The Four P’s of XM Insights

In a recent XM Institute report, we discussed how to Operationalize Experience Management (XM).  Why does XM matter? Because it creates a discipline that helps organizations continuously learn (how people are thinking and feeling), propagate insights (to the right people in the right form at the right time), and rapidly adapt (to an increasing flow of actionable insights).

As we look into the future, just about every organization is facing more demanding customers, more demanding employees, and shorter product lifecycles. In this environment, they need to make smarter, faster decisions… They need XM.

Organizations that master XM will adapt faster than their peers. That statement alone should be compelling enough to focus on building XM capabilities. What happens to your organization if your competitors are systematically adapting faster than you?!?

To understand where XM will come into play, I’ve identified four categories of insights that XM leaders will better understand and more quickly respond to than their peers. Let’s just call them the Four Ps of XM Insights:

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  • Problems: Have an issue with a product, a brand message that’s going awry, a manager ruining morale, or a process that’s turning customers into detractors? XM leaders will spot those problems and make appropriate adjustments, before their competitors have any indication that there may be an issue.
  • Preferences: What features do key customers prefer, which brand messages resonate with target audiences, and what benefits will have the most impact on employee retention? XM leaders will know the answers to these types of questions and make adjustments before their peers even formulate the questions.
  • Possibilities: What unspoken needs do your customers have, what innovations are in the minds of employees, how can you reinvent your brand, and what should your next generation of products and services look like? XM leaders will have a continuous pulse on these types of insights, while their competitors just brainstorm about them during planning off-sites.
  • Priorities: Which actions will drive the most loyal customers, the most engaged employees, the most vibrant brands, and the most irreplaceable products? XM leaders will understand these connections and focus their resources on the most impactful areas, while their competitors debate options with random groups of employees who happen to be invited to meetings.

The bottom line: XM leaders will adapt faster to problems, preferences, possibilities, and priorities.

New Research Digs Into Industries And Consumer Feedback Patterns

The XM Institute is kicking off the year with a research bang.

In a previous post, I mentioned two reports from late last year that show the business value of CX, The ROI of CX and What Consumers Do After a Bad Experience. Since then, we’ve actually published a number of new research reports with an emphasis on industry-specific data. These reports are based on a survey of 10,000 U.S. consumers and examine almost 300 companies over 20 industries.

Enjoy these free reports:

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Industry CX Snapshots

2001_CXRetailIndustryGraphics_v1This series of reports dig into CX data for a number of industries:  AirlineAutoBankingHealth InsuranceHotelInsurance, and Retail.

Each Industry Snapshot looks at how the highlighted industry’s XMI Customer Rating compares to the Ratings of the other 19 industries and examines the connection between a customer’s experience and the likelihood that they will recommend, rebuy from, and trust a company within that industry. These Industry Snapshots also explore the potential cost of delivering poor experiences, the most broken journeys within each industry, and how experience perceptions differ across age groups

How Consumers Give Feedback

Download the free report, Data Snapshot: How Consumers Give Feedback

2001_HowConsumersGiveFeedback_Graphics1Did you ever wonder what channels consumers use to give feedback, and how that differs between good and bad experiences and across age groups? Then this is a great report for you.

We found that people are more likely to talk about bad experiences than good experiences. When consumers do tell someone about an experience, only one-fifth of consumers provide that feedback directly to the company. We also looked at how consumer behavior differs across age groups.

Six Types Of Experience Data (X-Data)

One of the key building blocks of Experience Management (XM) is X-data, which helps establish an understanding of how people think, feel, and behave. In almost all circumstances, organizations lack the X-data they truly need. So how should organizations go about instrumenting their operations to collect the right data?

To identify the required X-data, it’s important to first understand how data flows from people’s experiences. That’s why you should start with the Human Experience Cycle (HxC). As you can see below, experiences lead to perceptions, attitudes, and behaviors.

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Using the HxC model, we examined the components of many XM programs and have identified six distinct types of X-data:

  1. Experience Expectations. How people think and feel about a future interaction with an organization, which can be collected on a regular cycle or periodically (e.g., whether a customer expects a product to be hard to use or believes they can accomplish a service interaction online).
  2. Interaction Perceptions. Feedback on a specific interaction, which can be tracked continuously or periodically (e.g., feedback after an online purchase or after an employee training course).
  3. Journey Perceptions. Feedback on collection of activities around a goal, which can be tracked continuously or periodically (e.g., feedback after an airline customer finishes a trip or after an employee completes her on-boarding).
  4. Relationship Attitudes. How people feel about an organization, including plans for future interactions, which can be tracked on a regular cycle or periodically (e.g., NPS or brand tracking study).
  5. Ad-Hoc Diagnostics. How people think or feel about a problem or opportunity, which is collected as needed based on other findings (e.g., pulse employee survey about a leadership issue or qualitative study into why a brand message didn’t work).
  6. Choice Preferences. How people would rank different alternatives, which is collected periodically (e.g., product feature selection or employee benefits optimization).

