Customers + Bad Math = Worse Strategy 

There’s something that always bugged me about how people present their customer scores – whether satisfaction, NPS, Customer Effort, or anything else. 

There are really two primary approaches to this reporting: 

  1. Give an average (4.65 out of 5, for example) 
  1. Give the % of top box (5 out of 5, 9 or 10 out of 10) or Top-2 Box (4 or 5 out of 5) 

From what I can tell, nobody really thinks about this. They just do what’s traditional. If a vendor reports one way to one customer, they report this same way to ALL customers. As if everybody’s customers react the same way, and all points in the scale matter the same. 

But that’s not true. 

Customers have very different expectations of Cabela’s than they do their utility. Maybe they shouldn’t – but they do. And using the same reporting method for both is just plain silly. 

Set aside the question of whether customer satisfaction is the right measurement (it probably is for the utility; it definitely isn’t for Cabela’s). What’s critical lies behind the measurement – in what each number means. Moving a customer from a 2 to a 3 is not the same as moving them from a 4 to a 5. But which is most important depends on your marketplace. 

Cabela’s is in a hyper-competitive market. Competitors are typically located nearby, and offer many of the same products. They need to earn customer loyalty. As a population, those who give them a top score are substantially more likely to drive by an REI or Gander Mountain to get to Cabela’s. Top box represents loyal customers who give a greater share of their wallet. So that’s what matters to them. 

Contrast this to a utility. A utility does see benefits to getting top scores, particularly in selling additional services, such as appliance maintenance contracts. But their biggest concern is disloyalty. First, competition has become a real concern for some markets. It’s too much work to switch utilities, so customers typically only leave when things are intolerable – a significant price differential, or a particularly awful experience. As such, there’s less benefit from moving customers from a four to a five. Second, frustrated customers drive increased service costs. To improve both customer and company outcomes, your better effort is to start by moving the ones and twos to neutral. 

And don’t get me started with the NPS methodology, which mandates a reporting methodology regardless of industry… 

I was reminded of this by an excellent article in The Harvard Business Review, Linear Thinking in a Nonlinear World.” In this, the author has a nice summary of how your marketplace determines on which customers you most want to focus (see the graphic on the top right). 

——————– 

I get it. You want to make every customer love you. And you should. 

But not everybody in your organization has the same focus. To get them on board to improve your customer experience, you need to start by showing the returns. Understanding where to focus your efforts to improve your company’s results is the best way to get others to join in. 

Stop using the default approach to reporting customer scores. Take the time to understand the impact of customer scores and business results, and use this to focus your efforts. 

Not only will your customers thank you—so will your CFO.

1 reply
  1. Lyle
    Lyle says:

    Great article Jim. To me it really starts with understanding strategic goals first…then, identifying metrics that measure progress toward those goals. Using a “standard” metric MAY be appropriate, but so many organizations don’t really think through metric selection. They just mimic what Forrester does or mimic something from an article they read.

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