Customer Satisfaction Doesn’t Cut it on Your Bottom Line …
There is the old adage in retail that if you have a good customer experience you will tell one or two other people, but if you have a “bad” experience you will tell 10 other people. Understandably, most retail oriented companies spend a considerable amount of time and money measuring consumer perceptions of their experience and satisfaction.
Traditional measures of the customer experience typically involve surveys of consumer perceptions. While these subjective ratings provide some qualitative insights into attributes and trends, what does it mean if you improve a satisfaction rating scale ½ of a point? How much should you invest to improve your customer experience ratings? More importantly, do these satisfaction ratings “correlate” with sales and your ROI?
How Do You Measure Customer Experience Value Metrics?
Rather than relying on correlation, you can measure more “behavioral” outcomes of the customer experience across the store. While these metrics do not measure today’s customer perceptions of their experience, they do measure the outcomes of quality experience over time and at the cash register. Consumer product manufacturers and retailers need to partner to more effectively measure key customer experience and value drivers. In the simplest of terms:
Traffic X Conversion X Market Basket = Sales and Lifetime Spending
Traffic - Traffic is most obviously influenced by customer experience … directly by the customers served and by those friends and neighbors they influence via sharing their experience. Consistent experiences, merchandising and service also build repeat visits and traffic over time.
Conversion - The second key metric is “fulfillment” or did the associates convert the customer from a shopper to a purchaser. Conversion may occur today or at a later time and result in future purchases, particularly for higher priced items. A more positive customer experience results in higher conversion rates for individual sales associates and stores.
Market Basket - The third key metric is market basket or what is in “the cart”. Customers who are served well tend to purchase more, attach more accessories and services, and tend to buy a “richer mix” of products. They also return to add components or accessories on to initial purchases based on their positive experience in an environment they trust.
IMS Perspectives
There is nothing wrong with measuring customer satisfaction in terms of the customer’s perceptions of their experience. However, all too often most vendors stop there, saying they can’t do any more. Over the years, retailers have become a major part of the problem by not being willing to share relevant data with the vendors.
Additionally, we see vendors simply taking the easy way out by measuring chain-wide total sales weekly. Even worse, we see IT departments making policies and creating roadblocks for acquiring and analyzing anything beyond traditional EDI data feeds.
Stop the Insanity! In today’s competitive consumer market place, product manufacturers must partner with retailers on measuring the critical value metrics, which are both a direct reflection of the customer’s experience, and directly both drive sales and satisfaction.
Retailers, you cannot simply have it one way. If vendors are making substantial incremental investments to “drive traffic” and improve the customer experience, retailers must be willing to share customer experience value metrics to help their vendor partners assess what is working and where.
Work? Yes! Difficult? Maybe. The hard part is not the technology … it is the commitment to a strategic partnership to share the value metrics for joint benefit and joint accountability. Accountability should NOT be a four letter word for either vendors or retailers.
Do you have a joint experience scorecard that tracks key value metrics?
To receive more information and sound bites from IMS follow IMS Results Count on Twitter, Facebook, and Google+.
Comments