Customer Experience: The Next Battleground
on the money, but she was wrong about the other thing — at least for business. In business, if we don’t know what customers and prospects think about us, we are unable to strategically plan our path forward.
The customer experience is the sum of all the interactions a customer has with your company’s people, products, and services during a buying cycle. The quality of this experience greatly impacts the likeliness of repeat business. While some points of customer contact are arguably more important than others, there are no trivial “moments of truth” in the customer experience.
Most retailers don’t have a way to measure key “moments of truth” and map them to loyalty and share of customer business. Furthermore, most retailers don’t know where they are most vulnerable with customers and can’t pinpoint areas of strength and weakness with respect to loyalty and share of customer business. Consequently, efforts to achieve improvement are unfocused and payback is uneven. Similarly, retailers can’t identify their competitors’ weaknesses (aside from coffee shop hearsay), and opportunities to proactively target new customers are often not fully realized.
The customer experience is the most basic relationship in business. Ask yourself honestly: “Do I really know how well I meet customer needs? How smoothly do I solve their problems? How deeply do I understand their business goals?” The customer experience is the next competitive battleground.
Properly managed, the voice of your customers can be measured and become a shared focus across your organization that drives performance improvements in operations, management, and selling. Here is a quick way to evaluate whether you should implement a customer experience power tool within your business:
• Insufficient or no measurements on what is important to customers
• No strategy for collaborating among the “divisions” in your company to implement change based on customer experience.
My company, AgKnowlogy, has developed a Retailer Performance Monitor (RPM) that helps retailers use customer experience measurement to improve their business performance. The objectives are:
• Provide insight into the effect of customer experience on business results.
• Identify strengths and weaknesses as perceived by growers in a trading area.
• Identify the strengths and weaknesses of competitors.
• Produce a Net Promoter Score (NPS) which measures the willingness of customers and prospects to recommend a retailer they use to another grower. NPS is a proven indicator of customer loyalty and company profitability.
• Help retailers incorporate this learning into their business planning.
Summary Of Results
With the RPM survey, growers identify a primary retailer, and a secondary retailer with whom they would consider doing business with. Typically, the primary position has between 80% and 95% of a grower’s business.
The Retailer Performance Monitor measures performance on a battery of attributes ranked in order of importance for growers in the retailer’s trading area. Chart 1 shows the ratings of growers for a company we’ll call Sample Ag Services, and how it compares to other primary retailers. Many customers and prospects in Sample Ag Services’ trading area perceive that other primary retailers are performing better than Sample Ag Services. Lower performance ratings on attributes that drive share of customer business are negatively impacting Sample Ag Services’ market share.
The Retailer Performance Monitor includes a Net Promoter Score, which measures how willing growers are to recommend Sample Ag Services to another grower. This establishes a benchmark of where Sample Ag Services is in terms of addressing the needs of its customers.
The Net Promoter Score is calculated by taking the percentage of respondents who are promoters (those who are highly likely to recommend you to a friend or colleague) and subtracting the percentage of respondents who are detractors (those who are less likely to recommend you).
The NPS is calculated by: % of promoters – % of detractors = Net Promoter Score (NPS).
Proponents of Net Promoter, such as General Electric and Dell, have determined that high Net Promoter Scores correlate to corporate growth. Based on Sample Ag Services’ performance on the attributes, we suspected it was beginning to pay the price for not meeting customer needs as effectively as other retailers in its trading area. Chart 2 shows Sample Ag Services’ Net Promoter Scores on an overall basis, and for the chemical, fertilizer, seed, and service portions of its business.
Industry leaders such as Dell aim to achieve a Net Promoter Score of at least 80%. As a company’s Net Promoter Score declines, customer defection increases and profitability declines. Chart 2 shows Sample Ag Services is lagging behind its competitors in every category. In other words, growers who indicated Sample Ag Services as their primary retailer were less likely to recommend it to another grower than the customers of other retailers are to recommend their primary retailer to another grower. The situation is worse when Sample Ag Services is not the primary retailer. In this case, its Net Promoter Score is actually negative, indicating many of the survey respondents rated Sample Ag Services within the “detractor” range.
What Is This Telling Us?
Sample Ag Services is worried that although it is a leading retailer in its area, it appears other retailers might be more effectively meeting customer needs in some key areas. A sign of its difficulties is its low Net Promoter Score, indicating customers and prospects are not very willing to recommend it to colleagues. Not meeting customer needs translates into reduced willingness to recommend, which in turn is associated with declining loyalty and profits.
Sample Ag Services needs to address this situation quickly or it could suffer extensive loses as customers drift away after evaluating other options. Next month, I will present additional findings from Sample Ag Services’ Retailer Performance Monitor, along with the recommendations we made to help the company turn this situation around.