Measuring Customer Performance – The Value Co-Creation Way

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I found a new Dutch initiative to measure a Company’s Customer Performance: The Dutch Customer Performance Index (DCPI) (Dutch only) – a new objective and validated index for measurement of Customer performance – . I thought it worthwhile sharing with you.

The Dutch Customer Performance Index is an initiative of the Customer Insights Center of the University of Groningen (Dutch only), intelligence bureau MIcompany and market researcher MetrixLab. The University of Groningen is responsible for the scientific bases of the research. MIcompany determines wich value companies create for themselves from their Customers and MetricLab is repsonsible for data collection and building the benchmark database.

The DCPI conducts their research on a regular basis for 80 of the largest service providers in The Netherlands, which is based on a research base of 4.000 Dutch consumers.

The DCPI measures and compares these 80 companies based on two perspectives of a company’s Customer performance:

  • The value a company creates FOR their Customers: Value to the Customer (V2C)
  • The value a company creates for themeselves WITH their Customers: Value to the Firm (V2F)

The Value to Customer Dimension

The V2C dimension is based on articles by Rust, Lemon and Zeithaml and Verhoef, Langerak and Donkers and is based on four components, all equal in weight to the total score:

  1. Relationship Equity: Valuation by Customers of the relationship with the company.
  2. Value Equity: Valuation by Customers of the price-to-value relationship.
  3. Brand Equity: Valuation by Customers of the brand
  4. Emotions: Valuation by Customers of both positive and negative emotions that can be associated with a company

The Value to Firm Dimension

The V2F dimension is based on articles by Gupta and Zeithaml, Reichheld and Gupta, Lehmann and Stuart and also has 4, equally weighted components:

  1. Revenue: Customer spend on a company’s service(s)
  2. NPS: Net Promotor Score
  3. Retention: The likelihood of Customer retention
  4. Risk: The risk of future revenue. This one is based on the variation between the three previous components. In short: the higher the variation between the three individual scores, the higher the risk.

My take on this

I like this research for a few reasons:

  • It’s Dutch.. but that doesn’t mean anything to most of you probably ;-)
  • It has a scientific/academic foundation and the research is conducted under the responsibility of a respected Dutch University.
  • The two dimensions fit into my “value co-creation” thinking.
  • The fact that the Value to Firm dimension does not talk only of financial value and it’s not based on one number.
  • I particularly like the way the research approaches the Risk of future earnings by bringing it into the equation for starters, but mainly by it being a component based on the variation between the three other components. This makes a whole lot of sense to me.

Additionally I would like to add that I’m not a fan of NPS as an indicator. Most certainly not when it’s presented as a “silver bullit”. I would choose to add at least one more question to the NPS question:
– Did you recommend company x/y/z over the past three months.

Unfortunately I do not have insight in the questionnaire itself. Hopefully I will obtain this. If I do, and get permission, I will put it up here too.

Curious as to what you all think. Is there something similar to this somewhere else in the world? If so, how’s that working? Is this the closest we get to measurement of value co-creation on a company to company comparable level? If not, what are your suggestions for improvement? [tweetmeme source=’MarkTamis’ service=’bit.ly’]

Reconnect the Customer and the Employee with the company

– This article was first published at www.CustomerManagementIQ.com. You can find the article there, here

Call centers have been named the drains of the organization. Unfortunately this is a true statement. Anything that goes wrong, within an organization’s attempt to sell and deliver products and services, will return in Customer Services. Also the people working in Call Centers are viewed and treated as Production Capacity, not as one of the most important assets of the company.

Reducing the P-side of the equation

The starting point for Customer Services Call Centers, as we know them today, has been the desire to concentrate the work (handling customer calls) which was viewed “disruptive” of the higher valued (administrative) work. The clear signs are still there today: Administrative work usually gets higher pay and working conditions in “the back office” are significantly better.

Over the past decade or two call centers have been managed on the P side of the equation: P (price per contact) x Q (volume of contacts).  Almost all innovations in call center or customer service management have been aimed at reducing the human factor in the equation, because that’s where the costs were considered to be highest. Even Quality and Knowledge Management systems could only be implemented after proving ROI through reduction of employee costs (e.g. of monitoring & coaching).

Sadly, for a long time, The only “quality” parameter in play has been Average Speed of Answer or Call SLA and until recently one was considered a specialist in call centers if one understood how to increase accessibility whilst increasing productivity.

We need to change the course of evolution..

I believe that all of the above has resulted in the following “shocking” fact:

The probability that a service interaction will drive disloyalty is approximately four times greater than the chance it will create any positive loyalty impression

I see this statement as “our” main challenge for the upcoming decade. It proves that we are not doing a great job. We have disconnected the customer from the company, by disconnecting the Customer services call center employees from the company first. The above examples prove to me that it is part of our genetic structure. This is not an easy fix. We are in need of genetic manipulation, we need to change the course of evolution: We need a new course, a new map, and a new compass to support that.

