Making Your Customer Experience Research Matter

customer experience research The Verde Group

Find the difference between interesting and actionable insights

By now, the notion that customer experience matters to market success is nearly universal.

A 2016 Gartner survey found that 89% of companies expect to compete primarily on the basis of customer experience — up from 36% in 2012.

Most companies make significant investments in customer research to shape their customer strategies, seeking to understand gaps in customer satisfaction and to develop remedial actions based on research findings.

Yet many companies still struggle to establish a clear link between research findings and meaningful, sustained improvements in business fundamentals.

For some, after many quarters of customer analysis, Net Promoter Score (NPS) – the metric that most companies use to gauge the loyalty of their customer relationships – remains stubbornly static.  For others, changes in customer satisfaction show little relationship to customer revenue growth.

Why would this be the case?  The Verde Group has been analyzing customer experiences for over 20 years, and we’ve arrived at this conclusion: for nearly all categories, customer experience is a rich, complex and dynamic phenomenon that is easy to describe generally using traditional satisfaction research analysis, but is quite difficult to diagnose actionably using those same techniques.

This is why we focus our clients on a different analytic filter for understanding customer experience: the filter of dissatisfaction analysis.

As my colleague Michael Tropp discusses, customer dissatisfaction can be very powerful for interpreting customer experiences.  Rooted in human evolutionary psychology, the concepts are simple:

  • Events that cause us pain are far more influential on what we do than events that cause us pleasure.
  • When a customer says “No, I won’t” (as in “you made my interaction so hard that I won’t buy from you again”) they are far more likely to follow through on that statement than when they say “Yes, I will.” This makes dissatisfaction analysis highly predictive of future customer behaviors.
  • Because problem experiences so strongly correlate to market action, they can be financially prioritized in terms of damage to customer loyalty, revenue or brand equity.

That last point is particularly important.  The objective of dissatisfaction analysis is not to tell companies their customers have problems; they already know that.

And they probably have an overall sense of what those problems are because if they didn’t they’d be out of business.  But what most companies don’t know is which problems are most damaging to customer value and relationship equity.

Now, executives in the C-suite will have their opinions.  But that’s the issue: generally, a company’s problem prioritization is based on partial data, limited analysis and a priori biases.  What’s worse, those opinions vary greatly depending on which executive holds them.

The sales department thinks customers suffer most from one set of problems, but Operations targets a different set.  Marketing focuses on the pain points they think are most crucial, but the Service function has a wholly different point of view.

What happens?  Executive team CX debates don’t resolve, strategies don’t align, and tactics step on each other and undermine overall improvement efforts.

This is why a statistically rigorous, financially based prioritization of the customer experience is so valuable.  It moves the debate from bias to objective facts: which problems are costing us the most in terms of customer revenue and loyalty?  Such a ranking aligns a company’s functions with respect to experience strategy and provides a powerful way to link C-suite strategy to front-line execution.

Maybe dissatisfaction analysis validates what the company already suspected.  That’s a win; validation means the team can move from debate to action.  Or maybe the analysis slays a few “sacred cows”: customer issues that the team firmly believed were highly damaging to customer equity, but turned out to be relatively inconsequential compared to other customer issues.  That’s an even bigger win since now the team can redirect resources to solving what really matters.

And the biggest win of all: identifying problems that the company didn’t even realize they had.  These “silent killers” are the most powerful output of dissatisfaction analysis.

Quietly eating away at customer retention and revenue growth, undiagnosed they represent a serious drag on loyalty and earnings.  But brought into the light, they can be addressed and controlled.

Most companies want the same thing: to serve their customers well, to innovate for the future, and to grow their customer relationships profitably and for the long term.

But few companies truly succeed at analyzing the customer experiences on which those objectives depend.  Those that are willing to go beyond traditional satisfaction analysis to look hard at the dissatisfaction of their customers will find great returns in customer loyalty, customer value and competitive stance.

Jon Skinner is Executive Vice President of The Verde Group

 

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