marketing research

Peace of Mind as a Key Dimension for Measuring Customer Experience

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All of us are customers, and as such, we all have buying experiences (good and bad) that shape our opinion of the company from which we are buying. There have been numerous discussions on how the exchange between buyers and sellers has evolved from creating products, to building customer relationships, to creating compelling customer experiences. This idea reflects the notions that how customers experience the process of acquiring and using a product/service and the exchanges along the way matters. More and more companies realize that they are competing on the basis of customer experience. In fact, recent research suggests that customer experience is a better predictor of loyalty and word of mouth than any other measure. So what is customer experience and how do we measure it?
 
Measuring and improving customer experience is difficult in part because there isn’t a widely agreed upon definition of what constitutes a customer experience. This lack of definition also creates the potential issue of customer experience devolving into everything. But there has been some great progress on the definition and measurement front.
 
Before we discuss some ways to measure customer experience, let’s step back and review the thinking to date. With the focus on customer retention in the early 1990s, Frederic Reichheld and others began to research customer loyalty and the association between loyalty and profit. It is from this research and others that many organizations adopted the “zero-defect” service philosophy as a way to reduce customer defection. Customer satisfaction emerged as a key measure. Research suggested a strong relationship between satisfaction, recommendation, and business outcomes such as repeat purchase. Two key tools emerged to measure these concepts: SERVQUAL and the Net Promoter Score (NPS). Using five dimensions, (reliability, assurance, tangibility, empathy and responsiveness) SERVQUAL became a way for companies to benchmark their service quality. A key concept behind SERVQUAL is to assess the gap between expectation and service received. Current thinking suggests that experience is more about how customers assess the value received in relation to their expected outcome of the interaction. SERVQUAL may be a good tool for measuring the expectation gaps but it isn’t necessarily the best tool for measuring and managing customer experience. Why is this? A service encounter may be judged as “good” or “meeting expectations” but that doesn’t necessarily mean that the customer achieved their desired outcomes. The SERVQUAL tool doesn’t examine the experience before or after the service encounter. 
 
Shortly after SERVQUAL, came the Net Promoter Score, which Reichheld and others claim is the sole metric a company needs to understand its effectiveness from the customers’ perceptive. A tremendous amount has been written about NPS and many companies trust and leverage this score to their advantage. But, it is not a measure of experience or the quality of experience. In 2011, Dr. Philipp Klaus and others began to explore alternative ways to measure customer experience that would be based on the cognitive and emotional assessment of value from the customers’ perspective and that captures how well the organization performed on its ability to deliver value customers’ received. They looked at four primary dimensions associated with customer experience quality:
 
  • Product experience (perception of choices and comparative offers)
  • Outcome focus (ability to achieve their desired outcome)
  • Moments of truth (service expectations and encounters)
  • Peace of mind (confidence in the service provide and perceived expertise of the provider).
By using these 4 dimensions to evaluate customer experience quality, Dr. Phillip Klaus came up with 4 conclusions:
 
  1. Peace of mind has the strongest impact on customer satisfaction, loyalty and word of mouth.
  2. Moments of truth are the next most important attributes to positively impact loyalty and word of mouth.
  3. Outcome focus (the customers’ ability to achieve their goals) effects loyalty and word of mouth but only to a lesser extent than peace of mind.
  4. After peace of mind, product experience has the strongest impact on customer satisfaction, but not as much impact as the other three dimensions on loyalty or word of mouth.
This research offers a different view into how to define and measure customer experience. If you plan to create a measure of customer experience, consider how your organization is set up to deliver on these attributes and how you would measure each of these dimensions.
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Managing Marketing Content Across the Customer Life Cycle

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Considering our purpose as marketers, we should be placing customers at the center of our marketing efforts. That’s truer today than ever before, because customers have more choices, more control, more ways to connect, and more access information. No wonder marketers everywhere are scrambling to develop content and make use of the myriad of channels to reach and connect with prospects and customers. 

Many marketers have gotten so caught up in the creation of content, however, that they have forgotten how important it is to match marketing content with the customer buying journey and life cycle. Content delivered in the right channel at the wrong time can be a wasted touch point. 

Too few marketers have mapped their customer’s buying journey and moved from profiles to personas, and therefore few clearly understand their customer’s life cycle. Because keeping a customer is more cost effective and profitable than acquire a new customer, knowing both the buying journey and the customer life cycle is important.  

The Customer Life Cycle 

One common definition of customer lifecycle is “the progression of steps a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service.” The key point is to recognize that the life cycle defines an ongoing relationship and continuous dialogue. 