XM programs need to collect these six types of X-data for all human beings in their ecosystem (e.g., suppliers, employees, customers, prospects, stakeholders, etc.). This effort embodies what we call the “Experience Monitoring” skill within the XM Competency of “Enlighten.”

We’ll use this taxonomy in future posts and research to help organizations assemble the right XM programs. For now, think about where you might collect and how you might use these different types of X-data.

The bottom line: Every organization needs these six types of X-data.

2020: The Year of Insightful Actions

As 2019 comes to an end, it’s time to think about what we’ll see next year. I collaborated with our XM Institute faculty (Aimee Lucas, Ben Granger, Isabelle Zdatny, and Moira Dorsey) to pull together a picture of where we think XM will be heading in 2020. As we looked across the different elements we were expecting to see, an overall theme for 2020 emerged… The Year Of Insightful Actions.

Looking Back At 2019

In the Global State of XM research, we found that senior executives around the world recognize the importance of XM. That mindset propelled many companies to deploy components of an overall XM program in 2019. As we found in the State of CX Management where only 6% of large companies have reached the top two levels of maturity, most companies remain in the very early stages of building their XM competencies.

Customer experience (CX) remained the most common area of focus for XM efforts, with employee experience (EX) gaining significant traction.

Few organizations have yet to take an enterprise-wide view of XM, instead they’ve most frequently deployed XM within isolated compartments of their organization. While narrow XM remained the norm, we started to see a few companies take a more holistic view of XM, often starting with an integrated view of CX and EX.

Five Trends In The Year of Insightful Actions

While most XM efforts have focused on isolated data collection and reactions, we expect organizations to become much more intentional about how their efforts drive actions that create value. That’s why we’re calling 2020, The Year of Insightful Actions.

What does this mean? While many XM programs claim to drive action, they don’t treat this effort as a primary objective. We expect this to change. During the upcoming year, organizations will prioritize their XM efforts in areas that directly help their organizations make better decisions and deliver more tailored experiences. In this environment, we expect to see:

  1. The marriage of CX and EX. XM programs will spread into adjacent areas. The most common form of this diffusion will be the an increase in the combination of customer experience (CX) and employee experience (EX) efforts. Why? Because there’s an inextricable link between CX and EX. Insights from customers can target high priority employee improvements, while insights from employees can identify key customer improvements.
  2. The reversal of metrics mania. Many XM programs have built up a slew of measurements, viewing their experience data (X-data) as a source of metrics. As companies pivot more to insightful actions, they’ll cut back on some of those metrics and focus more of their attention on developing insights in specific areas where they see opportunities to improve.
  3. The reorientation to action-first. In early maturity XM programs, there’s often a focus on collecting as much data as possible. The data, along with some insights, is then delivered to different groups. We expect that many organizations will shift this flow. They’ll start by identifying the actions that people make and use that information as requirements for insights, and then focus data collection on fueling those insights.
  4. The creation of a new discipline, IXD. Rather than just distributing data, organizations will more actively design the insights they deliver to specific groups across the organization. We call this Insight Experience Design (IXD). XM teams will use their experience design skills to integrate insights into different teams’ operating processes and decision flows. This process will also require change management to increase data-centric mindsets across their organizations.
  5. The rise of XM-enabled processes. As organizations use XM to power more key decisions, they’ll spot new ways to inject insights into their ongoing operational processes. Leading companies will start redesigning processes like product development and employee promotion cycles to embed XM insights. Look for existing methodologies like Lean and Lean Startup to incorporate XM insights into their methodologies.

Impact Across The XM Operating Framework

This focus on insightful actions in 2020 is merely a step on the path towards increasing XM maturity. As we described in the report, Operationalizing XM, organizations are on a multi-year journey to create the capabilities to continuously learn what people are thinking and feeling, propagate insights across their ecosystem, and rapidly adapt based on the most important findings. To establish these capabilities, companies will continue to expand their XM efforts in 2020 across the three elements of the XM Operating Framework, technology, competency, and culture.

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Here are some of what we expect to see in 2020:

  • Technology: Within XM, technology plays a very important role. It allows the automation of key activities and it enables strong practices to scale across an organization. In 2020, we expect to see more use of text analytics to tap into rich insights from unstructured data, more predictive analytics to uncover insights from a growing volume of both X-data and operational data (O-data), more instrumentation of growing digital channels, more automated and customized distribution of insights, and the enablement of more closed-loop processes for responding to feedback.
  • Culture: The norms within an organization can both inhibit and nurture XM capabilities. As the Year of Insightful Actions rolls out, companies will need to make adjustments to their culture to ensure that employees understand why XM is so  important for their future success, recognize their personal roles in helping the organization deliver better experiences, and become increasingly comfortable with more rapid, distributed decision-making based on highly tailored insights.

