Customer experience measurement: thinking beyond service

If you want to predict positive business outcomes like loyalty, word-of-mouth advocacy and satisfaction then customer experience measures may be more effective than monitoring the outcome of service events or using a net promoter score.

That’s the view of Stan Maklan and Phil Klaus in their article ‘Customer Experience: are we measuring the right things?’ in the International Journal of Market Research (IJMR) this month.

They don’t offer a generalised model of how to measure customer experience (i.e. a framework we can all take away and apply immediately into our customer experience strategy work) but they do share a detailed case study measuring the customer experience of a UK mortgage company. This gives some strong clues about how experience measurement will evolve.

IJMR is a subscription title, so I can’t point you to a link to the full article. But here’s my own (slightly ham-fisted) summary which might pique your interest.

A brief history of marketing measurement

The last 25 years has seen a very rapid movement through three models of marketing:

• Product marketing: the development and communication of consumer product brands. In this earliest phase products are king and marketing focuses on competing attributes.

• Service marketing: attempting to build a relationship between the company and its customers through service. This extracts more value because it builds on top of the intrinsic utility of the company’s products.

• Experience marketing: in the internet age, customer relationships become interactive (not just a database-driven CRM model as in the previous phase). Marketing becomes ‘community-centric’ rather than ‘company-centric’ and the emphasis shifts away from ‘marketing to’ customers and towards ‘marketing with’ customers.

If you accept that we’re moving into this third phase – though let’s face it, not every company has yet recognised this shift – you’re left with a measurement issue: how can you know that your customer experience is creating long-term business value?

Maklan and Klaus argue that, in the era of service marketing, the commonly used measures were flawed because they developed out of product manufacturing thinking. Instead of measuring product attributes, companies simply moved on to measuring service attributes. But there’s never been any agreement that these are predictive of long term value outcomes like loyalty, advocacy and satisfaction.

If you aren’t measuring the things that matter, you don’t fix the things that need fixing.

The measures that really count

So, what should we be measuring?

• Measure the customer’s assessment of value from their own point of view, rather than against benchmarks or expectations (because actually, customers don’t usually have meaningful expectations about service).

• Measure ‘value-in-use’: the extent to which customer’s utilitarian and emotional goals are met. This seems to be more predictive of long term satisfaction than checking whether a long list of product or service attributes are delivered.

• Assess customer experience across time and across channels (including the period immediately before they become a customer, which is a big driver for perceived experience). Watching a relatively small group of people closely over time may work better than trying to develop a view by amalgamating data from thousands of unconnected service episodes.

• Validate with behavioural measures. In other words measure long term outcomes through what people do, rather than what they say they will do.

So, should we stop measuring customer satisfaction with service events?

No; it’s clearly important that the service component of customer experience is measured and maintained. But there’s an argument that these measures alone aren’t enough because customers telling you that your service is excellent doesn’t reliably equate to long term value. We saw this ourselves in our ownOSS research into Insurance. We never saw a correlation between people saying their insurance company offered good service (or indeed a good product) and their likelihood of renewing. There are wider factors at play in the decision-making process.

What factors of customer experience should we measure?

In their study Maklan and Klaus explored a number of factors and settled on four groups which seemed to be useful for predicting long term customer value outcomes.

• Product experience: in particular, measures relating to customers feeling that a number of choices or product options available to them seem important.

• Outcome focus: factors which show the customer felt they would be better off buying (or repeat buying) from a company rather than shopping around. ‘There might be better offers out there, but why bother when I know what I’ll get from this company and it is straightforward?’

• Moments-of-truth: factors which reflect courtesy and attentiveness as well as flexibility when things go wrong.

• Peace-of-mind: emotional factors about the perceived expertise of the company and the level of guidance the customer gets through a process.

Stop for a second and consider the amount of energy and focus that Amazon has always shown on these factors in their customer experience. Or Zappos. Or John Lewis.

So is that a General Model for measuring Customer experience?

Sorry, no. Maklan and Klaus are at pains to point out “…researchers will need to model customer experience for their unique context; current generic conceptualisations of experience may be too broad to be actionable.”

And this is an important take-out for me. There are plenty of people touting generalised or ‘black-box’ systems for measuring customer experience. But the truth may be that you can either have your measurement easy, cheap and wrong…or more costly and time-consuming, but genuinely predictive of long term value outcomes. That’s one for you to wrestle with.

Whatever factors are important in your own customer experience a very large number of them can probably be influenced by a well-crafted digital experience. Creating an outstanding customer experience does not necessarily require huge commitment to human service resources: just the right people at the right moments.

I suspect that the perception – often held by boards, the media and customers themselves – that great customer experience requires person-to-person contact is not correct. If we build (and measure) experiences according to the factors which really affect long term satisfaction and value we may be surprised what can be achieved in the digital channel.

Maybe if we focus on measuring and fixing the right things, companies can create better customer experience (and greater shareholder value) on a lower – not higher – cost base than the current service marketing model.