Do you know whether or not your customers feel that it’s actually worth it to be your customer?
In my latest report, “How To Measure Value For Customer,” I argue that most organizations cannot measure whether or not customers feel like they derive value from doing business with them.
Customers derive value when they feel that they get more from doing business than they give up. Customer needs are varied; so is value. Think of it within four dimensions: functional (purpose), experiential (interactions), symbolic (meaning), and economic (financial).
Why is measuring value for customers so hard?
- Have a limited understanding of how customers derive value and which value drivers matter most. That means companies focus on obvious and rational value drivers at the expense of equally important experiential and symbolic value drivers.
- Use flawed metrics that focus on use or engagement or what a company does to customers. They may know which features customers use, which products and services they have, or which communications they receive but not whether customers derive value from those products or services. What’s more, these metrics usually ignore value drivers that are about a person’s self-worth or her relationship to society.
- Collect data about value in different parts of the organization, at different cadences, and using different tools. This makes it hard to assemble a complete picture of the value that customers derive.
Three Steps To Overcoming Challenges Of Measuring Value For Customers
If you want to excel at measuring value for customers, you have to start with the foundation and build from there. So you should:
1. Find key drivers of value across all four dimensions by using qualitative research.
Don’t rely on data and feedback to determine what customers value. Key drivers of value aren’t obvious — sometimes not even to customers themselves. Customers may overstate the importance of some value drivers and miss others. That’s why you need to bring together design, research, and data science expertise and conduct qualitative research into how customers use your products and services to help them accomplish their goals and meet their needs. For example, companies such as John Deere, AARP, and Quest Diagnostics relied on a mix of interviews and ethnography to identify value drivers but also to bust myths as to what the customer wanted. And then you need to validate that you got it right using advanced validation tools (e.g., conjoint analysis) and statistical analysis to validate and rank value drivers.
2. Define a suitable, viable measurement per value driver that minimizes burden on customers.
Customer experience (CX) professionals need to use a combination of measurement approaches to ensure the measurement is suitable and viable and poses a low burden on customers. They should work with stakeholders who own measurement efforts across the business to identify the right measurement approach per driver. Sometimes, existing data sources are a good fit; sometimes, CX professionals need to create new data sources and metrics. Alternatives to surveys lower the survey burden on customers and avoid possible bias in survey results for value drivers. Instead of asking whether client contacts feel like experts, Adobe measures how many client contacts achieved an “expert” badge as a metric for symbolic value and shares this data in strategic business reviews.
3. Establish focus by understanding your competitive value gaps.
CX leaders can use a potential gain in value analysis that uses importance and performance data per value driver to identify a value gap. When you have competitive data, also calculate a competitive value gap, helping you further prioritize value drivers to focus on. To identify performance relative to competitors, AT&T asked customers whether its own products and services — and those of competitors — were worth what customers paid. Customer Value Foundation uses a similar approach to measure the relative customer value added. Now that you know which value drivers to focus on, you can feed them into a second round of prioritization that takes into account feasibility and cost-to-improve.
If you are interested in hearing more details about these three steps, join me at Forrester’s CX EMEA fully virtual event from 17–19 November.