Changes Will Affect All Six XM Competencies

As we often say, the key to path to XM success requires mastering competencies that are enabled by technology and nurtured by culture. Here’s a taste of what we expect to see across the Six XM Competencies during 2020:

  • LEAD: Organizations will expand their governance to cover a broader set of XM areas, starting by connecting many of their CX and EX efforts. The focus on actions will also drive organizations to adjust their program roadmaps to more efficiently deploy their resources.
  • REALIZE: As insightful actions become more of the norm, organizations will start making the case for XM based on the establishment of capabilities to rapidly adjust to changes in the market, not just based on near-turn upticks in business results.
  • ACTIVATE: The spread of insightful actions will force more employees across the organization to rely on data insights in their day-to-day roles. This will require new training to improve overall data literacy and the capacity to use insights to drive decisions.
  • ENLIGHTEN: To fuel insightful actions, companies will redefine what X-data they collect. Rather than relying on static mechanisms that remain as-is, they’ll build more dynamic approaches that they regularly adjust to fuel an evolving set of required insights.
  • RESPOND: This competency will get a lot more attention across the board, as XM programs turn their focus more explicitly on the actions they enable.
  • DISRUPT: With the spread of insightful actions, more employees will benefit from applying experience design skills. Look for organizations to find ways for propelling experience design across their organization.

The bottom line: Welcome to The Year of Insightful Actions!

New Research Shows Strong ROI of CX

The XM Institute has published new research that examines the impact that customer experience has on the loyalty of U.S. consumers across 20 industries. You can download these reports for free:

  • The ROI of Customer Experience. This research examines the correlation between customer experience and the likelihood of consumers to exhibit the following behaviors: purchase more products or services, recommend a company, forgive a company, trust a company, or try a company’s new product or service.
  • Data Snapshot: What Happens After a Bad Experience, 2019. This research shows how often consumers run into bad experiences, and then examines how consumer spending changes based on those miscues.

The graphics below from The ROI of Customer Experience show a strong correlation between good customer experience and improved levels of consumer loyalty. While these graphics cover some of the overall findings, the report also includes data showing the impact of CX on loyalty for 20 industries.

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The graphics below are from the Data Snapshot: What Happens After a Bad Experience, 2019. As you can see, the percentage of consumers reporting bad experiences ranges from a high of 17% for TV/Internet service providers to a low of 3% for retail and streaming media. We also found that the impact that a bad experience has on spending is greatest in fast food and smallest in health insurance and utilities.

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Remember, you can download these research reports and many, many more for free from the XM Institute.

The bottom line: If you improve CX, you’re very likely to improve customer loyalty.

Stop Employees From Asking For Good Ratings

Over the last few weeks, I’ve run into a couple of examples of a common problem with some Experience Management (XM) programs… “gaming.” Here’s what I found…

During dinner with a friend who is an executive at a large bank, our discussion made its way to XM (no surprise). He mentioned that his bank has an employee engagement study and that leaders are compensated based on the results.

Sounds like a good thing, right?

My friend then shared a conversation that his boss had with the leadership team. This senior executive told my friend and the rest of his direct reports that they needed to give him better ratings, because the current scores were negatively impacting his compensation.

Now for the second example. I’m a frequent flier, and regularly receive requests from airlines to provide feedback after a flight.

Sounds like a good thing, right?

During a recent trip on Delta, the flight attendant announced that we’d be receiving a survey and that she hopes they exceeded our expectations and will give them a 5 (see note about Delta below).

Do these two situations sound like a path to better employee experience (EX) or customer experience (CX)? Of course not! Both of these examples represent inappropriate behaviors. Whenever a person is pressured to give a specific score, the integrity of the measurement system is broken. We call this type of behavior “gaming the system.”

Gaming is a common problem. It happens when an organization puts too much emphasis on specific measurements — at the expense of the overall XM program.

The goal of XM is not to achieve some number, but to create a discipline to continuously learn, propagate insights, and rapidly adapt. This enables an organization to consistently deliver experiences that meet the needs of its key audiences. When an organization overly focuses on a number, often by attaching strong incentives to individuals based on the data, the system is bound to create these types of counter-productive “gaming” behaviors.