Forrester defines the customer life cycle as follows: “The customers’ relationship with a brand as they continue to discover new options, explore their needs, make purchases, and engage with the product experience and their peers.” In our company, we talk about the Six Cs associated with this process: 

1. Contact 

2. Connection 

3. Conversation 

4. Consideration 

5. Consumption 

6. Community 

Whether you use this approach or another, the premise of the customer life cycle is the same: Capture potential and existing customers’ attention, preference, purchase, and loyalty. 

As marketers, we can and should use the customer lifecycle as the basis for every marketing investment decision we make that’s designed to acquire, retain, up-sell, cross-sell, and create customer advocates. Only by understanding the customer life cycle can marketers make better decisions about the additional marketing investments of time, people, and cash on customer-targeted efforts. 

Content and Life Cycle 

The purpose of content marketing is to deliver high-quality, relevant, and valuable information to prospects and customers in the right channel at the right time to drive profitable customer action. Content marketing is not the same as running a campaign. Content marketing looks more like publishing, where you serve as the architect of useful and compelling information that will inform, educate, engage, and entertain customers and prospects. Content marketing is part of the marketing mix, not a substitute for it. 

If you serve more than one market or region, and your product requires a consultative approach, you will likely have multiple customers and will therefore need to map content to multiple buying journeys and life cycles. Perhaps the following examples will help bring this point home. 

Let’s say you currently market and sell a technology product to IT buyers and decision-makers in the federal government. Your research suggests that there may be a strong growth opportunity in the Emergency 911 system—a quasi-governmental system. If you didn’t map the customer buying journey, you might assume that the buying process for the Emergency System was the same as for any other government agency. And you might also assume that the profile of the IT buyer at these sites would be the same as the IT buyer at the agency. Only by mapping the buying process would you learn that these are two very different personas and two different buying processes with different marketing content implications. White papers and tradeshows may be far more important in the early stages of the government-agency buying process, whereas webinars and videos of the system in use are more important in the early stages of the buying process for the emergency services sites. 

How can we record this process when most customer buying journeys and lifecycles are not linear? Though it is impossible to completely capture and monitor the entire buying journey and decision, mapping the process helps you capture channel preferences and interactions. You may not be able to know exactly which colleague, analyst, online and offline channels a customer used, or which publication informed the decision, but mapping the buying journey and customer life cycle will give you insight into when and how they are influenced. 

Mapping the Journey and Life Cycle 

The approaches to mapping differ. Regardless of the approach you take, you should include input from all internal people who are in contact with customers (Sales, Marketing, Customer Service, and Product Marketing) as well as input from the customers themselves. The mapping process should take into account the following: 

  • Initial triggers that lead to first contact 
  • Steps they take (industry reports, product reports and reviews, white papers, demos, etc.) and the conversations (analysts, colleagues, event encounters, call centers, salespeople, etc.) they engage in to solve their problem and find a specific solution 
  • Steps and experiences leading up to their purchase (the RFP, reference calls, pilots, etc.) 
  • Steps associated with the purchase and consumption (the on-boarding process, purchasing processes, implementation, invoicing, etc.) 
  • Ongoing experience and reaction to their purchase (problem resolution process, new product offers, community participation opportunities, etc.) 

 Once you’ve mapped the process and organized each step into the appropriate stage, you can begin to match marketing content with the buying process and life cycle. Two important benefits of the mapping initiative are improved Marketing and Sales alignment and a more behaviorally based opportunity-qualification process. 

Matching Mix, Content, Channel, and Life Cycle 

The links between marketing activities, content, and the customer buying process and life cycle will become clearer once you complete the mapping process. You’ll realize that different programs and content will be more valuable and appropriate at different stages depending on the customer process. The map will serve as a guideline for improving the utility of your mix and the content you use to connect and engage with customers and prospects, as well as to enhance existing customer relationships. 

For example, you may learn from the mapping process that traditional in-person events and presentations are far more valuable at creating contacts and connections for a specific segment than social media and blogs are. Your map may reveal that webinars with industry experts are a viable touch point for consideration for some customer segments while online chats with existing customers and traditional telemarketing are more effective for other segments. Through the process, you may learn that traditional e-newsletters are ideal for staying connected with one set of customers, whereas an online community with guest posts is better for another. Marketing will then need to select the program and build the content that supports the preferred channel for particular touch points in the process. 

Power Up Your Marketing to Prove Business Value

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Numerous studies throughout 2012 reiterated just how challenged marketers are in proving
Marketing’s business value.

