particularly in North America) called Extreme Response Mode. Presented with a question that has an answer on a numerical scale, respondents are likely to vote at the extreme high or low ends of that scale. So if asked ‘from one to ten, how happy are you with [product/service]?’ many customers will respond with 8s and 9s, as opposed to 6s and 7s.

Because we’re obsessed with success, companies tend to combine the two top ratings, then make conclusions like, “80 percent of our customers are satisfied. We must be doing great.” What they don’t understand is that satisfaction is not a predictor of loyalty, it’s a pre-condition.

No actionable insights. Worse, these distorted numbers don’t tell us much. On its own, a score provides no context as to why customers feel the way they do. It doesn’t tell you what they like about you, or more importantly, what’s making them unhappy.

Satisfaction doesn’t predict loyalty. Satisfied customers aren’t necessarily loyal — they may change their behaviors, switch their buying choices, or even stop buying from you altogether. According to a Bain & Company study, 60-80 percent of customers who describe themselves as satisfied do not go back to do more business with the company that initially satisfied them.

So what does this type of research deliver? Sadly, not too much, other than a few internal pats on the back. Despite the widely-held belief that these type of measurement instruments link to financial performance, it’s simply not true. And that’s why many are left explaining to their executive team why market share is shrinking and sales are tanking, even as customer satisfaction scores are through the roof.

Still, think satisfaction surveys are the best way to take your customer’s temperature? Think again. The Verde Group research determined that 60-80 percent of defecting customers categorize themselves as ‘satisfied’ on surveys conducted immediately before their departure. Don’t let satisfaction surveys leave you out in the cold.

Not asking the right questions about future customer behavior

While companies often ask their customers ‘will you buy from us again,’ they shouldn’t put a lot of stock in the positive answers they receive. Longstanding research has established the ‘Intention Behavior Discrepancy,’ which shows that positively stated intentions don’t accurately predict corresponding positive behavior.

However, the same isn’t true for negative answers. When customers state a negative intention, the likelihood of it matching future negative behavior is much higher. Also, our Verde Group research shows that problem frequency is directly tied to ‘intent not to purchase’ — customers who don’t experience problems are twice as loyal as those who do.

The challenge is that often companies don’t hear about these customer issues. Our research determined that over 67 percent of customers who have a problem won’t tell the company about it. So companies need to ask the right questions, and the right way, to ferret these problems out.

Then, of course, the negative responses must be investigated — organizations can learn so much more by drilling down into them. If customers say ‘they won’t buy next year’ or ‘they won’t recommend you,’ then companies need to dig deeper with follow-up questions and preferably conversations to understand what’s behind those negative sentiments.

Measuring unactionable items

Many survey questions that look good on paper can be dead ends — they don’t provide actionable insights. Here’s a classic example of a dead-end question: “how satisfied are you with the responsiveness of your sales representative?” If 70 percent of customers surveyed said they are not satisfied, what could you do with that information?

It’s almost impossible to define ‘responsiveness’ in this context, as it’s not really an observable behavior. Imagine going to your front-line reps and telling them they need to be ‘more responsive.’ Now instead, imagine telling them “when a customer waits more than three minutes, they don’t want to buy from us again.” That’s the power of asking more observable, behavioral types of questions that lead to genuine customer insights.

Here’s another example of an unactionable question: “How satisfied are you with product quality?” This query tells you very little. Perhaps the customer doesn’t like the packaging, or how the product operates, or even how it feels. Without deeper, observation-based questions, you may never know.

Then there’s the ‘double-barrel’ question. For example, “how satisfied are you with the speed and accuracy of our technical response center?” Questions that ask about multiple attributes in a single statement are also not actionable — without further questions, you’ll never really be sure what the customer is thinking.

Too much measuring, not enough analysis

Companies are committing more time and resources than ever to the collection of customer information. A common mistake many organizations make, though, is to send out mass surveys, then analyze the results as if they have a homogeneous customer set, with every answer having the same meaning and implications for each customer.

This ‘big bucket’ approach to analysis barely scratches the surface. There are many other variables to consider — gender and age for example — that come into play.

Imagine you conduct a survey and your scores are down 30 percent month over month, yet nothing appears to have changed in your business. But by digging a little deeper, you may learn that you had an unusually large percentage of millennial women respond to your latest survey — a demographic that doesn’t embrace your product.

While more in-depth inspection and segmenting your survey results will help, the real insight comes when you go beyond a single survey and leverage multiple sources of customer feedback. Look at your call center data, your social media, and interview your sales reps. Engage in a real dialogue with customers — not just in focus groups, but in the stores.

Collecting, dashboarding, and analyzing these disparate data streams isn’t easy. But the results can offer unprecedented clarity around what’s truly happening in your business.

Painting a clear picture of your customer

And that’s the key takeaway here. You should consider your customer research initiative — even if it’s world-class — as a single, small view into what’s actually going on with your business. One study or survey is just not enough. You need to collect and integrate multiple sources of customer insight, then weave them together to create a greater understanding of your customers, your business, and what you need to prioritize and change.

The stakes are undoubtedly high. Verde Group research suggests that just a 5 percent increase in customer retention can account for a 20 percent increase in productivity — and a 50-100 percent increase in profit margins.

Paula Courtney is Chief Executive Officer of The Verde Group and a lecturer at The Wharton School.








Why Care About Patient Experience?

The Verde Group Customer Dissatisfaction in the Pharma industry

Across products and business categories, customers are demanding more from companies and brands.  Better selection, lower prices, faster service, same-day delivery and frictionless interaction: these are the market mandates of the new customer-centric economy.