What should call centers of tomorrow chase? – How do we reconnect the customer?

Actually I exaggerated a bit above. The course of evolution is being changed. We already see smart companies like Amazon and Zappo’s following the new course. It is likely that more have followed. We just do not hear as much of them as we do from the companies that have a bad service reputation. And frankly I do not encounter a lot myself in my daily work as consultant. Smart companies follow a course that is build upon a few simple building blocks and which is resulting in Loyal Customers: Customers that buy again, buy more and are spreading positive word of mouth.

When we choose the course of Loyalty there is a clear map to follow. Several researches show that there is a high correlation with loyalty through the Customer experience (ease of use, usefulness, delight) as well as Customer engagement and last, but not least: Through employee engagement. It’s these three roads, “we” should follow to get to goal.

What does this mean for call center KPI’s

When targeting Loyalty, call centers should adapt their compass, their KPI’s, metrics or balanced score-cards, in accordance with this goal. So what does this mean:

How successful your Customer’s Experience is, will not be driven by continuously reducing the human factor in the interaction with Customers. It will only do so if the alternative makes the customer service experience easier and more useful for Customers. E.g.: How easy it is for the Customer to find the solution to his problem, how easy it was to find the correct phone number and how easy it was for Customer Service to solve the problem. And also: how empowered is the Customer Service Rep to solve even difficult cases. Those are factors that will increase the likelihood of the Service Experience being a contributor to the full Customer Experience and Customer Loyalty in the end. Those are the factors that need to play a key-role in your Customer Services Call Center score-card.

Employee loyalty will increase not by focusing on AHT, but if you empower employees with knowledge, skills and tools to have better conversations, it will. Employee loyalty does not increase by business rules or scripts that limit employees to deal with Customer problems themselves. Employee engagement does not increase by focusing on 10 critical errors out of 20 potential errors when you do (distant) call monitoring. Engaged employees are less ill, have higher productivity and are more likely positively contributing to the Customer Experience. Engaged employees are also your most loyal Customers. Measurement (and improvement) of Employee engagement should be a key-indicator for your scorecard.

Does the above mean that you can throw out all your old KPI’s? Do Call SLA and AHT no longer matter? From my perspective it does not. It does imply that it is significantly more important to focus your efforts and investments in areas where it does truly matter to increase customer loyalty.

By improving on the above I bet that your “old” KPI’s will improve too. Most of all your company’s profits will grow through increased sales, reduced customer churn and growth of the customer base. How’s that for an ROI? The question that remains: does this suffice for “genetic manipulation”?

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Which Goose should you chase? – Invitation to co-create next generation customer service dashboard 2.0 –

A few weeks ago I posted a blog with the title: Why keep chasing the wrong Goose? At the end of that post I promised to come back to you with a more in depth post on what you should be chasing, or in other words: Which metrics should you put in place in the Customer Services environment to get “it” right?

I truly believe our “profession” is in need of a new dashboard. Current metrics have brought our customers and our companies too little. Most of the times when a company gets bad press it is about the bad service that has been provided through customer services. The existence of TV-watch-dog shows depends on this, and the number of shows is only increasing. Thus: we need to re-invent ourselves. We need to re-invent the way we do, act, live, breath and measure (the value contribution to the customer and the company of) Customer Services.

When reading lot’s of research on the link between the Customer Service Experience and Customer Loyalty, stuff on metrics like the ACSI, Customer Effort Score, NPS, ways to ask questions in customer surveys and discussing the theme on Twitter and other blog-posts, it quite dazzled me, so I let it rest for a while.

This week I came to think: why not use the power of Social Media to co-create, through collaboration, the new Customer Services Dashboard 2.0? Together we know more, we can discuss viewpoints and we can leverage experiences. I hope you share my thoughts and are willing to contribute.

A short introduction:

Before we can build the new Customer Services Dashboard 2.0 we need to have a goal (we do not measure because we want to measure, we measure because we want to improve something).

I would like to think that the main goal any Customer Services department should have, is to contribute to the company’s goal. Since I do not know all company’s goals I propose that we set as our goal:

  • Improvement of Customer Loyalty (Behavior)

Customer Loyalty behavior consists of three specific “actions” that companies aim for to boost sales and profits. These three are:

  • Buy again (i.e. extend a contract or repurchase the same product when used)
  • Buy more (i.e. buy additional products or services from the company)
  • Spread the word (i.e. tell friends and family about the great product/service and advice to buy it too)

To make it a little more easy to link this desired customer behavior to Customer Services I suggest you read some of the following:

http://experiencematters.wordpress.com/2009/05/17/customer-service-trumps-price/

http://experiencematters.wordpress.com/category/6-laws-of-customer-experience/

http://experiencematters.wordpress.com/2009/02/18/customer-experience-correlates-to-loyalty/

http://blog.vovici.com/blog/bid/18229/Customer-Effort-Score-A-Loyalty-Predictor-for-Customer-Service-Interactions

So, I hope you are all warmed-up now. I am!

