Michael Lowenstein Michael Lowenstein Thought Leadership Principal, Beyond Philosophy
When B2B and B2C Key Performance Metrics Flatline…

When B2B and B2C Key Performance Metrics Flatline…

Continuing with our theme of CX metrics, Michael Lowenstein, Thought Leadership Principal at Beyond Philosophy makes the case for moving beyond single-figure measurements into a more sophisticated model incorporating customer sentiments, granularity, and actionability.

This blog represents two true stories of what happens, or can happen, to an organization when its key relied-upon performance metrics (CSAT, CES, NPS, etc.) flat-line and have little or no granular actionability.

The first, a B2C example, involves a major player in the cable television industry. Two years ago, they adopted, system-wide, one of the most popular single number performance metrics. As they moved from a customer acquisition focus to a more balanced approach between acquisition and retention, they’ve observed that in endeavouring to leverage their key performance metric there have been two major hurdles: a) the metric has flat-lined across major customer segments, i.e. generated the same or similar results year over year, making interpretation and experience improvement a challenge, and b) the metric isn’t helping them improve the overall value proposition, especially in the area of price/value. This is of special concern in competing with providers who provide substantial content for a much lower price.

The company needs to understand the benefits, and overall perceived value, customers seek in the entertainment experience. This involves looking deeper into the emotional components of value delivery, as well as the functional. In short, the desired outcome is to de-emphasize price and de-commoditize the service, building value delivery advantage around the total experience. More important, it involves utilizing a metric or metrics reflecting real-world decision dynamics such as word of mouth and brand favourability, which along with more actionable forms of analysis, will help them to understand, and prioritise, the drivers of bonded, positive behaviour.

The second, a B2B example, involves a major business services firm. In over a decade of performance measurement, only one key driver (a simple regression/correlation) analysis around a single number metric was reported. As basic customer experience processes were improved the metric flat-lined, offering no opportunity for further enhancement or competitive advantage. A new, more real-world research protocol focusing on bonding behaviour offered this company a means to understand the relationship between customer attitudes and behaviours, and business outcomes. Web-based survey invitations were sent to the company’s current customers. Close to 1,000 survey responses were received.

The study revealed that an overwhelming 75% of the company’s customers were communicating to others about the organization through offline and online channels. As a result, the new bonding behaviour research framework helped classify customers into four behavioural segments, ranging from highly bonded/positive to disaffected/negative. Over 40% of the customers in the study emerged as highly bonded; and under 20% of the company’s customers were disaffected, a reflection of how positively the company was perceived. However, through analysis it was apparent that even mild negativity was driving customers to use competitive suppliers.

The next step in guiding the company was to identify which tactics and survey diagnostics could help shift the organization’s customers to a more bonded state. Applying a multivariate technique to the bonding level segments, it was learned that the company’s ability to anticipate a customer’s future needs truly distinguished the positive from the negative group. This element of performance was more than

twice as high in terms of behavioural leverage as the next most important element, the customers’ perception of trust. This was essential to building bonded and positive customer behaviour. It was particularly noteworthy that, although the company had measured “anticipates future needs” for some time, until bonding research and analysis was conducted, its critical importance as a positive and distinct decision-making driver had never been identified.

Passive performance has the potential to undermine bonding behaviour. Maintaining a reputation as an expert in the industry and anticipating future needs are important values that must be performed well. Analysis identified these as the most critical steps to reduce the percentage of neutral or negative customers.

In order for the company to protect and build bonding levels, our counsel was that the organization must continue to find innovative ways to meet the emerging needs of its customers. This element of service performance was found to have almost four times the impact on driving customer bonding behaviour when compared to follow-up regarding staff performance. Again, though the company had measured innovation and need anticipation for several years, its unique importance in driving bonding behaviour had never been singled out.

As a core performance metric, customer bonding is very much alive and well in both B2B and B2C products and services. Scores of studies, in many verticals around the globe, have demonstrated that informal word-of-mouth and brand reputation are essential decision-making levers. If anything, due to the more critical nature of touch points, performance, brand perception, and relationships in B2B, bonding may well be more important in this arena than in the business-to-consumer world. Critically, in both B2B and B2C performance measurement, when metrics are done correctly, there is little evidence of flat-lining.