The Capsicum Report found that “Marketers lack commercial acumen and don’t speak the language of the business, reporting their contributions in terms of ‘activities’ or ‘outputs’ rather than the business key performance indicators.”

The Economist Intelligence Unit reported that “the CMO’s traditional dilemma of demonstrating effectiveness, return on marketing investment, and relevance to the business still persists.”

The Forrester Evolved CMO study stated that “to prove their value and justify investment, they (CMOs) must tie marketing closer to business results.”

The 11th annual marketing performance management study conducted by VisionEdge Marketing and ITSMA reported a continuing trend of the C-Suite’s perception that only about 25% of marketers are able to demonstrate their impact and contribution to the business.

Some marketers, though, are cracking the code, and we can learn lessons from them as we work to power up our marketing.

One of the key differences about the stellar performers is that these marketers view and present themselves as businesspeople first. This elite group is customer-centric above all else, and it’s driven to transforming or establishing Marketing as a center of excellence within the organization.

These marketers work at ensuring that Marketing focuses on producing results that matter to the business, particularly in customer acquisition, retention, and value, and they are able to communicate those contributions in ways that are relevant to the C-Suite.

These marketers consistently apply five best-practices:

1. Aligning marketing activities and investments with business outcomes

2. Developing outcome-based metrics and reporting capabilities to demonstrate their
accountability

3. Employing and developing analytical skills

4. Investing in the infrastructure, processes, and systems to support their work

5. Building collaborative alliances with Finance, IT, and Sales colleagues.

They also recognize that deploying those best-practices is only part of the equation for boosting their performance and measurement competencies. They realize that playing a more strategic role takes added muscle, which they build by…

  • Embracing strong talent, balancing creativity with science derived from valuable customer and market insights
  • Emphasizing innovation for all aspects of marketing—related to strategy, implementation, processes, and so on.

Every organization can benefit from adding such power and muscle to their marketing team:

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Take a look at  the most recent 2013 Marketing Performance Management Report: Executive Summary (FREE DOWNLOAD) or Purchase the Full Report at the VisionEdge Marketing Online Store!

Embracing Sustainability to Boost Sales

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Sustainability. Green. Environmentally-friendly. However we refer to it, it is top of mind.Sustainability is about how your company and its products are affecting, and trying to achieve balance within the economic, social and environmental systems. This isn’t just an issue for the “big” companies. Regardless of size, every company and its leadership team needs to be exploring what green and sustainability means for the company and its products. Because strategic planning incorporates opportunity identification, risk management, talent development, and financial strategies, all of which fall within the domain of the C-suite, sustainability which affects all of these should be the concern of the company’s leadership team. Practical green and sustainable solutions can help reduce risk, meet compliance, and create market opportunities.

There are many ways for a company to integrate green into their strategic plan.Image For example in October of 2007, P&G announced a corporate strategy around three goals: developing and marketing $20 billion in sustainable innovation products; improving the environmental footprint in operations; and the social sustainability area of increasing the number of children in need that they reach. Fast forward 6 years-the results? $52 billion in sustainable product sales as of 2012, a 68% reduction of waste disposed, and over 400 million children helped that were in need.

Goals are good, but implementation is where the rubber meets the road. So how did they accomplish surpass their goals set in 2007? P&G has a VP of Global Sustainability responsible for operationalizing each of these goals. Companies have found that this issue
is important enough to appoint someone as a champion of their sustainability initiative.

Green encompasses many factors. These factors can range from developing and manufacturing new green products, to looking at ways to make existing products more “green” by reducing their carbon footprint whether that’s in terms of the raw materials they source, the suppliers they use, how the product is packaged, the energy the company uses during production to the types of lights in the office. Whatever your approach, as you explore your company’s route to sustainability you should also discuss marketing the “green” aspects of your company to your customers

While being green is quite appealing, the journey takes time, investments, resources and commitment. You will want to establish performance targets and success metrics to help monitor the return on this investment. Is it worth the investment? The research suggests that it is. Sustainability is beginning to impact a company’s reputation. According to the firm, Conscientious Innovation, more than 70% of consumers link social responsibility to a company’s environmental behavior. Given the trend, sustainability in all its forms is becoming a necessary part of the way a successful company does business. And a recent study by Forrester revealed that 63% of US adults claim that they are concerned about the environment as a whole, and these concerns translate into spending changes. As this trend continues it will be important for every company to have a green marketing strategy designed to boost sales and increase loyalty. These two metrics – sales and loyalty – should be used to determine the success of your efforts and the return on your investment.