And then there’s health care.  Characterized by network-restricted product access, price and value obscurity, interminable wait times and a bafflingly convoluted billing system, health care today is often a case study in “worst practice” CX.  This is made clear by health care’s NPS status, which perennially competes for bottom ranking with cable TV and internet providers.

Yes, healthcare is complicated.  Yes, patients, doctors, nurses, administrative staff, hospitals, pharmaceutical companies, pharmacies and payers all own a piece of the problem.  And yes, it’s hard to see how any one stakeholder can break through to meaningfully improve the overall patient experience.  This is particularly true since the traditional economic incentives of CX improvement – customer retention, revenue growth and brand advocacy – are only partially relevant to today’s healthcare marketplace.

But the stakes for customer experience in healthcare are phenomenally high when you take into account the social costs of poor CX.  Consider adherence to a medical regiment: whether or not a patient takes their medicine on time, all the time, in the manner prescribed.  According to a recent study in the journal Annals of Internal Medicine, weak adherence in the US alone causes nearly 125,000 deaths a year, creates 10% of all hospitalizations and costs the already strained healthcare system between $100–$289 billion annually.

That’s real money, and it prompts the question: does CX play a role in these costs?  Do patient experiences influence adherence behaviors?

Please click here to download The Verde Group’s latest white paper which discusses these and other pressing questions affecting CX in the pharmaceutical industry.

Jon Skinner is Executive Vice President at The Verde Group


The Sound of Your Brand Speaks Volumes

Customer Experience Research and sonic branding

A Conversation with Sonic Branding Expert Tom Eymundson

In mid-September, we had two fantastic guest speakers presenting to a number of our top clients at The Verde Group CX Summit in New York City. One of those speakers, Tom Eymundson, is a leading sonic branding expert and the CEO of The Pirate Group Inc.

I caught up with Tom after the Summit to learn more about the power of sonic branding and how companies are using it to establish and reinforce their brands.

Paula: Tom, thank you so much for joining us today! So how would you explain sonic branding to someone who’s never heard the term before?

Tom: Thanks Paula, and it’s great to be with you. Well, if we were at a party and someone asked me ‘what is sonic branding?’ I would say, “listen to the music at this party. It conveys a certain mood and tone that the host wants us to feel, and sort of determines how this party is being experienced.”

Music and sound are that powerful and persuasive. Sound has the unique ability to connect people and brands. You see, brands are like people. How they look is how they’re seen, and how they sound is how they’re heard. Essentially, sonic branding is the strategic use of music, voice and sound effects to create emotional connections between people and brands.


Paula: What are the most critical steps for creating true brand differentiation through the use of sound?

Tom: A brand has to draw some honest conclusions about what its vision, values, promise, and personality are. That essentially defines the essence of your brand, and your sonic identity should be designed to embrace that essence. It should be as unique and articulate as your visual identity. That’s what will differentiate you from your competition.


Paula: Can you give an example of a brand that’s done an effective job of that, just with sound and no words?

Tom: McDonald’s has done a really good job of it with their ‘I’m Lovin’ It’ campaign. It’s been running since 2003, so it’s certainly stayed the course — and that’s imperative in order to have a sonic brand that’s recognizable.

It’s also evolved. What started off as a Justin Timberlake song with the familiar bridge followed by the words ‘I’m loving it’ has since distilled down to just the bridge. We as consumers fill in the rest. That’s how powerfully it’s been etched on our minds.

Another example, perhaps my favorite, is Intel. Their sonic branding is also ingrained in everyone’s mind. Intel also stuck to the course and embedded their branding in everyone’s offerings. So IBM would launch a computer with an Intel chip and Intel basically got to brand off of IBM’s back.

The actual sound, the ‘Intel Bong’ as it’s referred to, is often called the ‘Stairway to Heaven’ of sound logos because of its global ubiquity. I’ve read that it’s heard every five minutes somewhere in the world and that it’s played in more than 130 countries.


Paula: I know sonic branding has been around for a long time. Do you think it’s making a resurgence now because companies feel customers are over-saturated with visual stimulation?

Tom: Well that’s certainly true. The other thing that’s different is that we’re now receiving sound from so many sources, whether it’s the devices we’re holding, in our cars, or what’s on our walls or in our lives. What used to be a just print or visual media are now immersive, so there’s sound embedded in them.

For example, when you go to the New York Times website you’re no longer just reading a newspaper, you can get as deep and as immersive as you want, with full video and audio. As a result, sound has emerged an essential component of our strategic branding initiatives. I think that any brand out there today that’s not taking this into account stands a chance of being left behind.


Paula: So are you seeing more companies exploring sonic branding as a result?

Tom: Absolutely. Most companies are recognizing that sonic branding has to be a part of their overall communications strategy. There’s a great book called “Brand Sense” by Martin Lindstrom published in 2010 that explores the concept of sensory marketing, which is a shift from just visual sense marketing to targeting all five senses. He states that 41 percent of customers consider sound to be a central element of brand communication.


Paula: You’ve been involved in sonic branding for over 25 years. What’s your method for partnering with clients to develop an iconic sound for their brand?

Tom: We employ a three-step methodology when working with clients. It’s anchored in a strategic rationale which helps remove subjectivity — that’s key to why it works.

The first step is to determine the ‘what.’ What are we trying to do? This entails a comprehensive analysis of all existing brand and audio assets, a competitive audio review, and a technical audit – are we exploring something new and distinct or refreshing something that already exists?

Step two is the ‘why.’ Why do we want to do it? This involves identifying all brand and audio opportunities, formulating strategic guidelines then developing audio mood boards and sonic signposts.

