This is the first in a three-part series that explores critical questions CX leaders should be asking – and able to answer. There will be some overlap between B2C, B2B, and B2B2C issues, but I want to address each audience individually, starting here with B2C. Next week, I address B2B leaders.
One thing I’ve noticed over years of talking with hundreds of CX leaders is that their level of success usually corresponds to their level of knowledge about the health of the business.
Simply put, business leaders speak in business metrics, while CX leaders – the unsuccessful ones, that is – speak in survey scores. When I talk to one of the rare successful CX leaders, I find their vocabulary is much more aligned with other organization leaders, covering issues such as customer loyalty and share of wallet.
Below are 10 questions (plus one freebie – we’re all about adding value!) that you need to be able to address for your CX program to have real business impact, broken down between the health of the business and the health of your customer experience:
Critical Understanding of the Health of the Business
Start here to get a handle on how you currently serve customers and are rewarded.
1. Which dashboards are most commonly viewed by business leadership?
Surprise! Rather than starting with a specific metric, it’s most important to find the source of metrics used by other leaders. Are there a handful of shared dashboards? Does each department have its own?
Understanding the sources of “truth” for existing data will help you answer many of the following questions, so start here to ensure you’re aligned with the audiences you’re looking to win over.
2. How often do customers buy?
This is more relevant for some industries than others. Subscription-based companies such as Netflix? Not so much. But retailers (online or physical) and monthly box subscriptions will care deeply about this – so will many charities, which send various appeals.
2.1 Do we have a customer lifetime value score?
I broke this bonus question out on its own, because while every firm has profitability and complaints, not everyone has a customer lifetime value score. If you don’t, this should be one of your initial efforts, as this score covers both retention and cross-selling.
3. How do we calculate churn and what is its current level?
For some types of B2C companies, such as health clubs, this seems relatively simple. Churn is determined by how many cancel (or fail to renew) their memberships. But even there, it can get complicated – in northern climes, for example, some members cancel in the summer and rejoin in the fall, so be sure to adjust for seasonal and other factors.
Nor can you rely on customers to let you know they’ve churned. For example, if a Best Buy customer goes three months without purchasing, are they gone for good? What about six months? Three years? Retailers often need to apply parameters and assumptions to make their calculations.
Fixed-location companies will want to break churn down by regions and individual stores. That will also help you reveal trends over time. Discover which locations have the highest and lowest retention, then ask to visit these locations to understand what is different about them!
Reducing churn is an area on which CX leaders typically focus, so understanding what drives it will be central to your value proposition as you look to drive change.
4. What is the average length of customer retention?
The other side of the churn coin is the length of time customers stay with you. This metric may allow you to show progress quicker, as length of retention may be more sensitive to churn levels. You’ll also want to break this down in the same ways as churn to track changes over time.
One additional area to isolate is average retention for the 10% of customers who have been with you the longest, and the 10% who churn the quickest, to help you see differences on the extreme ends of the retention spectrum.
5. What is the average level of cross-sell or basket size?
This can look very different across B2C enterprises. While retailers look at basket size (how many products are customers buying?), a health club will look at how many customers purchase products or personal training.
Banks look for how many products their customers buy. (This is a good metric, despite the way it was abused by Wells Fargo. The problem there wasn’t the metric, it was the culture and management infrastructure.)
Few companies sell only one product, so if your CX work increases the level of cross-sell, that will strongly resonate with the business.
Critical Understanding of the Health of the Customer Experience
This set of questions will provide a clearer picture of the impact of CX on the business.
1. What is the average number of calls by customer?
The sheer volume of calls makes it a cost driver – but don’t use that as an excuse to make it harder to contact you! Instead, root out the source of calls and solve for it.
One of Heart of the Customer’s clients receives 3,000 calls a day on billing questions, which clearly indicates a point of focus. Do customers with certain products call more often? Do newer or more established customers call more? Related to this, be sure to ask:
2. How much does the average service issue cost us?
This is often easier to answer for B2C companies, since calls are typically isolated to only customer service. B2C’s higher level of calls is often offset by a lower cost. In the client example above, they spend about $10 a call.
3. What are the top reasons for complaints?
Too many B2C and B2B2C companies fail to record the top call types. This makes it more difficult to track down the causes. Knowing these three facts for the client referenced above (3,000 calls a day for billing at $10 per call) allows you to easily craft a powerful business case. Who wouldn’t want to address an issue that’s costing you $200,000 a week?!
4. How do we measure customer sentiment?
What are the key surveys questions and when are they asked? Do we incorporate the voice of the business through operational and behavioral data?
Most CX leaders start here, but survey questions don’t provide much value without clearly understanding the business first.
5. Are my survey questions validated?
You might be thinking market researchers use a survey to validate their qualitative research, so why do we need to validate the quantitative data?
In this case, the validation is that your survey questions predict something important, typically one of the answers to your previous questions.
If you’re new, beginning your conversations with other organizational leaders by asking about survey questions might feel awkward, since your internal customers may not know (or deeply care about) about surveys. So starting with these 10 questions will not only provide important learnings for you, it will also show your first concern is a healthy business that serves its customers well.