Motivating Employees to Drive CX: Linkage to VoC Measures
Should you link employee goals, performance reviews and variable compensation to Customer Loyalty/CX measures? A simple question that lends itself to a complex “yes, but . . . “ answer.
· We know that loyal customers are good for business and that the customer relationship is a good predictor of future customer behavior that creates (or destroys) value for the firm.
· We know that employees are key to delivering great customer experiences, connecting with customers and building the bonds of loyalty.
· And we know that clearly articulated goals and incentives help focus and drive employee behaviors.
Sounds like a slam dunk. In reality, however, this is a minefield that requires careful navigation.
Motivate and Channel
Yes, the ideal employee is self-motivated. But if you think that all you need to do to get employees to deliver great experiences is to hire those who are self-motivated, good luck. Look at the gene pool; does anyone see an abundance of self-motivated people (at all levels of skill and salary) readily available?
Even when you have skilled, self-motivated staff, they need incentives, recognition and direction. Just asking staff or associates to do everything they can to improve the customer experience is like telling people to be nice: it’s a bit too soft and fuzzy to have much meaning.
If you want to motivate or encourage employees to do something, they need to know what you want them to do. What are the goals? What specific behaviors are required? How will performance be measured? At a bare minimum, this is necessary to help set priorities, allocate resources and channel energies.
Goal Setting and Measurement
Of course, the rule is that we should use SMART goals – Specific, Measureable, Achievable, Relevant and Time-bound (or some variation thereof on the acronym). At an executive level, this is challenging with regards to CX. Infusing this throughout the organization for CX is even more daunting.
· What are the measurements?
· Are the measurements accurate?
· Are they meaningful?
· How will goals be set?
· Are there sufficient resources for improvement?
· Do people feel empowered?
· What about staff that don’t directly interact with customers?
The challenges multiply sharply as you move from “hard” measures – say, for example, sales, profits or the time to complete some process – to “softer” measures, such as loyalty or delight with a recent experience. The Voice of the Customer, however, is captured in such softer measures that bring with it a host of issues.
How large is the sample, for example. Quite frankly, I’ve seen any number of instances where samples are so small and the associated sampling error is so large that savvy employees could have easily challenged the validity of the metrics being used to assess their performance and make decisions on variable compensation. At a macro level, the company must be concerned about the representativeness of its VoC data, the mode of data collection and possible mode effects, weighting and a host of other issues inherent in data collection. All of these issues are magnified at a micro level when applied to a subset of employees or even an individual employee. These issues are even more poignant when relying on social media, comment cards or unsolicited feedback.
Some Dos and Don’ts
There is no ideal way to weave VoC metrics into performance assessment and comp plans. Every approach will have its strengths and weaknesses. Here are some tips for managing the quagmire.
· Keep your business objectives in mind: motivating employees to deliver great customer experiences that strengthen customer relationships and a system for recognizing and rewarding employee performance
· Pick some common corporate goals: while everyone complains they can’t affect such overarching metrics (actually, they only complain when the goals are missed), it is important to have some shared company-wide goals to nurture a culture of shared success and common purpose
· Link and align both macro (company-wide) and micro(group or individual) metrics to those business objectives: while seemingly obvious, do not promote behaviors that run contrary to the business objectives and never give some staff goals that are incompatible with the goals of others, especially their managers
· Give the What and the Why: Enumerate the goals and how they will be measured; also explain both how the goals were developed and why the goals are important (that is, how they feed into the larger business objectives)
· Train and empower (the How): telling people what to do must be supported by training, investment and providing the processes and tools for them to be successful
· Involve employees: you’d be amazed at the ideas people have for how to achieve objectives and improve customer experiences
· Communicate (over and over again): over-index on frequent, open, honest communications and complete transparency; avoid black boxes at all costs
· Make sure goals are realistic: nothing is worse or more counterproductive than goals that are dismissed out of hand as impractical
· Model behavior: senior leadership is part of the process, not above the process; they need to walk the talk, not just mouth it
· Don’t breed risk aversion or stifle innovation: you might need a carve out or other ways to avoid deterring new ideas and risk talking
· Watch out for unintended consequences: they always pop up, typically when least expected
· Unfortunately, also be wary of efforts to game the system (AKA cheating): As W.C. Fields put it, “anything worth having is worth cheating for,” so there always will be those who try put their thumb on the scale in some manner
· Take a slow test drive: test you metrics, set a baseline, set and track against soft goals before going live
This is a daunting list, and there no doubt are other dos and don’ts worth adding. It sure won’t be easy. But nothing worth the effort ever is.
Howard L. Lax
Not to be reprinted without the express consent of The Lax Group
Battling for the Hearts and Minds of Customers
How do your customers feel about your brand . . . and why should you care?
Most companies think about customer experience and loyalty in rational terms: How do customers rate our performance on these touchpoints? How do customers assess our work on various functional criteria? How do they evaluate the quality of the experience/product/service we provide?
All of these are important questions, as they go to the core of the functional dimension of any business: delivering products and services that meet the assured quality standards at the promised price to meet the use-needs of customers. This check-list approach is eminently rational, but is simply insufficient to delivering positive customer experiences and building customer loyalty. Sure, use-needs must be met, but the market is littered with competitors providing comparably excellent products. The reality, moreover, is that most ex-customers – churners, defectors, call them what you will – actually give their ex-companies solid performance scores. But they left anyway.
