Defining goals is critical in any business. When defining loyalty metrics such as 75% top 2 box Overall Satisfaction, NPS score of 50, or any other internal loyalty measures to guide and track your organization, it is vital those goals are realistic and achievable.
Understanding how your organization performs on the aspects of experience that matter most to your customers is the first step. After you have identified internal strengths and weaknesses, it is important to put your performance into the broader market context. Obtaining a comparative performance assessment to your key competitors benefits your organization by identifying your strengths and weaknesses, as well as gaps between customer expectations and gaps between customers wants and needs (i.e., whitespace) left unfulfilled in the market.
When deciding where to focus efforts for improvement in terms of customer experience, brand positioning, brand reputation or innovation, it is important to know which current and potential customers are most valuable to your organization. By narrowing the audience to those most beneficial in terms of overall value, you will optimize return on your investment.
Identifying your most valuable current customers and using knowledge from your existing customer segments is also beneficial in setting achievable goals. Satisfying all your customers at once can be difficult, therefore, recognizing your highest value customer or target segment(s), and focusing on the gaps present in their experience to satisfy expectations, wants and needs should be your priority. A driver and threshold analysis can identify key areas to improve, as Nicole Garberg discusses in a recent Big Village post Setting CX Performance Goals that Positively Impact Business Performance. Driver analysis also provides the context to answer the question to what extent interventions can realistically improve customer experience among valued customer segments.
Businesses are always looking to improve their products, service, and customer experience. These goals must be accompanied by an overall assessment of current customer experience ratings/performance as well as an understanding of how the brand is perceived. After acquiring a baseline, the natural next step is to determine appropriate goals for the organization to drive the improvement effort that is feasible within current performance guardrails and that promotes meaningful future positioning in the market. In this blog post we discuss best practices and a high-level approach to collaborative goal setting with our clients.
As with any goal setting initiative, a best practice is to leverage SMART – specific, measurable, achievable, reachable and defined timelines for your organization’s goals. Often goals are set with seemingly no real rhyme or reason. A metric may be set with competitors in mind or guidance from a syndicated industry report, but what is rarely communicated or discussed is how will the business realistically achieve that goal, and whether the goal is even attainable.
What drives your KPI? What levers can be pushed and by how much in a realistic time frame? Are these levers related to the overall brand image or the customer experience? If all the potential levers are improved what is the outcome? Big Village helps answer these questions and maps your brand’s progress to achieve realistic goals.
The first step to successful goal setting is understanding your organization’s current and historical performance. Have you been improving, declining or remaining consistent with performance? Additionally, the business needs to determine what a meaningful difference equates to in improved performance. Statistical significance is less relevant in this situation, so Big Village recommends measuring meaningful movement in terms of the expected ROI associated with positive change across one or multiple known drivers of customer experience. For example, if your organization wishes to improve NPS by 10 points in one year, clearly identifying the aspects of experience that require intervention and appreciating the anticipated improvement necessary to achieve a 10-point increase overall.
The next step is to establish a benchmark or status quo of your business. Leveraging a tracking study is typically the best way to understand where your current business stands on both brand perceptions and the customer experience. These studies are often a helpful measuring stick as you progress toward your long-term goals. Syndicated industry reports can be helpful as a starting point but are limited in terms of their methodology, and in understanding the levers that drive the overall metrics.
A good tracking study includes an ongoing assessment of your business’ progress toward its goal, and it is a good practice to include KPIs of the competitive landscape. Overall metrics (NPS, OSAT or similar), customer experience, performance on various purchase journey metrics and possibly some brand equities, may be helpful in guiding improvement areas relative to the competition.
Understanding brand equities and customers’ perceptions of these attributes for your organization, as well as competitors, can be extremely helpful. Leveraging a chi-square analysis, Big Village can identify what equities your brand owns, lacks, or is neutral on. Additionally, this analysis will allow your organization to identify and potentially alter your desired brand image. Knowing what customers think of your brand and your competitors is helpful for obvious reasons, but also allows you to prioritize improvement areas. If for example, a key competitor owns a certain equity within the industry, your organization realizes it may be an uphill battle to move the needle on that feature. You may choose to still improve that perception, but changing customers’ perceptions will be more difficult and take time to shift brand ratings and thus, your loyalty metric.
The brand equity analysis helps identify whitespace in the market. What equity features can your brand own in the market? When paired with driver analyses (discussed below) you can begin choosing areas to improve or make the decision to not spend time and money on. Understanding the landscape and which equities are viable to focus improvements, as well as understanding which equities have the greatest impact on the loyalty metric, provide a great starting point for strategic planning and setting achievable goals.
While managing brand perceptions are key, it is only one dimension to the overall interaction customers have with your brand. Customer experience (CX) is equally important. Your brand may stand for something your customers gravitate towards and know what to expect from your brand, but each interaction a customer has with your brand is critically important. One poor experience even for your most loyal and engaged customer can be detrimental to your brand’s loyalty. Knowing and understanding your CX strengths and weaknesses is another critical piece to achieving your brand’s goals.
Segmenting to Direct Goal Setting
It can be helpful to evaluate smaller groups of customers based on various criteria. Target segments identified through a robust segmentation that includes demographics, physiographic, attitudes and/or shopping behaviors. Your segments can also be analyzed by customer lifetime value and how key in terms of spending a given group of customers are to your business. It’s important to understand each group, how they perceive your brand, interact with your brand and what they desire from your brand as well as the various interactions they have with your brand.
Big Village can help identify meaningful segments to your organization, but the important step comes after you have identified groups. Segments will expect and react differently to your brand messaging and overall interactions with the brand. Identifying targets or high value segments through a CLV analysis is critical to goal setting initiatives. You will want to cater to your most valuable customers regardless of how you determine value. Breaking down the needs or your core segment(s) is important in prioritizing goals.
Identifying Levers That Increase Loyalty
The most critical step in goal setting is identifying the levers that impact overall customer experience. A driver analysis is critical to understanding the most important touchpoints or aspects of experience that drive overall performance. It is also important to interpret the performance on these drivers in context of brand promise and performance.
A full assessment, layering importance, performance and the overall image of the brand helps prioritize the areas of focus. Additionally, a simulator that models how much an outcome is impacted when increasing one or more input variables is also a useful goal-setting tool. Understanding areas that are low-hanging fruit and impact loyalty, as well as understanding costs and time commitments to improve are also critical to setting realistic goals and timeframes to achieve those goals.
Threshold analysis is also useful in understanding how to move the needle. This analysis identifies where on a given scale scores need to increase to achieve a meaningful lift in loyalty. Moving 5% of customers from 9 to a 10 on a 10-pt scale may be very difficult, especially if top 2 box performance is already strong. It may be prudent to move 10% of customers from 8 to 9 on a slightly less important metric to achieve the same lift in loyalty, especially if the incidence of customer interaction with that item is high. Identifying these opportunities and areas of least resistance is critical. It is also important to ensure goals are realistic. If all the various inputs are increased as desired, does the maximum outcome align with your goal? If not, the goal may not be attainable, and your organization needs to adjust expectations.
These steps will enable your organization to set realistic goals and be more informed on customers’ and prospects’ wants and needs. By goal setting on key focus areas that target key customers, you can build internal initiatives with more specificity and likely see results faster.