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Your CX Scorecard is Probably Measuring the Wrong Thing

Jim Tincher Jim Tincher 09/21/2017

“The purpose of a business is to create and keep a customer.” – Peter Drucker

I love that quote. In one short sentence, Drucker summarizes what a business – and customer experience (CX) – is all about. But despite that wisdom, companies continue to focus primarily on creating customers, often forgetting that keeping them is the way to organic growth. And when they do focus on keeping customers, the focus is all too often on trying to trap them – requiring a phone call to cancel (I’m looking at you, TiVo and Comcast), or requiring contracts that assess fees to leave (Comcast, you again).

Jeannie Bliss has been beating this drum for years. We need to listen to her. What matters is new customers minus attrition, plus how much those customers spend with you. Everything else is just window dressing.

I get all kinds of calls from companies proud of their Net Promoter Scores (NPS). Yes, all things considered, it’s better to have a high NPS score than a low one.

But you know who’s not impressed with your high NPS? Your customers. While you’re navel-gazing, they’re trying to figure out your website.

We all know the stories of companies whose customer scores go up while their business tanks. So, let’s focus on what really matters – getting and keeping customers.

Major Metrics

The top of your scorecard should have three simple metrics – new customers, lost customers, and revenue per customer. Imagine how your executives will respond when they see this. They’ll probably ask you a whole bunch of tough questions! But these are the questions that matter.

I met with a CX leader whose scores were going up while his business was declining. We walked through what they knew, and he was excited because he just finished doing a driver analysis for what drove customer satisfaction. (A driver analysis is a statistical methodology for determining what factors most drive the dependent variable – in this case, customer satisfaction. For example, speed of service, taste of food, cleanliness of locker rooms, etc. It obviously varies both by industry and brand, but it shows you what to focus on.)

That’s where he messed up – and you likely are, too. Who cares if your customers say they’re satisfied on a survey? Between low response rates, gaming the system, etc., surveys are becoming less predictive of actual business outcomes. What we care about is getting and keeping customers. Rather than falling into the trap of measuring what’s easy, look at what matters. Don’t report satisfaction – instead, use your surveys to see what most drives repeat visits. If you can’t track which customers are new and who has left, then track total number of customers and how that changes over time.

Only by reporting on what the business cares about – getting and keeping customers – and driving action against that – can we earn a seat at the executive table. And that’s when we start driving impact.

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