Editor’s note: David Trice is co-founder and CEO of customer relationship management firm Engage.CX, Atlanta.
Too much of a good thing can be a bad thing. Such is the explosion of data for specialty retailers at the start of 2016. From click-through rates and bounce rates, to conversions and marketing messages, to ROI and ROE, any retailer could drown in all of the information flooding in from sales channels. There are so many metrics to monitor that brand managers could get lost trying to make sense of all the numbers.
While data isn’t a bad thing, knowing which metrics to which to pay attention can be a make-or-break decision for specialty retailers. Paying attention to the wrong data could result in drawing the wrong conclusions or making the wrong strategic moves. Homing in on the right metrics can result in impressive growth in revenue and customer satisfaction.
The key to blocking out the noise and focusing on the metrics that matter most is to focus on the customer. Sounds pretty basic, right? But, it’s surprising how few companies prioritize data with this focus in mind.
Creating the customer life cycle
Focusing on the customer starts with understanding the customer life cycle, which represents the stages of engagement a customer experiences during his or her relationship with a retailer. Every time a customer touches a business, whether it’s by a mobile device, through a Web site visit, in a store or over the phone, that experience is a touchpoint in the customer life cycle. Tracking, measuring and understanding each of these touchpoints is the best way to begin the process of getting to know customers on a personal level by understanding their likes, dislikes, and preferences. By putting together customer life cycles on all customers, a retailer can not only put together an enriched profile of each customer but also create metrics to understand how well it’s doing in meeting the needs of all customers.
Moments that matter
For most specialty retailers, there are roughly 20 key moments that should be standardized, including:
- a customer’s time browsing for a product;
- social sharing;
- a customer’s search efforts;
- product research done by the customer;
- adding something to a shopping cart;
- live help from a company associate; and
- a customer writing a review of the product or service.
These moments can happen anywhere and are channel agnostic. Organizing customer life cycles around a list like this provides a consistent framework for a retailer to use as it considers the customer’s path to purchase in a way that is not hindered by channel silos.
Measuring customer affinity
While constructing the customer life cycle, retailers must also use the opportunity to figure out how much the customer liked each and every experience with the company. Measuring customer affinity can include elements like how the customer viewed the relevance of each interaction; if the interaction made any sort of emotional impact on him or her; and if the customer was satisfied with the outcome of each event. By capturing and measuring customer affinity throughout the customer life cycle, retailers can see how their relationships with customers’ trend over time.
The customer value index
The creation of the customer life cycle allows for the establishment of an all-encompassing metric called the customer value index (CVi). The CVi measures the impact of customer experience on financial performance. It also unites a company around the goal of maximizing customer experience. The CVi is made up of the following elements:
- Frequency: How often does a customer interact with the retailer? This value is calculated on the number of customer events versus how often and how regularly a customer engages with a retailer.
- Sentiment: Does the customer like the retailer? If so, how much? This metric is determined by capturing the affinity of the customer on each event.
- Purchase score: How valuable is the customer to the retailer? The purchase score illuminates the strength of the financial relationship with each customer.
The wonderful thing about the CVi is that it focuses retailers on improving customer experience, rather than the sales cycle, letting them see if the level of customer engagement influences purchases and if customer sentiment is a factor driving the frequency of engagements.
By putting the customer at the center of all business practices through the creation of the customer life cycle and CVi, retailers can create a set of metrics that truly illuminate how well they are doing with meeting the needs of customers. Instead of being drowned by data, retailers can be empowered by data and focus attention where it’s most required – on offering superior customer experiences.