To help discourage this type of behavior, consider adopting these five rules to stop employees from gaming that I’ve described in a previous post:

  1. Don’t mention or refer to a score
  2. Don’t mention specific survey questions
  3. Don’t mention any consequences
  4. Don’t say or imply that you will see their responses
  5. Don’t intimidate customers (or employees) in any way

The bottom line: Make sure you’re not encouraging gaming behaviors.

Note: I regularly fly with Delta and this is the only time that I’ve run into this type of gaming behavior.

Discussing The Experience Economy With Joe Pine

TheExperienceEconomy_Ruled_2Welcome to the Experience Economy. That’s the title from an HBR article written by Joe Pine and James Gilmore in 1998. It was a seminal article, laying out the important role that experiences play in building differentiation. Pine and Gilmore went on to write an amazing book, The Experience Economy: Work Is Theater & Every Business a Stage.

The Experience Economy was more than an article or a book, it was the start of a movement. And it continues on today. As a matter of fact, Pine and Gilmore are rereleasing the book with a new forward. They’ve also created an online training series focused on helping frontline employees stage remarkable experiences.

I caught up with Joe Pine during his global travels to discuss the Experience Economy. Here are his answers to some questions I posed:

Q: How has your view of the Experience Economy shifted since you originally introduced the concept?

Pine: Interestingly, not that much! My partner Jim Gilmore and I always thought that the experience staging would grow many-fold, that every year more and more companies would embrace the Experience Economy, and it would be both caused by and cause goods and services to be increasingly commoditized. One big difference is that we used to talk about the nascent, the emerging Experience Economy — and now we say it is here. Experiences have become the predominant economic offering, what people prefer over mere goods and services. I remember having to argue with people about it, making the case of the shift into the Experience Economy; now, however, I just describe it and everyone gets it.

Q: What role does new and emerging technology play in the future of the Experience Economy?

Pine: One of the big growth arenas is in experiences that fuse the real and the virtual, including virtual reality, augmented reality, and many more possibilities I wrote about in my book Infinite Possibility. Digital technologies also enable companies to mass customize their offerings so much more than in the past, for anything that can be digitized can be customized. And that’s actually how I discovered the Experience Economy, by realizing that customizing a good turned it into a service, and customizing a service turned it into, yes, an experience! So companies can now know who their customers are, where they are, their context at this moment, and how to fulfill their individual wants, needs, and desires. The “Wow!” effect that engenders can turn such interactions into engaging experiences. I’m also enamored with the potential of 3D printing, for it makes matter programmable, effectively digitizing materials to be (almost) instantly customized to the individual.

Q: I like to talk about Experience Management as a discipline that need to be woven throughout an organization’s operating fabric. How does that mesh with your view of the Experience Economy?

Pine: I think that’s true — while companies can make progress by feel, by art rather than science, it will tend to be sporadic and lessen the chances of truly embracing today’s possibilities. Also understand that many companies aim their Experience Management activities too low, at merely making their interactions with customers nice, easy, and convenient. These are all well and good — and often very necessary before proceeding further — but do not rise to the level of staging a true, distinctive experience. As a distinct economic offering, experiences are about offering customers time well spent, not the time well saved of services. So, yes, make the service aspects of your offerings frictionless, and then use the time saved to build atop this to offerings that are engaging, memorable, and personal, experiences that customers view again as time well spent.

Q: Can you share a couple of the coolest examples you’ve seen of a company shifting it’s approach and embracing the Experience Economy?

Pine: My favorite experience stager these days is the Princess Cruise Lines unit of Carnival Corp. for its Ocean Medallion program. The Medallion is an IoT device (speaking of new technologies) that enables the cruise ship to mass customize everything on the ship — and eventually off it — to each individual guest, family, or other unit (such as wedding parties or reunions). Guests upload their passport data beforehand and then simply walk up and onto the ship without ever having to show it, as Princess crew members have tablets that identify each guest by name and picture based on their unique Medallions and welcome them aboard. Guests also specify their preferences before boarding, which Princess uses to create a mass customized itinerary that can be updated as it learns more and more about each guest. It can even learn about context, knowing for example that on the pool deck with the kids your favorite drink is an iced tea with no lemon, while in the bar with your buddies it’s a coconut mojito, and at dinner with your spouse it’s a glass of Shiraz! True, though, that as a cruise company Carnival has always been in the experience business, but now it is elevating that experience for every guest, eventually on every ship.

One of the cool things I see happening turning service providers into experience stagers is retailers, restaurateurs, and others actually charging admission for the experience! Next in Chicago, Trois Mec in LA, Noma in Copenhagen, and a host of other restaurants, for example, now have you go online to reserve a table, pay the admission fee, print out your tickets, and then present them at the reserved time for the dining experience. Even Venice, Italy, is starting to charge admission to alleviate the overcrowding in the city center.

