How can leveraging customer data improve business metrics?

5 minute read

For many years now, marketers, customer success, sales and customer service teams have been using customer data to power interactions and ultimately drive customer loyalty. From delivering personalised communications and offers to enhancing the interactions for frontline teams with the latest information on the most recent contact with the customer, having data at your fingertips has never been as easy as it is today.

But here is the question. Does having all this customer data mean you have what is required to increase loyalty and solve your business problems? I would suggest, no. Having data alone won’t help you. In fact, having too much data can overwhelm and cause paralysis.

So, where do you start? I have personally worked in businesses and with clients that have a lot of data. The result can be that you have so much data, telling you lots of different things, you don’t have a clear direction to move in.

Creating data streams aligned to Business Goals:

I am not saying that you should stop collecting customer data is it’s worthless, not at all. Data is essential. However, it’s how you use the data, including how you design the data you collect, that is super critical. If, like most businesses, you have been collecting various forms of customer data for many years, a good place to start is understanding what business metrics are important to your Board and what critical problems your senior leaders are trying to solve. From there, review the data your business already collects.

As part of this review of data, identify any gaps your business has or data that you are collecting that is not proving insightful or useful.

It may be that the data you have is indicating a problem however, there are gaps in understanding the emotions your customers are feeling about these critical areas or specifically why they are feeling the way they are. Quantitative data alone won’t give you the necessary information to really, truly understand the issue and emotions related to that area. A simple regular survey or even just including a qualitative element to your quantitative surveys will help to solve this problem for your business. It may be in the form of a Voice of the Customer programme or on a much smaller scale depending on your business requirement, frequency of purchase or service.

Apply feedback loops, ensuring you apply Closed Loop models to unlock some trends demonstrating key areas of opportunity to investigate further and critically act upon, consistently.

During the data design phase, keep circling back to make sure the data gaps identified still feed into a key business need or metric. Everything must align to core business goals and metrics, failing to do this may result in lack of organisational support or understanding in why customer experience improvements are essential.

When I first started working in the area of Customer Experience, I felt frustrated that customers were not the primary and central consideration for all business decisions. Now, with 20 years-experience of how businesses operate and work successfully, I strongly believe the customer should not be at the centre of all decisions, but they should be included in making or informing decisions. I believe the same applies to data.

Before designing a Voice of the Customer programme to give you more customer data, it’s critical that you set out clear objectives for the data you are collecting and understand which areas your business is interested in understanding more about. Without appetite at senior leadership levels, you may be wasting valuable time and resources.

There must be a business need to answer. This may be a specific business goal e.g., Net Promoter Score (NPS) or Customer Satisfaction (CSAT) which in turn may correlate with customer churn metrics. Many businesses use NPS, CSAT, and CES (customer effort scores) as measures of customer loyalty and satisfaction, however, to improve either metric, you need to understand why the rate has been given by the customer in the first instance. This leads to the requirement for more data.

I’d also like to point out at this stage that NPS should not be the goal. The goal of a business should be to improve customers experience to retain their business and achieve increased Customer Lifetime Value (CLV). The NPS result is an indicator, but it alone won’t provide the insights to make improvements in the critical, high revenue areas.

Business Metrics and how CX can help improve them.

To emphasise this point, below are a few critical business goals that your business may have. They all have a direct impact on business revenue and profit, areas that ultimately your business must improve on year on year to increase shareholder value and overall business performance. These areas can all be tracked back to customer emotion, sentiment and ultimately experience. Due to this they can all be improved by applying customer experience frameworks and processes, identifying opportunities to improve overall customer experience and turn the metric trend upwards.

Here are the most frequently used business metrics:

Reduce customer churn:

o Typically, customer churn is a central business metric and strategies to reduce churn are likely to centre around customer experience led actions.

Improve operational efficiency:

o Ultimately businesses must be profitable, that means managing CAPEX investments and reducing operational costs. Identifying customer friction points across operational areas can provide investment to improve systems and automate processes, a win-win situation for customer, employees and leadership teams.

