Gartner: Measuring the customer experience takes more than one metric

At its annual CRM Summit, Gartner detailed seven projects that will improve the customer experience.

WASHINGTON, D.C. -- Managing the customer experience seemed to be a major priority for many attendees here at the...

Gartner CRM Summit, where it was the central theme of the opening keynote.

While much of the focus on CRM has shifted to better managing the customer experience, it comes with a significant challenge, according to Ed Thompson, vice president and distinguished analyst with the Stamford, Conn.-based analyst firm.

"How do you measure it? This is the biggest question we get," Thompson said.

The answer, unfortunately, is not so simple. And it's not for lack of interest.

According to recent research from Gartner, 80% of executives think customer satisfaction is more important than it was three years ago, and 95% of business leaders see it as the next competitive battleground.

"Everything else is easy to copy," Thompson said, referring to price, product and delivery. "This is a topic for many, many organizations at the board level."

Customer experience may be a critical consideration in the offices of upper management, but throughout the rest of an organization it is often less of an issue, he added, because "they don't get paid for it."

Organizations are measuring the customer experience -- they're just doing it in multiple ways with little collaboration. For example, customer satisfaction is typically measured in sales, service or market research. Loyalty is measured by churn/retention, referrals or loyalty management. The brand is measured via marketing communications, product and service design and user interface design, while quality is measured by process improvement and product engineering.

"I have repeatedly shown up in meetings, and these people who have never met each other are suddenly introducing themselves," Thompson said. "Don't think because you're in one department, other parts of the organization don't care."

More on improving customer experience and Gartner's CRM summit
Find out the role of the chief customer officer in improving customer experience  

Check out the top-five headlines in customer experience management  

Read coverage of Gartner's CRM Summit in 2007

There is no one measurement of the customer experience, he said. Many organizations focus on loyalty, but that paints an incomplete picture.

"In many cases, customers screw you," Thompson said.

Many companies measure only rational loyalty, he said, while emotional loyalty -- the kind that convinces customers to get tattoos of your brand -- is the kind of loyalty that really needs to be measured. Emotional loyalty correlates directly to profit. The problem is, emotions change quickly and demand different sorts of questions in surveys, which need to be conducted very frequently.

The Net Promoter Score (NPS) is a popular metric that accomplishes some of this, asking simply how likely a customer is to recommend your company or product to someone else. The NPS, Thompson said, is good for causal analytics but not for B2B companies.

"It has some capture of emotional loyalty and some benchmark information," he said, "but most important it is simple and appeals to the board of your company."

Most companies run on an average of seven metrics and use the NPS as the one metric they give to the board.

"The battle is on in the post-NPS world," Thompson said. "Most organizations have their own derivative of the net promoter score."

Thompson offered seven recommendations from Gartner for improving the customer experience.

Listen, think, do: Many organizations survey more than they ever did before. "Everyone is surveying customers to death, sticking it in an inaccessible database and not sharing it with anyone and annoying the heck out of customers," Thompson said. Forward-thinking organizations make sure they act on the feedback. Only 5% of companies tell customers what they have done as a result of that feedback, according to Gartner research.

Design process from the outside in: Find the two or three processes that customers care most about and design them from the point of view of the customer.

Use multiple channels: "This is where IT tends to lead the charge," Thompson said. This is the slowest, hardest work of any of these projects, he said, and the problem is often politics: Who owns the customer and the data associated with it becomes a hurdle.

Be open and exclusive: The combination is possible, according to Thompson. Organizations need to be transparent to their customers while showing them their respect and organizing communities that encourage participation. Missha, a Korean cosmetics manufacturer that has gained 40% market share in its home country in just a few years, has done this by co-creating cosmetics with teenage girls online, Thompson said.

Personalize products, services and offers: "As you get to one-to-one [relationships], things tend to get extraordinarily complex," he said. The Nike Plus, which transmits information on a runner's time and distance to his iPod, is a product that is simple for the user (just plug it into your iPod) but creates an enormous amount of personalized information.

Alter attitudes: Most executives cite employee attitudes around the customer experience as their biggest challenge, but this is an where HR can help, Thompson said. Since 1998, Southwest Airlines, for example, has made a point to hire people who smile, not just the frontline employees -- but the back-office employees who can affect front-office attitudes as well.

and design the customer experience from scratch: Disney designed the parking lots of its parks with a focus on the customers and getting them out as fast as possible, thereby ensuring the memories that lasted were of the rides and the day, rather than looking for their cars with tired children, Thompson noted. Disney assigns cars to the lot by the time they arrived and provides key-cutting and towing services.

"It's OK to have different measurements; just get everyone who cares about it together to look at it," he said.

At the least, organizations should have an NPS derivative specific to their industry, and if they're at the top, Thompson said, they should look to other industries as well.

The keynote provided validation for O'Connor of the York Department of Criminal Justice and an attendee at the event.

"I'm getting a sense we're at the forefront," O'Connor said. "We're looking now where we can move for improvement."

Dig Deeper on CRM strategy and implementation