And I’ll also mention hospitals, of which so many are taking on experience-related themes or purpose statements, such as Holy Redeemer in Philadelphia with “My. Life. Story.”, Mosaic Life Care in St. Joseph, MO, with “LIve Life Well”, or Mid-Columbia Medical Center in The Dalles, OR, with “Personalize. Humanize. Demystify.” I work more in healthcare than any other industry for the basic reason that research shows that the better the patient experience, the better the outcomes, and that is what healthcare is truly about.

Q: What advice do you have for a non-traditional experience company like a chemical manufacturer or shipping company to embrace the Experience Economy?

Pine: It may seem like a stretch, but even B2B manufacturers or service providers. First, they can understand a basic principle that in today’s Experience Economy, the experience IS the marketing. So they can stage marketing experiences that generate demand for their offerings., such as CASE Construction Equipment does with its Tomahawk Experience Center in the north woods of Wisconsin, or the World of Whirlpool on the banks of the Chicago River.

Any company can also turn mundane interactions into engaging encounters by understanding that work IS theatre. It’s not a metaphor — work as theatre — but a model for work, understanding that whenever workers are in front of customers, they are on stage and need to act in a way that engages those customers. In shipping, a costumed UPS route driver performs an act of theatre with every package she delivers, while FedEx’s overnighting is absolutely, positively theatre when its employees deliberately rush about to convey the impression of speed as the essence of the company.

Whenever I work with B2B companies I also make the same point as earlier that mass customizing their goods turns them into services, and their services into experiences — and that B2B customers can far better gauge the value of such customization than consumers can. Moreover, no business customer buys their offerings because they want their offerings; they are always the means to an end. If you supply the end rather than the means — and that means focusing (as healthcare should) on outcomes, not inputs — then you will gain much more economic value. In fact, you can then go beyond staging experiences to guiding transformations for your individual customers. And there is no greater economic value you can create than to help customers achieve their aspirations.

The bottom line: Make sure to read the book!

The State of CX Management, 2019

I’m particularly happy to announce a new research report, The State of CX Management, 2019. In the past, Temkin Group published similar research and we charged for the reports. One of the great things about now being a part of the XM Institute is that we can give it away for free.

To understand the current state of customer experience (CX) management, we surveyed 212 CX professionals around the world from companies with at least $500 million in annual revenues. Respondents at these large firms not only answered questions about their organizations’ CX efforts, they also completed our CX Competency & Maturity Assessment, which evaluates the Six Experience Management (XM) Competencies: Lead, Realize, Activate, Enlighten, Respond, and Disrupt.

Since you can easily download the report, I won’t provide a full summary. Instead, here are some of my favorite data points along with additional commentary:
  • The focus on CX is growing. Eighty-one percent of respondents plan to increase their focus on CX in the upcoming year, while only 4% plan a decrease. That represents significant momentum for CX.
  • CX and EX make sense together. Seventy-two percent of respondents felt that it was at least moderately important to improve employee experience (EX) while they are improving customer experience. That shouldn’t be a surprise. As I’ve said in the past, CX and EX are inextricably linked.
  • CX professionals are leading the way. About two-thirds of companies have a senior executive in charge of CX and a centralized CX team. And a third of those CX teams have 11 or more full-time employees. This makes me feel great. When we launched the Customer Experience Professional’s Association in 2010, our hope was to create a thriving CX profession… we’re there! Check out my comments about the future of the CX profession.
  • Digital channels need an XM infusion. When we asked respondents to evaluate the experiences they deliver across multiple channels, the two experiences they rated most highly were on the phone with an agent (59% said it was at least good) and in a store/branch (41% said it was at least good). Digital channels fell well behind. Companies not only need to better understand these experiences, but they should also learn from human interactions. Check out our report, Humanizing Digital Interactions (yes, that one’s also free).
  • Companies get in their own way. What challenges do companies typically encounter as they work to improve their CX? At the top of the list is other competing priorities, which was selected by 59% of respondents. This has been the top problem for years. It’s important that CX teams link their efforts to business results that the company cares about and the individual goals of the senior executives. It’s worth taking a look at another free report, Activating Executive Commitment.

