As an old friend of mine would say, if you do what you’ve always done, you’ll get what you’ve always got. This very much applies to what we measure.
We are obsessed with reporting. But that’s too often all we end up doing. As we’re great at reporting on the outputs of what we do. Conversion rates, AOVs (average order values), UPTs (units per transaction), dwell time, bounce rates, abandonment rates, traffic, unique users, returning users…the list goes on.
As an ex-head of online and multichannel for brands such as Intersport, Burberry, Harrods, Pentland Brands and Ted Baker, I know this from my first-hand experience of the thousands of trading meetings and reports I produced on a Monday. I had more KPIs than you could shake a stick at. However, when it came to real insight, I had virtually nothing of substance to discuss. That’s because I was simply stating what the performance was across the KPIs outlined above rather than understanding the inputs that really drove the insight that would have enabled me to make better-informed decisions.
What levers could I pull to improve performance if I didn’t know why we were under-performing in the first place? For example, the fact that conversion rates are up or down is irrelevant. What is important is to understand why 95% of the customers coming to your website every week aren’t buying anything. How many of them had the intent to make a purchase but couldn’t do so due to barriers you inadvertently placed in their way? Such as, not having the right payment options, not offering the desired delivery proposition, having a lack of availability of the products they want to buy. Making it hard to find the right products due to ineffective search and merchandising. Not having an effective gifting proposition or not informing customers of the delivery options and costs until they get to the checkout, which is too late in their journey. If you really understand what’s happening on the customer’s path to purchase, you can make informed decisions that have a tangible impact upon your commercial performance.
In addition to understanding the customer journey better, there are a suite of insight led customer centric KPIs that can help your decision making. Such as Net promoter scores (NPS), Customer satisfaction (CSAT), on-site surveys, focus groups, why customers were calling the customer service team and so on. They provide the insight to understand what’s working well and what’s not, enabling you to take the appropriate action to improve performance.
There are many businesses today who measure ‘the cost to serve.’ That might seem like a logical approach; however, it all too often manifests itself in the wrong decisions being made to the detriment of the customer. Be that a reduction in staff in-store to a focus on the volume of calls answered in the contact centre. The former results in customers walking out empty-handed due to there not being anyone around to answer their questions about a product they’re interested in. The latter drives up customer dissatisfaction as the contact centre are not being measured by first-time issue resolution.
Contrast this with the Jeff Bezos and Amazon’s customer obsession, where they start with the customer and work back from there. Is it a fluke that Amazon has the level of customer lifetime value it does, of course not. It is driven out of a relentless focus on always improving the experience for customers. Broadening the range, offering ‘free delivery’ through Prime. Improving the value of Prime by adding entertainment. Having what seems like an almost instantaneous order delivery proposition. They never stand still when it comes to continually looking at how they engage even more effectively with customers.
Colleague empowerment is also a driver for customer satisfaction. Instead of forcing our colleagues to have to seek permission for everything they do, if we empowered them to make decisions for customers, such as offering a discount or providing some compensation when something goes wrong, what would the impact be on sales and lifetime value? I’m fully confident it would more than pay off. But this is the opposite of a focus on the cost to serve. We can be measuring the effectiveness of this.
How many brands do you know who are measuring the level of dissent on social media platforms? Negative sentiment increases because of not empowering our customer service teams to resolve issues for customers. Many go on to Twitter or Facebook to voice their dissatisfaction. Whereby thousands of additional potential customers get to hear this negative sentiment about a brand. Why would anyone be happy with that outcome? Why wouldn’t you want to ensure that this was a KPI that was always improving and, therefore something you focussed on?
By measuring all the above, we can also ensure we have everyone pointing in the same direction of travel as we all get measured by the impact we’re having on the customer and their experience.
If you are interested to learn more about Customer Centricity, you can join my next Mini MBA in Customer Centricity in September.