To get started you will want to create a roadmap to “sustainability” that identifies the strategies and tactics you will deploy.This roadmap should be integrated into your strategic, operational, and marketing plans. It might help to provide some examples of companies who have already embarked on the journey and what they are doing.

Steps every company can take:

1. Establish a Chief Sustainability Officer or a similar position to head your effort. For Mitsubishi, this is their President and CEO, Ken Kobayashi. When the CEO is the Chief Sustainability Officer, it signals the important of environmental and green considerations within the company. At P&G, Len Sauers serves as the Vice President of Global Sustainability.

2. Create a cross-functional team. Herman Miller has what they call an Environmental Quality Action Team (EQAT) which is composed on employees from across the company who address all the multiple components of the green strategy.

3. Assess your carbon footprint. The first thing the team should do is assess your current carbon footprint. The carbon footprint is a way to measure the impact your organization’s activities on the environment in terms of the amount of greenhouse gases produced. Every aspect of your carbon footprint needs to be inventoried from activities having to do with how the company uses energy or the quality of your customer database in order to reduce direct mail waste. For example, Gwen Migita, Director of Corporate Social Responsibility recently reported that at Harrah’s Entertainment, which operates 51 casinos worldwide, and significantly leverages direct-mail after a substantial database cleaning efforts was able to cut its mailings to the 40 million customers in its database, saving the company $3.5 million. Often one of easiest ways to start down the sustainability path is by focusing on how to reduce your environmental impact from the extraction of raw materials, the production of goods, the use of those goods and management of the resulting wastes.

4. Develop new opportunities: Reducing your carbon footprint is one side of the equation the other is developing new initiatives. These new initiatives can take the form of new products, which is what Home Depot is doing around their Eco Options products or be in the form of take back programs where companies will for example take toxic chemicals back. If new initiatives are not something you can tackle solo, consider looking for a partner or making an acquisition, which is what Clorox did by buying Burt’s Bees.

5. Integrate your strategy into your business. The best way to approach green is to look for ways to integrate it into what you already do. For example, Armstrong International, Inc., is looking a number of ways to modify what they do today. This includes exploring how to return hot condensate to be reused, installing double-pane windows and low-fluorescent lighting, using gas fired hot water heaters to heat their buildings, monitoring air quality in the welding area, reducing trash by 10 percent annually, increasing the amount of recycling, eliminating the use of Styrofoam cups, reducing storm/sewer water discharge, and saving carbon dioxide by replacing travel with videoconferencing.

6. Develop a Plan: The carbon footprint reduction is a good measure of progress but the ultimate goal is to have these investments result in cost savings and revenue growth. Trying to tackle everything can quickly become overwhelming. Apply the concept of Pareto analysis in your decision making. Select a limited number of things you can address that will produce the most significant overall effect – things that will increase sales, garner more customer and employee loyalty and the right return on investment. Develop the plan to address these items and how you are going to:

A) Communicate this plan and status internally.

B) Communicate this plan and your achievements to customers, prospects and other external stakeholders.

C) Measure and report on results.

This means your sustainability officer and the company’s marketing leadership will need to join forces. While the sustainability officer/department may be looking into the processes, practices and products that enable the company to become “more green” and manages the technical expertise; it is the marketing organization that is responsible for building and communicating the strategy. Your marketing organization needs to communicate how the end-user can be environmentally sustainable through the use of your products as well as the company’s progress with its sustainability initiatives.

7. Establish a company culture and align the business plan. All the best laid plans can go awry if the company’s business values and culture don’t support the effort. Part of the process will require you to set policy, implement changes, review successes and failures. Hold periodic sustainability milestone meetings to demonstrate your commitment, address issues, and measure progress. CEO Mike Duke of Wal-Mart takes this approach. Wal-Mart’s sustainability department runs lean with the focus on integrating sustainability into the overall business.

8. Measure and report results: Sustainability and green are new ways for a company to
demonstrate its social responsibility and serve as good community citizens. However, companies and organizations are in business to see a financial return. So where should you expect to see the results of your green investments and marketing initiatives? On the increase sales side your efforts should pay off in faster product adoption rates and an increase in the rate of growth in your category. And on the customer loyalty side of the equation, you should expect to see increases in share of wallet and referral rates. Using your performance today as your baseline, monitor the changes in these numbers as you ramp up your sustainability efforts and your promotion of these
efforts to track the degree of impact.