One Part Brain, Multiple Parts Heart
Strong scores on performance are a must. But what’s more important is whether the company is able to translate its performance into preference for their brand relative to competitors. This is the heart part of the equation (a very rational sounding term!) in delivering great customer experiences that translate into enduring relationships. Performance without preference is like being the nerd in the class: you get great grades and recognized for being super smart, but you eat lunch alone, don’t get chosen in the pick-up games or aren’t invited to parties.
Preference grows from an emotional connection with customers. Customers prefer your brand not just because of your performance. Rather, they prefer your brand because they feel a sense of a stronger bond with your brand than they feel for the competitors. This is very much an emotional issue, a matter of the heart.
Most companies, however, do a better job at delivering against the rational expectations of customers than capturing their hearts. As a consequence, great performance doesn’t necessarily translate into preference and comparably solid loyalty levels.
A Rational Approach: Experiment in Retail Banking
Being the rational researchers that we are, we did the natural thing: test for empirical validation that the heart has a direct effect on customer loyalty. Kantar TNS partnered with Heartbeat Ai Technologies to gauge the impact of emotions on customer loyalty to their primary retail banks in the US. We surveyed 750 customers across five of the largest commercial banks in the US: JP Morgan Chase, Bank of America, Wells Fargo, US Bank and PNC.
Our approach entailed measuring the customer’s level of loyalty to their bank using the TNS TRI*M metric based on performance and preference, as well as their NPS rating. We also asked customers to tell us in a few words how they feel about their bank. This open-ended response was run through the Heartbeat Ai algorithm to determine the feelings of the respondent. Feelings were than classified as love, joy, trust, sadness, anger, fear or “void,” essentially the absence of an emotional expression. Depending on how varied a respondent’s comments are, a single respondent might express multiple emotions, so the number of emotions classified exceeds the number of respondents.
The Love Connection
The results are quite clear: how customers feel about their banks is strongly correlated with their level of loyalty (as captured in the TRI*M score). On the positive side of the emotional scale, those who expressed emotions we characterized as love for their bank registered the strongest customer relationships by far, followed by respondents whose feelings were classified as joy and then trust. All three of the positive emotion groups register above average on their relationship strength, including both the performance and preference scores.
On the negative side of the emotion scale, feelings that express fear are associated with the lowest relationship scores, with anger and sadness performing only slightly better. All three of the negative emotion groups display sharply weaker than average relationship scores and below average readings on both the performance and preference dimensions.
The absence of any emotional expression is correlated with scores that fall between the positive and negative sides of the scale, providing near-perfect symmetry. Interestingly, however, the relationship scores of the emotionally neutral group are below average, especially with regards to preference. Emotionally neutral, in other words, isn’t truly neutral in terms of its impact on the customer relationship: emotional neutrality skews towards weaker than average customer relationships.
On the positive side of the scale, both performance and preference drop sharply from love to joy to trust to neutral. In each instance, however, preference drops more precipitously than performance, confirming that emotions are more closely associated with preference than with performance – at least in terms of positive feelings. On the negative side of the emotional ledger, the performance and preference scores are more compressed and don’t fall dramatically from sadness to anger to fear. In each instance, the TRI*M, performance and preference scores of those whose descriptions of their bank are associated with negative emotions are very, very weak.
The individual bank results closely conform to the overall results for the group. PNC, for example, which registered the strongest relationship scores, also outperformed the field in terms of the positive emotional attachment expressed by customers. Chase ran second in terms of its loyalty scores and recorded the next best results in the degree of positive feelings. At the opposite end of the spectrum, Wells trailed the group in terms of both relationship strength and emotional expression. (Note: Surveys were completed in May 2016, months before the sales goals scandal and illegal account openings at Wells Fargo.)
The NPS Connection
As would be expected, NPS scores also show a correlation with emotions. The emotional connection to NPS, however, appears more muted than the link between emotions and TRI*M scores. Promoters and Passives, for example, display quite similar emotional profiles. Almost half of all Promoters express feelings that are characterized as joy. Among all respondents who projected a sense of joy with their bank, however, one-third are Passives and almost 30% are Detractors. Similarly, almost half of the Detractors express an emotional void towards their bank, but Detractors also are just as likely to project joy (15%) as anger (16%) and trust (8%) as fear (5%). In banking, at least, NPS appears to be less of an emotional expression than others have previously hypothesized.
So Should You Care How Customers Feel about Your Company?
Absolutely. While the dynamics between rational assessments and emotions, between performance and preference, are complex, the evidence is clear that emotions are strongly correlated with the strength of the customer relationship. Positive feelings about a brand translate into stronger levels of loyalty, while negative feelings undermine customer relationships. Although neutral feelings on the face of it are just that – neutral – the absence of feelings is associated with below average relationship scores.
Customer feelings towards a company emanate from the various experiences customers have with that company over time. While many interactions are fleeting and irrelevant, leaving no emotional residue on customers, other interactions are more meaningful and memorable. Experiences are memorable because they stimulate some type of emotional reactions on the part of the customer. Just as each experience can affect the overall customer relationship, the feelings customer have about those experiences can affect their overall emotions towards a company.
The mandate for banks and other firms is clear. Great performance, of course, will bolster loyalty more than weaker performance. Customer relationships that rest exclusively on excellent performance, however, are inherently less stable than relationships supported by positive emotional attachment. That sense of emotional attachment stems in large part from those experiences that leave an emotional imprint on the customer. And in the final analysis, loyalty requires some sense of positive emotional attachment.
Howard L. Lax
Not to be reprinted without the express consent of The Lax Group