Next, we determine the ‘how.’ This is where the creativity begins. We start with concept development, then present three concepts to the client. Once reviewed, we generate more options if required. When all parties are satisfied, we move on to concept refinement and re-calibration.

At that point, we dig deeper into the concept and explore topics like media applicability, ethnic suitability, and overall flexibility. Then the testing stage comes, which is internal qualitative testing for the agency and client to review. It’s difficult to actually test sonic branding without it being released — you’ll only know if it’s effective once it’s had time in the market. Repetition is key.

And finally, we have our handoff. All sonic branding assets are presented in pre-selected formats, broadcast ready. Adhering to this ‘what, why, and how’ methodology is how we develop the right sounds that resonate with customers. The reason it works is that we resist the urge to jump to an execution (the ‘how’) before we figure out the ‘what’ and the ‘why.’ That’s also how we avoid ‘flavor of the month,’ and ‘what’s hot now’ traps.


Paula: Given all the changes in technology Tom, what do you see for the future of sonic branding?

Tom: For one thing, the whole world of artificial intelligence, as it relates to voice assistants, has opened up a whole new level of sonic branding. Now it’s being dubbed VX, or Voice Experience. Brands can now have a dialogue with their customer, in front of the customer, and in the comfort of the customer’s own home. Think of the data mining possibilities there.

Brands also have the opportunity to extend their sonic identity to include that of a branded voice assistant. According to The Smart Audio Report, 65 percent of users say they wouldn’t go back to life without their smart speaker. And even Pandora noted in their Definitive Guide to Audio 2018 that there’s never been a better time to be a marketer who invests in audio.


Paula: That’s pretty exciting stuff, Tom. I’d like to end by asking your advice on behalf of our readers. What are the top three things you would tell a company considering a sonic branding initiative or campaign?

Tom: Sure. If a company is considering sonic branding, then it clearly already understands the power and importance of an effective sonic communication strategy. So I would say that the three most important rules for leveraging their sonic branding efforts are: 1. Be creative. 2. Be distinct. 3. Be consistent over a long period of time.

Paula: That’s excellent advice! Tom, thanks so much for your time, and for sharing sonic branding expertise. We’ll be listening for your work!

Tom Eymundson, CEO of Toronto-based The Pirate Group Inc., is a talent director, music producer, and sound designer. A winner, juror and Jury President of many international advertising awards shows (including Cannes Lions and the London International Awards), Tom has been helping brands find their voice for over 20 years.

Find out more about Tom and the Pirate Group at http://piratetoronto.com.

Paula Courtney is Chief Executive Officer of The Verde Group.

Is Amazon Making You a Lazy Shopper?

Let’s face it – in this age of convenience it’s easy to cut corners, and as a working parent of young kids, I welcome any opportunity to be ‘lazy.’ I’ve also noticed that over time I’ve continued to return to the products and businesses that make my life easier.

For example, I’m a huge fan of Target. I could spend hours in their store buying all sorts of things I may or may not need. But when it comes time to purchase a household item online, my default is always Amazon.

Why, if I love Target so much, wouldn’t I consistently choose Target as my retailer of choice? Their prices are comparable, they offer free shipping, and Target also has product reviews and comments.

My answer is simple – Amazon is easy. I can reach my end goal with the least amount of time and effort when I shop with Amazon. And let’s be honest, I’d much rather spend my time with my children then spend hours of time researching purchases online.


Why has laziness become so important?
“Busy” is the most common answer to the age-old question “how are you doing?” I hear that response so much that I try not to use it myself. Busy is the new normal, and according to Nielson, our quest for convenience is driven by two primary forces – new consumer challenges and changing lifestyles.

We are busier, more connected, and more on-the-go than ever. As a result, we are stressed, receive too much information, and constantly fatigued by the amount of complexity surrounding us.

While over time all these challenges have changed our lives, one thing has remained the same — we still have only 24 hours in a day and seven days in a week. As we work to prioritize our precious time, we need to reserve our mental and physical activity for the things that matter most. And, outside of big-ticket items like a home or car, that doesn’t include most of our purchases.

So going back to my earlier example, while I may be brand loyal and have an emotional connection to the Target brand, if it means spending more time with my loved ones, I’ll choose convenience (and Amazon) every single time.


How does a company like Amazon make my life easier?
While the definitions of ‘easy’ and ‘convenient’ are somewhat subjective, our research at The Verde Group suggests that most people view them similarly.

When we measured the ‘ease of doing business’ for a partner logistics company, we then segmented the results by age but found no statistical differences. The amount of perceived effort necessary to work with our client did not vary appreciably by age or gender.

This is good news for CX executives wanting to deliver a frictionless experience across their entire customer base. And they need to look no further than Amazon for ways to offer that simple purchase experience:


  • Customers want trustworthy information and Amazon provides that by encouraging customer reviews. They offer programs (the newest being the Amazon Influencer Program) that make it easy for social influencers to showcase and promote Amazon products.
  • Shoppers can quickly weigh their purchase options and can see all competing products on one page, with prices, features, and reviews. As a result, they feel a sense of confidence when making purchases, knowing that they have done their due diligence.
  • 1-Click ordering. Enough said.
  • Accessibility of customer support. In one place, customers can track their package, make a return, seek technical help, or report a problem. It’s easy for them to find help and to navigate to their end goal.

This last point is an important one. Our research has reported that customer service is a critical component of assessing ‘ease of doing business.’ In fact, we’ve seen up to 50% of all loyalty risk coming from customer support issues.