In summary, getting your customers to use your sustainable products to help them become more sustainable themselves achieves three key things. First, it boosts your sales and helps build stronger brand loyalty. And it helps your customers become more sustainable in return, creating a ripple effect making your efforts extend beyond just your company

Listen to the Voice of Customer and Reap the Rewards

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Would you like incremental purchases from existing customers? Would a lower churn rate help your bottom line? Would referrals from existing customers help reduce the cost of sale for your company? We hope you answered a resounding yes to these rhetorical questions. And if you did, our next question which isn’t rhetorical at all is, “Do you conduct Voice of the Customer (VoC) research?”

If you do, fantastic, you’re among the few organizations that do. According to a study by Temkin Group last year only 57% of large North American firms have a formalized VoC program and many medium to small size organizations don’t. The premise of VoC is to collect and analyze customer data to transform an organization into a truly customer-centric operation.

VoC is a market research technique designed to help a company better understand customers’ wants and needs and to be able to prioritize these in terms of importance and satisfaction with current alternatives in order to positively affect the customer experience. When executed well, a VoC program enables you to acquire business insight about customers and what is important to them. You can then use this information to enhance the customer experience. Research by Forrester shows that a better customer experience drives improvement for three types of customer loyalty: willingness to consider another purchase, likelihood to switch business to a competitor, and likelihood to recommend to a friend or colleague.

VoC takes an investment of time and money but the results directly affect a company’s bottom line with incremental purchases from existing customers, lower churn, and new sales from referrals. Hopefully we’ve convinced you to conduct a VoC study. VoC research is typically more than a customer satisfaction study which is designed to measure how an organization’s products and services meet or surpass customer expectations. VoC research should enable you to make customer-focused decisions.

Most firms turn to experts for help. Whether you decide to move forward solo or with the help of an experienced third party, you should know the basics.

The Basics of VoC

1. The first decision is what questions to ask and how. Most VoC research is
conducted using in-depth interviews with a pre-defined discussion guide. The questions in the discussion guide typically cover these topics:

What are your customers “saying” about your company, brand, product/service? And where are they saying it?

How do your customers “feel” about your company, brand, product/service? And how does this affect their intent to buy?

Why do they feel the way they do and what is the root cause of this sentiment?

Are their differences among different types of customers and if so, what are they and which customer segments?

Who are what influences your customers’ perceptions and feelings?

What are your customers’ needs, wants, desires and intentions and how do these relate to your company, brand, products/services?

What are my customers saying and feelings about your competitors and what are their perceptions of your competitors and how well do the competitors meet their needs, wants, and desires?

2. Framing the questions. While many VoC studies are qualitative in nature, we firmly believe these studies should consist of both qualitative and quantitative, open and response option-based types of questions. The quantitative types of questions help with ranking, rating, and comparing choices. The qualitative questions help with capturing the actual language, phrasing and nuances. Use ranking and paired comparisons to aid to prioritizing customer needs.

3. Selecting and notifying customers. How many customers do you need to talk
with? While there is no hard and fast rule because the number will depend upon the complexity of the product, diversity of market, product use, and the sophistication of customers, experts in the field suggest that with 20 customers you can capture 90-95% of your customer needs. The first source of information if you are trying to address your current market should be current customers. But it is also a good idea to talk with prospective customers, especially if you hoping to address a new market. And we often recommend talking with competitor’s customers.

4. Conduct the interviews. The participants should be offered confidentiality which is why it is best to use a third party. The third party won’t know who to interview, so it is up to the company to provide the contact list and pave the way. This is a single blind type of study, which means customers will know the study is about your company but you will not know their individual responses. An incentive isn’t necessary but a thank you and sharing your action plan as a result of the feedback is essential.

5. Data capture, analysis, and reporting. One of the challenges of analyzing the results of a VoC study is that customer voices are diverse. There are multiple customer voices for most organizations, even those that work in only one market, such as the voice of the procuring organization, the voice of the user, and the voice of the supporting organization. These diverse voices must be considered, reconciled and balanced during the analysis of the study. One technique to accomplish this is to set in advance of the study different priority ratings associated with each customer voice.

The point of the VoC study, or any research for that matter, is to derive actionable insights from the results. So once you the findings are reported a key step is to develop an action plan. And of course, measure your progress and the improvements once the action plan is implemented.

To succeed VoC studies, you need a minimum of two things. First you need a robust voice of the customer (VoC) process. Second, you want to implement the initiative with people who are properly trained. As you embark on your VoC initiative, keep in mind that the objective is to understand how satisfying particular customer needs, wants and desires will influence the purchase decisions and improve the bottom line. There are numerous benefits from listening to your customers such as faster adoption of new products, more repeat sales and loyalty, and lower cost of sale or cost to serve. Engage in VoC and reap the rewards.