Comparing CX Leaders With CX Laggards

The XM Institute has built an XM maturity model based on the Six XM Competencies. Respondents completed our assessment and only 6% of companies ended up in the top two (out of five) stages of maturity. We compared companies with higher levels of maturity (CX leaders) with those who had lower levels of maturity (CX laggards). When compared with CX laggards, we found that CX leaders:

  • Enjoy stronger financial results. Seventy-one percent of CX leaders report that their CX efforts had a positive impact their financial performance over the previous year, while only 38% of CX laggards report the same.
  • Have more senior executive support. Fifty-seven percent of CX leaders consider their most senior leader, such as their CEO, to be a “strong” or “very strong” champion of CX, compared with only 38% of CX laggards.
  • Have more coordinated CX programs. Sixty-four percent of CX leaders report having significant CX efforts underway across the company with significant coordination across these efforts, compared to only 26% of CX laggards.
  • Foster a more empathetic culture. The two groups differ across a number of cultural elements. We found the largest gap in agreement with the statement our organization demonstrates empathy for its customers; 80% of CX leaders agreed, while only 37% of CX laggards agreed.
  • Deliver better digital experiences. As you’d expect, CX leaders report delivering a higher percentage of “good” and “very good” experiences across every interaction channel we examined. Leaders and laggards diverge most when it comes to the experience they deliver in mobile apps, online self-service, and online chats.

As I’ve said, we’re excited to be publishing this research as part of the XM Institute. Make sure to download the free report, The State of CX Management, 2019.

Five Recommendations For De-Emphasizing Benchmarking

Benchmarking, benchmarking, benchmarking… it’s a popular subject.

I’ve been publishing CX benchmarks for more than 10 years, so you might be surprised by my point of view on the topic: benchmarking is often overused and misinterpreted. I’m not saying to give up on the entire activity, but people often spend too much time and energy focusing on industry comparisons that aren’t necessarily an accurate reflection of the genuine customer experience.

Let me start by saying that benchmarking is a perfectly good activity. It makes sense to periodically evaluate your performance relative to competitors, especially as an input to your strategy. And it’s also healthy to look at your performance relative to companies from other industries.

While benchmarking provides value, people often let it distract them from more important activities. So here are five recommendations on how to think about benchmarking:

  1. Focus on improving, not comparing. When it comes to the use of your insights activities, it’s critical that an overwhelming majority of your efforts are aimed at finding opportunities to improve — not scorekeeping. Many executives seem to feel as though a benchmark provides a security blanket of sorts—one that shows their remit within the business is in line (or better than) the competition. Whether it’s from internal metrics or external benchmarks, knowing where you are and where you’ve been is not nearly as valuable as knowing where you should be heading. Companies often use up a lot of their feedback capacity to ask customers (and employees) questions solely for the purpose of fueling a benchmark. My advice: Optimize everything you do on driving improvements, even if it means dropping some benchmarking questions.
  2. Obsess about customers, not competitors. One of the risks of relying too much on benchmarking is that it can mask your performance when there are shifts in the market, such as new competitive options or evolving customer requirements. You may be doing well against current competitors and with existing customers while the market is slipping away from you. Your critical strategic question should be are we delivering the right experiences to the right customers?, not how are we doing versus our competitors?
  3. Compare data within studies, not across them. Every industry benchmark is based on a specific methodology, with it’s own target audience, sampling approach, timing, collection mechanism, questions, and calculations. Each of these items has an impact on the results. As I often say, sampling patterns really, really matter. It’s often ineffective to compare results across different studies unless you control for all of those items, which can be very difficult. So don’t spend too much time trying to reconcile an industry benchmark with internal results.
  4. Set goals around key drivers, not necessarily industry benchmarks. As you think about setting goals for your organization, don’t fall into the trap of relying on benchmarked metrics just because the data exists. You should be setting goals for the items that drive the overall performance of your business, which may or may not look anything like the industry benchmarks. What’s unique about your brand and what creates a loyal customer? We recommend following five steps for creating a CX metrics program, starting with higher-level goals and working your way down to metrics on key drivers.
  5. Rely on internal insights, not external data. While external benchmarks can provide a high-level snapshot of relative performance, they lack the depth and adaptability to dig into critical company-specific topics such as the needs of target customer segments and your performance during key moments of truth. The additional value of internal insights are also dramatically amplified when you combine experience data (X-data) with operational data (O-data). The ability to dig into key questions and find more meaningful insights makes building internal insights capabilities a much more valuable endeavor than digging into external benchmarks.

The bottom line: Choose actionable insights over competitive comparisons… everyday!

Operationalizing XM: The Report

I’m super excited to announce the publication of new research from the Qualtrics XM Institute, “Operationalizing XM.” It describes how organizations can tap into experience management (XM) to continuously learn, propagate insights, and rapidly adapt—capabilities that can be used by just about every organization. It’s a must read (and a free download) for anyone who cares about or is just interested in XM.

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The report outlines the XM Operating Framework, and goes into detail on Six XM Competencies.