And that makes sense. If there’s a need to reach out to customer service, then most likely something has already gone wrong with a product or service. If a customer is already upset before speaking to someone, it’s easy to see how a poor experience (like a long hold time or information repeated over and over) can increase their frustration.

Knowing the potentially high impact this service interaction can have on customer loyalty, it’s critical that customer service receives the attention and resources needed to achieve satisfactory problem resolutions.


The lazier I get to be, the more I’ll buy from you. Am I alone in this evolution?
Don’t worry, you and I aren’t alone! When it comes to service, companies create loyal customers primarily by helping them solve their problems quickly and easily.

In the book “The Effortless Experience,” the authors report that four of the five drivers of disloyalty involve additional effort that customers are compelled to put forth. The Verde Group’s research confirms this as well. If a customer feels it is easy to do business with our selected client, then they are most likely to be a promoter of that company. And if the customer believes that the company is not easy to do business with, there is a high chance that the customer will be a detractor.

With that in mind, here are three steps to improve your customers’ laziness:

  1. Identify the points of friction in your purchase experience and develop a plan to improve those areas. Prepare to spend significant time diving into the customer service experience. Is that experience helping your customers solve their problems quickly and easily? What about your return policy?
  2. Learn what your customers are doing before, during, and after their shopping experience. Are they leaving your site or store to compare prices? To help your customers to make easy purchase decisions, you must start with understanding what they are doing today.
  3. Make “simplicity” the mantra of your customer experience. Across touchpoints, both online and brick and mortar, ask yourself: “is this experience simple for the customer?” If the answer is no, then go back to the drawing board.

These types of improvements in your customer experience are likely to increase loyalty, positive word of mouth, and customer recommendations. As consumers, we’re all “busy” and overwhelmed. The last thing we want is to have to jump through hoops to give a company our money.

If you’re like me, just keep letting me be lazy, and I promise I’ll keep coming back.

Sarah Pierce is Senior Vice President at The Verde Group



Captive Customers: When Customers Want to Leave You But Don’t

We’ve all heard it, and probably even said it: “I’m never shopping there again!”

But is there a tipping point, a ‘red line,’ that once crossed means customers will leave you for good? It turns out that things are not so simple. The point where customer dissatisfaction actually impacts repurchase intent varies from industry to industry, and to make things even more complicated, ‘never’ is not always forever

How lack of choice affects customer behavior
Certain industries appear more immune to customer defection than others, as an example, think of your bank or airline you choose to fly. In these industries, customers perceive there is a limited choice between suppliers, and that other supplier alternatives are just as flawed.

Customers may believe that their provider’s problems are endemic to the industry, and are truly not fixable. So why bother going through all the hassle to switch a provider if the alternative isn’t any better?

An obvious example is the cellular provider market. Most customers believe there are only a handful of viable alternatives. And most would say that those suppliers shared common issues (cryptic billing, excessive data charges, etc.) And virtually all customers would say that cellular providers are unable — or unwilling — to find fixes for these issues.

In these cases, the level of friction between a customer and their supplier can reach very high levels before the customer is ready to jump ship. In research done by The Verde Group, 90% of wireless customers reported having at least one problem with their provider in the past 6 months. More likely, these ‘captive customers’ will carry on in the relationship, unhappy but unwilling to make a change.

The problem with captive customers
Marketers in these industries shouldn’t be complacent, however. Captive customers pose at least two risks — including one that could strike a non-recoverable blow to the business.

The first risk involves cross-selling and up-selling to these customers. True, they buy from you today, but they don’t really want to. As a result, your ability to sell new products and services to them is minimal and requires a tremendous amount of marketing dollars to get a little bit of lift in sales. This is not good news for providers looking to grow their business by way of their installed base.

That pales in comparison to the second risk — disruption. Those unhappy customers will be quick to embrace non-traditional alternatives when they emerge. And that can have devastating effects.

Just ask Yellow Cab, once San Francisco’s largest taxi company, who filed for bankruptcy protection in 2016 — largely thanks to Uber. And what about Airbnb’s impact on the hotel industry? Morgan Stanley forecasted that in 2018, due to Airbnb, U.S. and European hotels’ revenue per available room would decrease by 2.6 percent.

Problem frequency and category killers
So when do customers actually leave a supplier? Again, it varies by industry, but The Verde Group research shows that across industries, problem frequency is a strong predictor — the incidence of a specific number of problems, regardless of what they are, tends to be the tipping point. In retail, for example, our research indicates that after just two issues, things are at their worst point with customers. That’s when they’re most susceptible to defection.

Another type of issue that leads to customer loss is a ‘category killer’ problem — one that happens infrequently but does maximum damage to the customer relationship. These problems tend to be related to your core value proposition.

For example, a delivery company who cannot reliably deliver, or an insurance company who doesn’t pay claims properly. These types of issues have one thing in common —they tend to sever customer loyalty completely, and recovery is almost impossible.

Never say never again
Although ‘never’ is not really a relative term, different industries use different timeframes to measure customer loss. In retail, for example, a customer who stops shopping for three or four months is the equivalent of a 100 percent loss. They may return after six months, but at that point, they’ll be considered a ‘new’ customer.

If you’re in the agricultural industry, the measurement is different. It’s an annual cycle, so if a farmer doesn’t purchase from a supplier for a year, they’re deemed to have left. If they return in three years, they’re classified as a new customer.

They may come back — but when?
While some customers never (and I mean never) come back, many do. And often it’s the type of problem they encountered that determines the length of time before they return. This is known as ‘the ‘decay’ period.

Core business problems or egregious issues typically have a much higher decay window. In other words, don’t hold your breath. Those customers aren’t coming back anytime soon — if ever.

