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’]

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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