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Here’s the executive summary of the report:

An ever-increasing flow of information is shifting power from institutions to individuals, while new technologies are redefining business models and shortening product lifecycles. To succeed in this environment, organizations need to adopt a new approach that focuses more on the experiences of human beings throughout their ecosystem. How? By developing a discipline called Experience Management (XM). This report introduces this new approach and provides details around:

  • The XM Operating Framework, which is built on a combination of competency, technology, and culture.
  • The six XM Competencies—LEAD, REALIZE, ACTIVATE, ENLIGHTEN, RESPOND, and DISRUPT—that organizations should focus on to improve their XM capabilities.
  • The five stages of XM maturity that companies will progress through as they master the six Competencies: 1) Investigate, 2) Initiate, 3) Mobilize, 4) Scale, and 5) Embed. This report also includes an XM Competency & Maturity Assessment organizations can use to calculate their own maturity levels.
  • The XM Diffusion path that companies should follow as they expand their XM efforts across their entire enterprise.

Stop Obsessing About Organizational Alignment

I was recently asked a question that I hear a lot, how do we get alignment across our large, complex organization? This is an important question since the path to Experience Management (XM) often requires large-scale change.

I’m now just saying: Stop focusing so much on it. Instead of trying to gain full alignment before you begin, build it over time in an iterative manner that I’m calling Agile Alignment.

When people think about transformation, they often make a false assumption that alignment is required prior to change. They believe that it’s a prerequisite to get all of the key stakeholders on the same page. It isn’t.

If you have limited bandwidth (which is the case for just about everyone I’ve ever worked with), then you have to make trade-offs on where you spend your time and energy. At a simplistic level, you will be faced with deciding between trying to build alignment with people who are not pre-disposed to supporting your efforts, or focusing on driving some elements on your change agenda. My argument is that, on the margin, the latter can be much more productive than the former.

We often assume that alignment is a precursor to change. But let me introduce a new thought: Successful change is the precursor to true alignment. In other words, you may be able to get people passively on-board with your plans, but they aren’t truly on-board until they see something is working and on the path to success.

The ideal approach for driving transformation, therefore, is an iterative process that I’m calling Agile Alignment. It goes like this:

  1. Identify key stakeholders who are actively aligned
  2. Drive successful change initiatives with those aligned stakeholders
  3. Build alignment with a larger group of stakeholders
  4. Go back to step #2

This way, you keep expanding the scope of your efforts and the breadth of your alignment over time.

The bottom line: True alignment follows success.

 

 

Is NPS A Dubious Fad?

Okay, it’s that time again. Every few years someone ignites the debate about whether Net Promoter Score® (NPS®) is a great or terrible thing. A recent article in the WSJ (The Dubious Management Fad Sweeping Corporate America) has sparked the discussion this time.

Rather than write something entirely new, I decided to share something I wrote in 2015 that addresses the issue. Before I share that post, I also suggest you take a look at these:

Below is the 2015 post, Is Net Promoter Score A Savior Or A Demon?

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Every couple of years, I get a resurgence of questions about Net Promoter® Score (NPS®). These surges typically coincide with research that shows how NPS is either an excellent predictor or a terrible predictor of company performance. That data often ignites a religious battle between the NPS lovers and NPS haters.

Well, it’s one of those times.

Let me start by saying that I’m an atheist in this NPS battle. We’ve had the opportunity to study and work with hundreds of companies that use NPS. I’ve recommended to some companies that they adopt NPS, to others that they stop using NPS, and to others that they start with a totally different set of metrics (see our VoC/NPS resource page).

Let’s look at what we know for sure about NPS…

The reality is that the metric itself is much less important than how it is used. I’d rather use a sub-optimal metric in a way that drives positive improvements across an organization, than have a perfect metric that doesn’t result in as much impact.

Here are some quick answers to key questions:

  • Is NPS the best indicator of customer loyalty and business performance? In many cases, no.
  • Can other metrics be used to drive positive change? Yes.
  • Does NPS provide an easy to understand metric that can be widely adopted? Yes.
  • Can NPS be used to make an organization more customer centric? In many cases, yes.
  • Will a company improve if it increases promoters and decreases detractors? In many cases, yes.
  • Can NPS be used inappropriately? Yes.
  • Can any metric be used inappropriately? Yes.
  • Would I ever recommend NPS for every touch point? No.
  • Should companies consider their specific business when selecting metrics? Absolutely.
  • What’s more important, the metric or the improvement process? The improvement process.

The bottom line: NPS is neither a savior nor a demon.

P.S. In case you didn’t know, NPS® and Net Promoter® are registered trademarks of Fred Reichheld, Satmetrix, and Bain & Company.

 

Exciting News From The XM Institute

The time has finally come for me to tell people to stop purchasing Temkin Group research reports. Are we eliminating them? No. Are they irrelevant? No. We’ve just decided to give them away for free on the Qualtrics XM Institute site.