Peripheral issues (such as customer support, stock problems, or delivery challenges) can have shorter decay periods. Customers may in effect put their suppliers in the penalty box, but some eventually come back, and do so in a shorter period.

Understand your customers’ issues
It’s critical for companies to develop a complete view of customer problems. They need to monitor frequency, resolution, and customer perception. They also need to be vigilant in guarding against catastrophic, category-killer issues.

Finally, even if doesn’t appear that customers are ripe for defection, companies can’t afford to be complacent. After all, the next Uber could be right around the corner.

Paula Courtney is Chief Executive Officer of The Verde Group and Product Founder at WisePlum.




NPS is Just Part of a Much Larger Toolkit

The Verde Group Customer Experience Risk

The Net Promotor Score (NPS) is a loyalty metric that measures how willing customers are to recommend a company’s offerings to others. As an alternative to traditional customer satisfaction research, it’s widely believed to reflect revenue performance.

Virtually every Fortune 500 company uses the Net Promoter Score (NPS) to measure customer loyalty — if you don’t believe me, check out how they stack up here. Most invest heavily in improving their scores, and many tie executive bonuses to the results.

There’s only one problem. Customer satisfaction in general and NPS, in particular, are poor predictors of customer behavior. And that means that a good NPS score does not necessarily translate into customer loyalty, increased revenues, or a bigger market share.

The problem with NPS scores
While NPS can serve as a decent barometer of customer satisfaction, it doesn’t give you the bigger picture. It doesn’t provide the backstory of why a respondent would or would not recommend your company.

That story — particularly the negative experiences that frame it —  is what really helps predict future customer behavior. The simplicity of NPS can at times, overlook the complexity of company-customer relationships.

Some companies are lulled into a false sense of security by their NPS scores. If they see a year-over-year improvement, they celebrate, but don’t sense the potential dangers that could be lurking right beneath the surface.

This is primarily due to the fact that NPS is a description, not a cause, and measures an outcome without a deep understanding of the actions leading to this outcome. Alone, NPS does not tell you what you need to do to change the rating outcome.

For example, you can have great NPS scores and have flat or declining revenues. You can have a strong NPS result right now, but be ripe for disruption — think of what Uber and Lyft have done to the taxi business.

Because NPS scores don’t provide a complete picture of the relationship you have with your customer and their loyalty to you, you can’t afford to rely too much on those scores.

Still, NPS is not dead, despite reports to the contrary. As the American Marketing Association states, NPS does have its benefits — it’s simple, its findings are easy to understand, and it can be benchmarked.

However, the AMA acknowledges that employing NPS may create tunnel vision for companies, and recommends that it ‘shouldn’t stand alone.’

And that’s the key. NPS represents only a single data set in measuring the customer experience. Customer surveys are another, and inbound feedback provides still more. In isolation, each is incomplete, and almost sure to offer only a partial (and potentially misleading) picture. Taken together, they form a more detailed view of the customer.

However, companies need to dig even deeper to understand customer experiences, particularly the negative ones. Customer response to negative interactions is strong, and those customers with negative perceptions are more likely to take action, such as shopping somewhere else and telling their friends.

Get out your toolkit
With NPS only partially measuring customer sentiment, companies must ensure they have additional, complementary processes in place to help further develop the customer insights they require.

Use Multiple Inbound Data Sources
Call centers, sales, social media — all provide excellent sources of inbound customer feedback. Organizations need to take a broad, holistic approach when managing these different ‘listening posts,’ consolidating, assessing, and actioning the collected data as a whole.

Be Proactive
As I’ve written about previously, many customers won’t share their negative experiences when providing inbound feedback. Companies need to reach out to those customers through interviews or other live interactions — building trust through conversation to uncover, acknowledge and explore underlying customer issues.

Deeply Understand Problem Experiences
Companies need a purposeful and deliberate method of getting an understanding of problems. Our research shows that problem experiences negatively impact the likelihood to recommend a retailer.

We also know that one out of two online shoppers will experience a problem before they even make a purchase. Ongoing measurement and tracking of problem experiences is a valuable and impactful tool in understanding the drivers behind the NPS ratings.

Take Action
Once companies have discovered and acknowledged a customer problem or negative experience, they need to resolve it as quickly as possible. Customers expect a resolution and aren’t concerned if that fix falls within your company policy or is expensive.

Following up post-resolution is also critical. You need to confirm that the problem is resolved and the customer is happy — from their point of view. We see time and time again that when a problem is resolved to the customer’s satisfaction, loyalty and spend actually increase more significantly than if there were no problem experiences at all.

It appears the debate over the value of NPS will continue for some time. Is NPS the best way to measure customer satisfaction, or is it hopelessly flawed?

Our position is it’s neither. It’s just another tool used to capture and assess customer satisfaction. Used alone, it’s flawed and incomplete. Deployed with the rest of the toolkit, it can provide valuable insight into the overall customer experience.

Michael Tropp is Vice President, Business Development at The Verde Group.



Inbound Feedback is Only One Piece of the Customer Experience Puzzle

The Verde Group customer insightCompanies who rely solely on inbound feedback to gain a greater understanding of their customers’ experiences may be missing the opportunity to solve for the problems that are most related to customer loyalty.

Most organizations understand the importance of focusing on negative customer experiences. Customers who’ve had problems or are unhappy are more likely to change their shopping behavior, and also to tell others about their experience — both to the detriment of their current provider.

Many businesses rely on inbound mechanisms to capture that negative feedback. They’ve invested a great deal in creating multiple, effective ‘listening stations’ to gather feedback — call centers, sales team, websites, programs, market research and social media.

