Customer experience KPIs: CX Mini Masterclass – E53

Welcome to Decoding the Customer, a podcast about customer experience and how to realize customer-centric change in today’s dynamic business world. I’m Julia Ahlfeldt, certified customer experience professional, business advisor, and host of this program. Thanks so much for tuning in. If you’re new to the show, welcome.

If you’re a returning listener, thanks, and it’s great to have you back. This episode is part of my CX Mini Masterclass series here on Decoding the Customer. These weekly episodes are published each Thursday and designed to be punchy, bite-size overviews of key customer experience concepts and ideas for how you can help your organization thrive through customer centricity. Whether you’re new to the field of customer experience, are preparing for the CCXP exam, or are a seasoned professional looking to brush up on a few basics, this series will help you improve your knowledge, skills, and performance to stand out as a CX professional.

This is episode 53. Today, I’m diving into an important topic related to organizational alignment and accountability, KPIs, or Key Performance Indicators. When business leaders think about how to rally teams around the customer and incentivize the right actions or behaviors, they often look to KPIs as a way to do this.

In their own right, KPIs are important. If performance management guides teams towards common customer-centric goals, it absolutely can encourage the right stuff. But I’d also caution that KPIs are not a magic wand, nor are they the only component of an organizational alignment strategy. That said, they are definitely important and a critical way for any organization to foster alignment around customer experience.

So, I’ve dedicated this episode to giving you some answers. We’re going to explore why it can be useful to align KPIs to customer experience objectives, look at which types of KPIs are the most effective and why, and we’ll explore some of the common pitfalls so that you can avoid these. If you’ve been looking for a quick and snappy overview of the role of KPIs in customer experience management, then stay tuned. And as always, if you’re out and about while listening to this, and here’s something that you’d like to remember later, don’t worry about writing it down.

You can find an overview of the key concepts that we’ve covered today in the show notes for this episode, which are on my website, juliaahlfeldt.com or decodingthecustomer.com. Let’s start with a little bit about why KPIs are important for customer experience management, and fostering alignment to customer experience strategy. As mentioned in the show intro, it’s a generally accepted management theory that people will mold their behaviors to align with the criteria that they’re evaluated on. This is why sales teams so often have revenue or customer acquisition targets built into their performance management, and also why they chase these so aggressively.

And businesses have these kinds of KPIs for sales teams, because they want them to contribute to revenue and profitability objectives. It’s just that simple. From the early 1990s, the concept of the balanced scorecard gained popularity. And with it, the understanding that teams and individuals should have measurable performance goals that roll up to broader business objectives.

This is why operations teams, for example, will oftentimes have KPIs related to efficiency, accuracy, and productivity. These KPIs are probably connected to the organization’s cost and profit margin objectives. So as you see, it all rolls up into a bigger goal. It should come as no surprise then, that as customer experience became a business focus, leaders also started considering how to bring customer centric KPIs to encourage teams to work towards the common customer experience goals.

If everyone is chasing revenue and cost, and no one is being measured on customer experience, then one can easily see how this could create problems for an organization that wanted to foster customer centricity. This thinking gave rise to the inclusion of customer experience KPIs in team members’ scorecards, something that’s gradually become a globally accepted best practice. In order for these KPIs to do their job, they must be designed correctly. For starters, some measures are more effective than others.

And those listeners who tuned in to the mini masterclasses from March of this year, 2019, will know that there’s a lot of debate right now around customer experience metrics and measures. When thinking about appropriate customer experience KPIs for team members or individuals, it’s important to select KPIs that teams or individuals can directly influence. That’s typically a lot easier to do for customer facing teams than for those who are working behind the scenes. Yet those working behind the scenes play a critical role equally as important when it comes to delivering customer experience.

And so they need to be equally accountable for customer experience. To do this, businesses should first decide on their overarching customer experience objectives and how these will be measured, and then figure out how that cascades down and across the organization in terms of roles, responsibilities, and KPIs. Each individual’s contributions will be unique, and the KPIs should reflect this, at least at a team level. So for example, let’s say that a cell phone company defines seamless access to their service as a key customer objective.

For the contact center team, this might translate into a KPI around accurate and quick issue resolution to minimize any friction between the customer and the service. For the network team, it might mean minimizing network outages and maintaining a certain level of network speed. For the organization’s risk and legal team, it might mean maintaining policies that balance risk mitigation with customer ease on some sort of customer effort score rating system or something like that. Ideally, each team or individual should have a couple of KPIs that connect their day-to-day responsibilities back to the bigger customer experience picture.

It’s not uncommon for these to become a little more obscure or difficult to define as a team member’s role becomes more removed from the customer interface. Don’t let that discourage your efforts. It may present an opportunity to engage with these teams, teach them about the customer journey or customer experience, and maybe even co-create their KPIs. If you’re planning to do this, I’d encourage you to go back and listen to those episodes from March, episodes 31, 32, and 33, which covered metrics and measures in a lot of detail.

In episode 32 in particular, I looked at leading and lagging indicators, which might be useful to help teams understand the inputs of customer experience, which are things that could eventually become KPIs. Now that we’ve covered the basics of customer experience KPIs, it’s time to look at some of the potential challenges and pitfalls for teams that are wanting to implement these. The first and most common pitfall that I see is assigning KPIs that people can’t influence. For example, net promoter scores often used the KPI for customer facing teams to help manage their performance.

But when feedback from NPS surveys is reviewed, sometimes it shows that customers provide their ratings based on impressions from other experiences with other teams or the product or something that happened a year ago. When this happens, teams can become despondent about their CX KPIs and feel like they can’t affect change. Ultimately, this can lead to resentment, and you don’t want teams resenting the customer. That attitude couldn’t be further from the desired result.

Another common mistake is that only some teams are given customer experience related KPIs, usually the customer facing or operational teams. If you want to foster organizational alignment across and through the organization, you need to cascade customer experience KPIs across as much of the business as possible. In saying that, I’ll fully acknowledge that it will be difficult to find suitable KPIs for some teams, difficult, but not impossible. Finally, the last pitfall that I wanted to highlight is relying on KPIs as some sort of silver bullet for alignment and accountability.

If you want to get the right attitudes and behaviors going on in an organization, it’s going to require a combination of performance management and employee engagement. KPIs are just one piece of the puzzle. Don’t let your executive team fall into the trap of thinking that KPIs are a fix-all, because they’re not. Thanks so much for listening today.

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If you’d like to get in touch in the meantime, you can send me an email, tweet or LinkedIn message. My handle is at Julia Ahlfeldt and my full contact details are also listed on my website, juliaahlfeldt.com or decodingthecustomer.com