Increase upselling and cross-selling opportunities:

o Critical to business growth is ongoing sales including growth across customers and accounts (B2B or B2C). Unhappy customers generally do not increase their spend which may impact sales conversion rates. Investigating customer satisfaction scores may help to unlock investment to ‘fix’ systemic areas causing customers friction.

Improve brand reputation:

o Whether B2B or B2C, having a good brand reputation is essential for business success. If brand reputation metrics are declining, the customer data you collect should be able to provide information and trends on customer sentiment and potential reasons for reputational decline. Incorporating social media data is crucial here, a key opportunity to understand market conversations.

Improve NPS/CSAT/CES:

o As highlighted above, to achieve any improvement in quantitative scores, businesses need to collect qualitative data which will provide the ‘why’ behind the score. From this you can create trends to understand broadly actions your business can take to improve the areas highlighted by the feedback. Customer journey mapping or 'Experience Mapping (customer and employees) will then be the tool applied to identify 'As Is' journeys and design 'To Be' in critical revenue areas.

Cost per acquisition:

o In marketing, the business is likely to include costs to acquire customers. Surveys suggest this could be as much as 10 x the cost of retaining existing customers. Improving Customer Experience will increase advocates of your products and services which in turn has been proven to reduce acquisition costs through referral to your business. It has also been proven that customer acquired through referral are more valuable than those acquired through marketing and sales tactics.

All of the above can be improved upon with customer experience approaches. Critical when collecting data is to have a process of feedback loops, also known as ‘Closed Loop Models’. These integrate a system of acting upon feedback trends applying an agile approach to demonstrate impact on profit (whilst ROI is typically used, high ROI may not actually deliver EBITDA in the long term, something to consider in measurement metrics). This may be automated using machine learning tools or it may be through analysis, identifying trends and having processes in place to act upon the feedback.

Having a customer pillar and resource in your business or employing a CX consultant, will help implement process to ensure the data is used in the best way and pull together cross functional teams to act upon the data quickly. Having broad business accessibility to the right data points will help to keep a focus on this area. Whilst long-term, large-scale customer experience improvements will be highlighted through longer term view of trends emerging, implementing simple improvements highlighted initially, demonstrating early successes, will keep your leadership team engaged. Having a roadmap outlining short- and long-term initiatives is key.

Once acted upon, tell your customers the improvements you’ve made. Some improvements may be so very simple, investment light and easily implemented but the long-term benefits that will be seen against the key business metrics highlighted will demonstrate an ROI. It will also give your business leaders encouragement and confidence in seeing early wins. Having the right measurement here is important, ensure benchmarks are identified through the data with forecast improvements highlighted.

So, what steps should you take?

1. The first step is understanding the business metrics, issue or challenge that your business leaders need to improve / solve. Speak to your business leaders, understand their pressures and priorities. Failing to align your strategy with their priorities is unlikely to get traction and may damage credibility.

2. Identify the data your business already has, any existing insights and data gaps that require filling. Talk to your colleagues, teams. Understand their views, typically, there will be an understanding of friction points already. The correlation between employee and customer experience is inextricably related and symbiotic in nature, you can’t achieve excellent CX without high levels of EX in the first instance.

3. Design the data you need and identify the best means of collating it ongoing. This may be a simple survey to begin however, collecting data once won’t provide the insight you need and won’t demonstrate any improvements. Having a program or schedule for regular surveys is key. There are many software providers out there who can help for varying investments, certainly worth considering and investigating.

4. Identify opportunities through data analysis, overlaying quantitative with qualitative to bring the areas of friction to life for stakeholders. Look for trends in the data and recurring sentiment in specific areas. Create a proposal identifying low hanging fruit, areas to improve at low cost, plus areas for diving deeper into for longer term initiatives.

One area for businesses to consider is regularity of data collection. As highlighted in step three, in order to successfully use data to inform opportunities to improve business performance, having regular feeds to understand trends over time is, essential. Remember, a score on its own won’t provide your business with the necessary insights to improve customer experience and drive those critical business metrics up.

In summary, every CX opportunity must link back to a critical business problem and metric. Having the right data, delivering the right insights with clear action loops with the right processes to do something about them is key to long term success.