These companies believe that, with multiple channels harvesting customer inputs, they’re sure to understand customer issues and negative experiences throughout the customer journey.

Unfortunately, our research doesn’t bear this out. According to Verde Group findings, more than two-thirds of customers (67%) experience problems and never contact the company about them. Instead, they’ll choose to explore other options and often take their business elsewhere and you’ll be left wondering why you lost a perfectly good customer.

Even if customers do call in with problems, they may only identify issues they think you can fix. Worse, the ones they tell you about may not have a significant revenue impact on your business.

You may spend time and resources addressing issues that have a minimal effect on your bottom line while having no real window into the negative experiences that are making customers walk away — and taking their wallets with them.

Luckily, by looking beyond inbound customer feedback, companies can gain a better understanding of customer issues while also strengthening relationships with those customers.

Get proactive
Reaching out and asking for customer feedback can make a world of difference in the quality of the responses you receive. If they believe your intentions are genuine, many customers will open up about their experiences, both good and bad.

There are a number of ways to do this. Many companies will send out an email survey (or better, a personalized email) after a customer engagement. Some will initiate a call-back to the customer after a purchase is complete.

Even better, develop a plan to reach out to the customers you haven’t heard from in a while. They will offer a unique and valuable perspective compared to new customers or customers who have proactively contacted you.

Where viable, a more in-depth, personal interview can yield the most valuable feedback. A conversation gives the customer the opportunity to be more candid and detailed in describing their experiences with your company.

Feedback gathered from proactive outreach can provide your cross-functional partners with a wealth of information. Socializing these findings is a great way to drive customer centricity within your organization.

Fix and follow up
When a customer does share a problem or a negative experience, your next move is critical. You need to resolve the customer issue, and in such a way that the customer is happy with both the outcome and the interaction.

The fix may fall outside of policy, and in some cases may be expensive, but wherever possible, resolving the customer problem should be your prime consideration.

The next step is equally important — following up. From a customer perspective, there’s nothing worse than thinking your issue is resolved, only to find that it’s not.

Following up to confirm you’ve addressed problems to the customer’s satisfaction will ensure there are no outstanding issues, and create a lasting, favorable impression with the customer.

Many customer service centers send a survey for feedback immediately following an interaction. At times, this can provide a false positive. The customer believes that the problem was fixed only to realize a week later that it wasn’t fully resolved. Consider the timing of the customer service survey to ensure the customer has had time to fully implement the fix or solution.

Revisit your inbound efforts
While inbound feedback alone does not provide a complete picture of the customer experience, it is an excellent source of information. As part of your overall initiative, you should ‘re-tune’ your inbound process to ensure you’re collecting the best feedback possible.

One way to do this is by reframing the questions you’re asking the inbound customer. Rather than ‘are you satisfied?’ consider ‘what didn’t you like about your interaction?’ or ‘what could we have done better?’ You want to develop your questions in a way that provides actionable feedback. Feedback is useless if you can’t drive action to fix the issue.

Once uncovered through your inbound efforts, any issues identified can be managed with the ‘fix and follow up’ process you’ve already established.

The stakes are high
Even the best companies can’t avoid customer problems — it’s how those issues are brought to light and handled that makes the difference. It’s critical to capture feedback not only from customers who self-report problems but also from those who never report at all. Over time, dissatisfaction levels will drop as you tackle one problem after another and loyalty will rise.

Michael Tropp is Vice President, Business Development at The Verde Group.



The Customer Experience Risk – It’s What You Don’t Know That Should Keep You Up at Night

The Verde Group - Customer Experience Risk

You may be like many executives who’ve had more than a few sleepless nights worrying about your customers. Particularly the customers with problems (and on average that’s 3 out of 4 of your customers – source: The Verde Group white paper) — the ones who light up the phones and fill your inbox with concerns, complaints, and helpful suggestions. Surely if you don’t act and fix their issues, they’ll take their business elsewhere, right?

It’s a common hypothesis that you should prioritize your initiatives around those known problems or the ‘squeaky wheel’ issues. The ‘known issues’ are causing friction in your customers’ experience and should be addressed, however, they may not deserve the resources or priority that you think.

In fact, it’s often the best, most loyal customers who bother to take the time to contact you and complain. And by and large, they’re not a flight risk. There’s a good chance there is no direct correlation between the frequency of customer complaints, the likelihood of retaining that customer, and the revenue impact to your business. This group of customers are passionate about your product or service, and they want to make it work.

How do you determine what the real customer issues are that may be financially impacting your business? With limited resources to address them, you can’t afford to get it wrong.

Majority of unhappy customers don’t complain. Over 67% of customers who experience a problem never tell the company about it. Customers cite “it’s not worth my time” and “they don’t believe that complaining will do any good because no one cares”. These are the customers who spread negative word of mouth and then vote with their wallet by taking their future purchases elsewhere. (source: The Verde Group white paper)

Where to start? Build a data-driven hypothesis
In a prior role, I was charged with building business strategies for a start-up SaaS company to reduce customer defect and maintain the very costly customers we worked so hard to acquire. It was early days in the subscription business model, and while we had a hypothesis as to why customers would defect, we didn’t know with certainty what was driving the churn.

We had spent a lot of time analyzing the customer complaints and surveys that came in through our support desk. We could tell you with confidence, the issues that our customers were experiencing.

But as we started to dig into the customer data points associated with that segment of customers (those that contacted us) we were surprised to see that they were some of our most engaged users. They were contacting us multiple times a year and using the product more frequently and recently compared to those customers who never contacted us.