How will this continue?

First of all I need to know if you are up for the challenge? Do you also believe that our Customer Services Profession is in need of building a Customer Services Dashboard 2.0?

If yes, or no, please leave a comment below and share your views. Are you interested in contributing to build this dashboard, please connect to me through LinkedIn or Twitter, and let me know you’re interested. I’ll get back to you within a couple of days, to let you know how we are going to get this done and how you can contribute (and benefit from joining in).

Looking forward to the collaboration journey. Are your in?

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How to (not) end up chasing more Geeze

goose-headThe Goose represents the Goals that we pursue in our lives dedicated to excellent customer service experiences. I’ve written about chasing the Same Goose and chasing the Wrong Goose. If you want to follow the Goose Chase please hit the rss-feed button on the top right corner of my blog.

How to (not) end up chasing more Geeze  – will Social Media or Social CRM add value for Customer Services or not?

Unfortunately most companies do not have a well thought-through Customer Interaction Strategy. You will probably recognize from your own experience that companies jump on the next new wagon that passes because everybody is doing it. I wrote about this copy-cat behaviour before. Because there is no true strategy behind these choices, companies tend to follow the “benchmark” metrics to see if they are successful. They take too little time to do research in what their customers really want and expect. As a result they end up being mediocre companies, with mildly satisfied, mostly indifferent and disloyal customers, who will jump on the next best competition-wagon that passes by.

Now we have the next Goose flying in the air: Social Media & Social CRM. Highly recognized analysts from companies such as Forrester advice you to jump onto the wagon as quickly as possible. Some even say it’s time now to forget whatever you are doing or measuring now in Customer Service (or other areas) as a consequence of jumping onto the high-speed train.

The question is: do you, from a Customer Services perspective, need to jump? do you need to chase this Goose?

Honestly, I do not know. What I do know: if you fly out to chase the Goose without a map, a compass and jump the plane without a parachute, you will end up feeling pretty bad. If you do not have a clear goal and strategy defined with clear stepping stones and possible scenario’s worked out, you do not have a clue what you will encounter. If you do not have the metrics in place that give you a good idea of your position (how am I doing compared to my goals) you do not know whether the initiative is worth continuing. If you do not pilot or test in a small environment, with little risk involved, you will not know if your assumptions (that you based your strategy on) are true (or likely to be true). As a consequence, if you did not do all your homework, the likelihood that you will fall out of the sky and get injured seriously or even drop dead, is significantly increasing:

The probability that a service interaction will drive disloyalty is approximately four times greater than the chance it will create any positive loyalty impression

So, when jumping onto the Social Media wagon, the risk of getting hurt is huge, much bigger than the chance you will emerge out of the slopes.  This is not a law but a fact. It shows that we human beings in general are not that good in providing customer services experiences that matter positively. The vast majority just does not get it, and we know it. (I hit the . on the keyboard really hard there… some frustration coming out ;-)

Before you decide to step in or jump on you should ask yourself one important question: How am I doing today?

Can you honestly say that you have your customer services under control, that you are actually contributing positively to the value your company is providing to your customer? If so, you probably have a good chance of making it in the Social Media place too. (But hey, do not forget: what’s the purpose, the value for you and your customers?).

If you think you are doing ok today, take a break, rethink, research and know how you are doing today.

If you know you are not doing well today I suggest: fix that first. We all have limited resources and they are best spend where they add value to your customers and your business. We know that Customer Services can make a difference in the Customer Experience, and we know that Customer Experiences matter. So your first job is to fix that.

Tapping into the Twitter-stream or any other Social Media place will not fix it for you. It will just give you more Geeze to chase.

If your company is doing well and if you can honestly say that customer services is adding value in the total value bucket, implementing a social media or social CRM strategy will have great opportunity to contribute more value even (if you did your homework). If this is not the case, you will be overwhelmed with a completely new, not yet to be seen, volume stream of interactions you do not know how to handle or manage. Workloads will increase, staff who started out enthusiastically will be disappointed (they still cannot solve the customer issue) and then the worst of all things happens: Social Media starts doing its work, Bad word of mouth is out, and spreads faster than Mexican Flu (was supposed to ;-).

Honestly, do you want to end up with hundredthousands Geeze to chase?