That’s right, you can now get access to almost our entire research library for free. One of the reasons we joined Qualtrics was to be able to help more people and organizations. This move shows you the commitment that Qualtrics is making to help the world understand and deliver on the promise of Experience Management (XM).

One of the things you’ll notice on the XM Institute page is a filter to select reports based on Six XM Competencies. Yes, we’ve created a new model. It’s based on the following six competencies:

  • Lead. Architect, align, and sustain successful XM efforts. Driving XM transformation requires a strong program and active support from senior leadership.
  • Realize. Track and ensure that XM efforts achieve business objectives. For XM efforts to have lasting, positive impact, they must align with the overall priorities of the organization.
  • Activate. Create the appropriate skills, support, and motivation. People generally gravitate towards the status quo. To help overcome that inertia, the organization must ensure that employees have all the appropriate XM-related training and support needed.
  • Enlighten. Provide actionable insights across an organization. At the center of XM is the constant flow of data being transformed into useful information and shared with those most capable of taking the appropriate action.
  • Respond. Prioritize and drive improvements based on insights. An organization must act on what it learns by making constant improvements as insights are uncovered.
  • Disrupt. Identify and create experiences that differentiate the organization. Truly successful XM efforts go beyond simply reacting to problems to proactively developing innovative experiences that give the organization a competitive advantage.

That’s just a quick summary. We will be publishing much, much more on this model in the future. It will be the primary lens for all of our content, which is why and we’ve created categories on this blog for the Six XM Competencies.

Enjoy all of the free content on the Qualtrics XM Institute site!

Six Categories Of X&O Data Insights

Last week I attended SAP’s SAPPHIRE and CX Live events in Orlando. It was great to see 35,000 or so of my new friends. As you might expect, Experience Management (“XM”) was a dominant theme. Just about every SAP or Qualtrics keynote speech discussed XM, and it was a topic at many of the concurrent sessions. I really enjoyed seeing the XM message come to life in so many different ways.

One of the cornerstones of XM is the combination of operational data (“O-data”) and experience data (“X-data”). While each type of data can provide valuable insights on its own, the combination can unlock new levels of intelligence across an enterprise. These more inclusive datasets will increase in value as organizations expand their use of predictive analytics, as the combined data is inherently more insightful.

To help you think about where you can find valuable opportunities to combine X- and O-data within your organization, we identified the following six categories of use cases:

  • X Why: Find something happening in O-data and look for an explanation in X-data
  • O Drivers: Find something happening in X-data and look for operational situations that are causing the situation
  • X&O Predict: Build projections based on an analysis of X- & O-data
  • X&O Personalize: Adjust how you treat people based on a combination of X- & O-data
  • X&O Alert: Send alerts and other proactive information based on a combination of X- & O-data
  • X Value: Measure the value of improving experiences by examining the impact that those changes have on business results

1905_CategoriesOfXODataInsights_v2

The graphic above provides some customer experience (“CX”) and employee experience (“EX”) examples, but it’s not meant to be an exhaustive list of use cases. Hopefully the table provides you with a good sense of the insights that can be unlocked with the combination of X- and O-data.

Now that you understand some of the ways for gaining insights from X- and O-data, think about how the combination can impact your organization. If you have some ideas or examples of how it’s worked for you, leave them in the comments section of this post.  I’ll try and highlight some of the most interesting items.

The bottom line: Combine your Xs & Os to unlock more insights.

 

Complexity Is An Experience Killer

I just spent two days in Miami with a great group of executives who are part of the SAP CX Client Advisory Board. One of their presentations described the company’s technology transformation, and included a stream of activity around “decomplexing.” I loved seeing that!

Complexity ends up oozing its way into all types of experiences. Complex products, prices, or processes lead to ill-prepared employees and confused customers. A complex set of benefits leads to ill-prepared HR representatives and confused employees. A complex brand positioning leads to erratic messages and a confused marketplace.

The problem even goes beyond confusion, as complexity causes people to make mistakes — or even to think they made mistakes when they hadn’t. It generates large numbers of unproductive interactions, as people try and sort through the complexity to figure out what they want to, or need to do.

People often try and mask complexity. And while that may be effective in some situations, it ends up failing almost all the time. Why? Because complexity oozes its way into everything. It’s extremely hard to contain. A complex pricing structure can be masked with a configurator, but customers end up being confused about why they have to buy something, the price associated with the purchase, or the information on their first bill.

Organizations have a natural tendency to create complexity. They add rules and processes on top of of other rules and processes. That’s why decomplexing is a great thing to work on. It requires an explicit focus and an ongoing discipline. Making things simple is often much harder than continuing to make them complex.

Decomplexing is worth the effort.

The bottom line: Simplification is a wonderful enabler of great experiences.