The profile of these customers was contradictory of our institutional belief, so we had to learn more. Following a big subscription renewal period, we began to analyze the data points available on customers who defected. Did they purchase through a certain channel? Did they use specific feature sets?

Examining the data of our lost customers provided us with working theories as to why they left. But the data alone was far from providing us with the necessary insight to be able to put plans in place to reduce future customer churn. We needed to understand the context of the internal data points we were seeing. We needed to understand the “why” behind these behaviors.

Ask ‘what really happened?’
What you’re looking for here is the opportunity to have a genuine dialogue with your ex-customer — an open-ended conversation where you let them talk and share their experiences. It’s important to listen without pre-conceived notions of what the customer will say. Go in with an open mind and the only goal being to listen and learn.

Using the data you already analyzed, target specific segments of users when recruiting for the listening sessions. For example, one group may be users who showed great engagement with the product, yet still defected. This focus enables great efficiency in learning the root cause because you already have some insight into their behaviors.

Each user has a unique experience, but through qualitative research such as IDI’s or focus groups, themes will emerge that will provide the insight that you’re looking for. Often, they will introduce an issue that you didn’t uncover when reviewing the data and provide critical insight in doing so.

Socialize your learnings
At this point, you have detailed customer feedback in one hand, and objective, measurable data in the other. The customers’ experience with your product or service is end-to-end and holistic. What you learn through this process will not fit nicely into just one area of the business or function.

In order to put plans in place to address the top drivers of churn, you will need cross-functional support and leadership buy-in. This is a critical and often overlooked step in the process. Don’t forget that the insights you uncover may be completely new to this audience. It may take some time to help colleagues understand these “silent killers” and why they haven’t heard about them before.

Build your action plan
Now that you have organizational alignment, you’re ready to prioritize the issues you’ve uncovered and start building a plan to address those specific issues.

Start with what you consider to be the easiest fixes that have the most substantial revenue impact. Don’t overcomplicate the solution but rather stay laser focused and have clear metrics in place to measure the impact. It’s easy to start to have scope creep and before you know it you’re attempting to build a plan that is unattainable.

Clarity of ownership is critical in getting plans off the ground. Make sure everyone involved knows their role and expectation in solving the issue at hand.

After achieving some early momentum, move on to evaluate the business case the more complex, resource-intensive solutions.

No resting on your laurels
Once you’ve moved from a reactive mode to proactively addressing customer issues, don’t make the mistake of stopping, or even slowing down. You’ll need to repeat the data review/customer conversation cycle on an ongoing basis to stay in tune with your customer’s experience and keep raising the bar on your performance.

In the end, it’s not the customers who complain the loudest or most frequently that should keep you up at night. It’s worrying whether you really understand your customer’s experience and whether you’re truly addressing the issues that are financially impacting your business.

Of course, if you leverage your data, have genuine conversations with your customers (and ex-customers), build organizational support and create a measurable action plan, you might just sleep like a baby.

Sarah Pierce is Senior Vice President at The Verde Group.

Collecting Consumer Data: Is More Really Better?

The Verde Group - Customer Experience ResearchIt wasn’t too long ago that industry leaders would have scoffed at the idea of collecting too much customer data. In a rush toward realizing the value of big data and analytics, customer information was the key to higher revenue and increased market share, and more was better. Too much customer data? There was simply no such thing.

Times have changed
Today companies are experiencing firsthand the challenges associated with collecting, analyzing and actioning mountains of customer data. Big companies, especially when delivering an omni-channel experience in retail, collect data in many different ways — through various touchpoints, transactional data, marketing automation and primary research initiatives.

The challenge for these companies is how to bring all of this customer experience research and data together in a way that provides value and insights to the business.

Multiple stakeholders, multiple agendas
Consider call center teams, who collect and validate basic customer information, but can also confirm customer interest and readiness to purchase. Or social media engagement tracking, which tells companies how customers interact with their content and also provides a means to monitor brand image. Sales also collects client data (installed base, key customer contact, competitive information), especially in business to business (B2B) companies. Marketing has their own data points including website traffic, email open rates and communication preferences to name a few.

Often these and other groups within an organization will drive separate research initiatives to gather, analyze and action customer data, in many cases for their specific purposes and in isolation.

A significant expense
Collecting, housing, analyzing and actioning all that customer data is very expensive. With no centralized plan, companies can incur a considerable cost for overlapping initiatives. Even if separate groups share data, there’s bound to be overlap in the data collected, and each group will mine the data based on their unique requirements. The costs in dollars, time and resources add up quickly. Additionally, your company may be investing these resources into something that may or may not have a substantial impact on the customer experience and your business.

Lack of planning can drive lacklustre results
While it’s okay and often necessary to have individual customer initiatives, the absence of a centralized and coordinated plan often creates missed opportunities and confusion for companies. Inconsistent approach to research can yield conflicting insights and drive different action plans, and rather than improving the customer experience, they can confuse or even frustrate customers.

Organizations need to start with a company-wide understanding of their goals for increasing profitability and improving the customer experience and establish a consensus on how to target and measure progress against those goals. Without these two in place, they risk investing in initiatives that may have little to no impact on the customer and not meet revenue or market share targets.

