CLM: Six interconnected measures. Which ones are you missing?

Bill Shapard Jr., PRC
March 7, 2023

In a world where a competitive edge is here today and gone tomorrow, customer experience management (CEM) is billed by many CEOs as the last battleground. It is where the relative quality of product and service delivery meets consumer decision-making. Based on their experience, consumers will be more loyal; more amenable to upselling and cross-selling; less price sensitive; and more likely to spread positive word of mouth. When you get these factors right, various studies have shown that the resulting positive impact on cash flow can dramatically increase shareholder value. So rest assured, the prize is a large one. This is one of the reasons why U.S. companies invest so heavily in research to understand how they are performing relative to their competitors.According to ESOMAR, U.S. firms invested some $9.2 billion in customer research in 2010 and are predicted to spend similar amounts in 2011 and 2012 - much of it in the field of experience and service delivery. Yet according to Nunwood's comparison of 2011 and 2012, there has been little discernible increase in the quality of the experiences created for U.S. consumers. Further, a report published in 2010 by the Boston Consulting Group showed that only one-in-10 voice-of-the-customer programs come anywhere close to meeting their original objectives.It raises the question as to why, given the huge investment, this should be the case.

Process measures

Because it encompasses every aspect of how a business functions, CEM has many moving parts. It is for this reason that companies find it so challenging. In addition to product, price and brand, there are six factors that influence loyalty and repurchase. The commercial contribution of each of these six factors varies across business and industry. However the excellent organizations consistently deliver outstanding performance against all six.

  1. Personalization: The degree to which an experience meets an individual's specific needs.
  2. Time and effort: Valuing customer time and reducing effort to make the interaction easy.
  3. Resolution: Turning a poor experience into a great one.
  4. Expectations: The setting and delivery against implicit and explicit promises.
  5. Integrity: The degree to which the customer trusts the company to do the right thing - not just the thing that maximizes its returns.
  6. Empathy: Understanding the customer's unique circumstances and responding accordingly.

A statistical analysis from the study shows that a composite 11-point measure of these factors has 10 percent more predictive power of future customer behavior than NPS.However, this is not the point. Each of the six factors plays a role at essential points of the customer journey. On a number of occasions, more than one factor is necessary for the satisfactory completion of a customer journey step.The message from the study is clear: The top companies excel by solving all of these areas. They do not solve these problems individually - each is interconnected. So if an organization fails to solve any one of them, it ceases to be excellent. It's the management of the interconnectedness that sets it apart.

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Bill Shapard Jr., PRC
Founder & CEO

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