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Greg Kihlström
Published: Monday, February 27, 2023 - 12:03 Customer loyalty and lifetime value are highly prized in today’s competitive environment. Smart businesses know that a major point of competitive advantage (or failure) can be the type of customer experience they provide. The need to balance what customers want with what the business needs to thrive requires knowing what you want to achieve, gaining meaningful insights into customer needs and expectations, translating those insights into action, and then balancing what your customers are asking for with what benefits your business. For most organizations, the main challenge with customer insights isn’t having enough data. You’re probably flooded with information. The challenge is determining what information is meaningful and what is noise. It isn’t possible to make the most of your data if you don’t have clear questions relating to what you want to know. In other words, if you don’t know why you’re collecting or reporting on specific data, how can you possibly know what to do with them when you have a report in front of you? You’d just be grasping at straws and hoping you find answers. Thus, before you even begin looking at the numbers, formulate a series of questions about your customers that you want answered. Once you’re asking the right questions, you’ll likely see that you need to collect data in different ways and at different times during the customer journey to gain truly meaningful insights. Meaningful customer insights can be gleaned from many sources, but having a holistic view of what your customers are saying and a mix of leading and lagging indicators throughout their experience will give you a better understanding of where opportunities and challenges lie. Instead of relying solely on a survey that goes out only once a customer makes a purchase, you want to look at several points along the way to gain a more complete view of who they are and how you’re doing. For example, consider looking at some of the following: Create a key performance index (KPI) that shows you the “health” of the customer journey at each stage, from awareness to education to purchase, and beyond. Instead of only looking at lagging indicators like survey results that show net promoter score (NPS) or customer effort score (CES), add real-time metrics or other quantitative metrics to add leading indicators to your view of the customer. Leading indicators include things like advertising click-throughs, email opens, website clicks, and other quantitative measures that point toward completing a conversion. It’s not enough to just look backward using a qualitative or subjective assessment of what already happened via a survey tool. Leading indicators not only will help you diagnose dips in your lagging indicators but also will give you useful insights into key parts of your customer experience, and specific areas where things may not be performing well. Take a look at the internal processes you use to serve customers and find measurements that can help you improve them. This could be the amount of time it takes for a customer to get an answer to a question, how many team members it takes to get to a solution to a challenge, or even the amount of time it takes to fulfill an order. Once you’ve created a comprehensive plan to collect and analyze your customer reactions, it’s time to do something meaningful with the information. Because you’ve started by ensuring that the insights you’re collecting can be tied back to meaningful questions, the next step is to turn those questions into a list of prioritized items. Each of these items should have a story behind it. Define the following for each: • What was the original question asked? Once you get to this point, you can take the final step of reconciling customer needs with the needs of your business. Just about any business will claim to value their customers above most things, but the real test of this commitment is when a decision must be made that prioritizes one or the other of the following: what the business needs vs. what customers want. Make sure you understand business priorities before you embark on this endeavor, because it’s going to be a critical step. Once you know what’s most important to the business, it’s time to consider the following: I have calculated the above very successfully using something as straightforward as an Excel spreadsheet with a simple algorithm that weights each of these factors and allows as many as 100 different items to be ranked and ordered. If you only have two or three items this is overkill, but if you have 10 or more this can be incredibly helpful in providing you with a prioritized list of items. No one would ever say it’s easy to perfectly balance the needs of customers with the needs of the business. But when you ask the right questions, gain an overview of the customer experience, and better understand and align the priorities of both business and customers, you can start making better investments with higher returns. The transparency of this method—where everyone can see the questions asked, the information gained, and how items were scored and calculations weighted—will also be to your benefit as others in the organization “see the work” behind what you did. Regardless if they agree with the outcome, the process is visible. Quality Digest does not charge readers for its content. We believe that industry news is important for you to do your job, and Quality Digest supports businesses of all types. However, someone has to pay for this content. And that’s where advertising comes in. Most people consider ads a nuisance, but they do serve a useful function besides allowing media companies to stay afloat. They keep you aware of new products and services relevant to your industry. All ads in Quality Digest apply directly to products and services that most of our readers need. You won’t see automobile or health supplement ads. So please consider turning off your ad blocker for our site. Thanks, Greg Kihlström is a best-selling author, speaker, entrepreneur, and currently an advisor and consultant to top companies on marketing technology, customer experience, and digital transformation initiatives as principal and chief strategist at GK5A. He is also the host of The Agile Brand with Greg Kihlström podcast. Kihlstrom has worked with some of the world’s top brands, including Adidas, Choice Hotels, Coca-Cola, Dell, FedEx, HP, Marriott, MTV, Starbucks, Toyota, and VMware. “House of the Customer” is his 11th book. Learn more at gregkihlstrom.com.Balancing Customer Insights With the Bottom Line
First, ask the right questions
Asking the right questions
Turn your insights and questions into actionable items
• What were the results of your measurement?
• What does the item mean to both the customers and the business?
• What level of effort is involved in designing and implementing the item?Balance customer wants with company needs
• The benefit to the business, which you will need quantify. Make this easy enough to accurately reflect the weight of importance of each of elements. To rank things, use something more complex than a 1–5 rating. Perhaps an approach similar to how agile scrum teams determine the amount of work a task will take using “story points,” which allows teams to focus on level of effort rather than trying to estimate exact amounts of time that a task will take.
• The benefit to the customer, using a similar approach to ranking the benefit to the business.
• The amount of your total customer audience that will be affected, which can be expressed as a percentage.
• The difficulty/cost to implement, using a similar number scale, and where financial cost isn’t the only factor to consider; you want to think of cost in terms of time as well as in terms of deprioritizing other initiatives.
• Finally, the time to return that this initiative will bring. As much as we may want to embark on a course of action that yields amazing results in 10 years, most businesses need to see a return on their investment much sooner.Creating an open book
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Greg Kihlström
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