Three ways to improve your customer data initiatives
How can businesses manage all this data and build a company-wide strategy that promotes collaboration, data-sharing, and the creation of common action plans? Here are four ways that organizations can get started:

  1. Establish common goals
    While each team will have unique requirements and metrics, it’s critical to establish common goals when it comes to customer engagement and the customer experience. These goals should align with the strategic vision for the company set out by the executive team.This helps to streamline the number of goals, creates clarity and also ensures executive support for the overall initiative. An effective way to determine those goals is by conducting strategic customer experience research — this helps clarify the current relationship between company and customer, and ultimately to refine and prioritize goals.
  2. Share data and minimize overlap
    Teams collecting data should work together to consolidate their efforts. Where possible, ‘no repeat data’ should be their mantra. Customer data must be centralized and fully accessible to the appropriate stakeholders.This includes defined business requirements – how to collect the data, when it should be collected and where it will be stored and how to access the data. Consistent screening questions across initiatives will enable cross-collaboration between studies.
  3. Collect the right data points
    Companies need to carefully examine the questions they’re asking their customers. Too often, in an effort to gauge customer satisfaction, they’ll ask customers about what they like, or what makes them happy. Many organizations invest a great deal of money and effort in measuring customer satisfaction and even pay bonuses based on the results.The problem is that customer happiness and satisfaction are very poor predictors of customer loyalty or future behavior. In fact, negative experiences are much more predictive of what a customer will do in the future. In fact, 60-80% of defecting customers categorize themselves as ‘satisfied’ on surveys conducted immediately before their departure. (source: Verde white paper).

    Another point to note is that attitudinal feedback (‘I’m angry’, or ‘I’m frustrated’) is much less valuable than experiential feedback (‘this is what happened’). It’s hard to do anything with the former, while the latter provides a precise readout of that particular customer experience.

Create common, actionable insights
With shared data and goals, companies can consolidate their findings and create actionable insights that are consistent across the organization. These can serve as a platform for individual functions to align behind broad initiatives based on the desired customer experience.

Michael Tropp is Vice President, Business Development at The Verde Group.


Start Small To Create a Company-wide View of the Customer

The Verde Group - Customer Insight

I’m sure you’ve heard the ancient parable about the blind men and the elephant.

It’s the story of a group of blind men who encounter an elephant for the first time. They all touch a different part of the animal, then draw different conclusions as to what they’ve experienced. In some versions of the story, the men violently disagree and almost come to blows. The moral of the story, of course, is that people often form different conclusions based on a partial view of the same information.

This is precisely the challenge many companies have when collecting, analyzing and actioning their customer data for customer insight. How best to link multiple sources of data to capture a complete, holistic picture of the customer experience?

Islands in The (Data) Stream
For many companies, views of the customer experience are functionally focused. For example, the team in charge of packaging design understands everything about the customer’s perception of their packaging. Sales knows about product features and benefits and is competition-savvy. Customer service is full of experts about everything that can go wrong with the product.

Often, especially in large organizations, each of these teams captures, prioritizes and actions different (and incomplete) data about the customer experience. However, customers don’t view each of these areas separately — their perception of their purchase experience and the company as a whole is much more holistic.

From a company-wide perspective, this functional approach is wildly inefficient. It’s hard to know what to prioritize and take action on if you’re only focused on your small area and can’t see the big picture. It can lead to competing (and sometimes conflicting) action plans, duplication of efforts, and resources spread too thin to be effective. 

More Than a Systems Issue
A common theme, again in large companies, is to put the problem down to deficiencies in systems. With the mountains of data collected and stored, the refrain goes, it must be a systems limitation that prevents customer data from being pulled together into a centralized view.

It’s true that it’s difficult to consolidate disparate data sources like customer service data, transactional data or product usage. Systems issues are real enough. However, even more than systems, this is a leadership issue. Leaders must embrace the need for a complete, ‘single source of truth’ for the customer, and acknowledge that it’s worth the time, money, and organizational disruption to do it. It’s a long-term initiative and not an easy call for leaders to make, given other more pressing, short-term issues.

It may be easier for startups to implement the ‘single customer view’ as a priority than for established businesses. It’s simpler for smaller companies to build from the ground up — to agree on what data should be collected and how it will be shared and actioned. Startup mode gives these companies the luxury of building systems around the process, rather than the other way around.

Look at how Netflix has leveraged their data gathering and their understanding of the customer experience. By collecting and analyzing user preference information, the company can recommend shows they ‘know’ you’ll like based on your previous viewing habits. Moreover, armed with a holistic view of their customers, they are creating bespoke programming that’s almost certain to be a hit with their target audience.

Starting Small The Best Approach
Ironically, the optimal solution to tackling a customer view that’s too narrow is one that involves starting small and staying focused. Remember the elephant? Not that you would, but if you had to eat him, ‘a bite at a time’ is the right approach. The same goes here.

The idea is straightforward — pull together cross-functional teams and build agreement on a small number of ‘must-have’ customer data fields that you think are the most important and impactful to your business. Next, brainstorm about the best way to collect that data if you aren’t already, determine how it can be easily shared and interpreted even if it is a manual process while gaining traction with leadership/ Once the organization begins to see that there is consistency in how teams are looking at the customer experience, it is time to leverage that data and build coordinated action plans from your findings.

Once the cross-functional team has had success with limited data streams, you may see a snowball effect. Perhaps you started with a Top 5 list of must-have customer data fields, but the team can now see gaps and opportunities that lead you to expand the initiative.

While the cost benefits of this approach can be substantial — less duplicated effort means a lower cost of data collection — the real benefits to the organization are far greater.

This focused, cross-functional approach yields a single ‘true picture’ of the customer,  supported across the enterprise. Stakeholders share data and analytics and execute universal programs and get-well plans. The company develops a greater understanding of the customer experience, and that understanding is the key to building deeper, more meaningful relationships with its customers.

Sarah Pierce is Senior Vice President at The Verde Group.