Senior leaders grapple with a fundamental question: Why is overall customer loyalty and engagement so slow to improve, despite reports of healthy customer feedback?
At any given time, senior leaders across industries grapple with a fundamental conundrum: Why, they wonder, is overall customer loyalty and engagement so slow to improve when most areas of the business report healthy customer feedback after each customer interaction?
When it comes to pleasing their customers, most company leaders have bold aspirations. A recent survey by Temkin found that more than half of the companies in a given sector maintain a goal of delivering the best customer experience in their industry within the next 3 years. Leading companies in almost all consumer industries have invested significantly over the past decade to improve customer experience, and increasingly we see a movement toward companies trying to differentiate themselves based on service.
Yet, the reality of most companies’ progress is sobering. Few companies have made significant and sustained changes in their overall customer loyalty and value. Less than 20 percent of the top 10 companies in 10 different consumer industries have consistently raised their customer experience performance for three years in a row. Even fewer have made gains at rates that allow them to pull away from their competitors following the economic recovery.
On the whole, customers are not feeling happy about their experiences. Many existing and recently-departed customers report being tired of what they consider to be an unimpressive service experience. When pressed on the root cause of their exodus, former customers said they felt no personal connection or loyalty to the company.
How could this be?
Introducing the concept of Customer Journeys
The problem stems from the fact that the key interactions companies have with their customers – often called “moments of truth” – don’t tell the whole story. When customers give a company high marks on these moments of truth, their accolades typically represent a sincere reflection of a customer’s specific experience in those given moments. These customers genuinely appreciate the company’s efforts and the attention they receive during most of their in-person and remote-channel interactions.
But these interactions, as important as they are, are only sub-components of a larger and more important picture. Customers do business with a company, and they interact with that business over time to meet specific needs. Those needs drive specific interactions that a customer navigates with that company. That important series of interactions anchored around a specific need is called a Customer Journey.*
The case for a paradigm shift: From Moments to Journeys
A customer can have repeatedly good interactions in the context of a frustrating series of attempts to meet a need. Thankful for each interaction that seemed to meet her needs, she will report her satisfaction gratefully. However, this does not reflect the fact that over time, she was frustrated with the experience. Similarly, feedback after each interaction would not fully reflect the impact that the Journey has on her relationship with that company and its ability to meet her needs over the course of the customer relationship.
For example, in the cable and satellite industry, satisfaction rates tend to drop dramatically after the first few months of a customer being with the company. Yet customer satisfaction with specific interactions over the same period can remain high. For one cable company, overall satisfaction dropped 40 percent, while service interaction feedback remained strong.
This dynamic exists in other sectors, too. A bank account representative in the branch, an insurance claims agent in the field, and a wireless phone service representative can all report high and rising marks with specific “moments of truth” interactions, without a commensurate impact on the overall experience or the loyalty of that customer.
In the end, this is because, while excelling in individual interactions is important, customers care about a need that they are trying to fulfill. Again, we call those needs and the related interactions Customer Journeys. Company strategies that focus on individual interactions or moments of truth are most likely leaving significant opportunities on the table. The ‘moments of truth’ approach is well-intentioned, yet in the long run, it misses the whole point.
Customers are increasingly using multiple channels to interact with companies in an effort to meet their needs. To resolve a billing issue, for example, customers will often start with their bill, turn to the internet, call in to a call center, revisit the web site to check for resolution, and finally confirm a resolution on their next statement. In fact, over 70percent of very satisfied customers build a favorable impression when their needs are met over three or more touchpoints. A Customer Journeys approach addresses this.
Additionally, Customer Journeys are consistently better predictors of value. They do a better job than the touchpoint approach of predicting a customer’s willingness to recommend the company to others or to renew their business. They also give more reliable insight about a customer’s likelihood to cancel/churn.
Most critically for companies seeking ways to differentiate based on customer experience, Customer Journeys create more room to excel over competitors than touchpoints. In our conversations with leading customer satisfaction companies, we found that a focus on journeys has significant payoffs. A mobile operator with loads of irate customers, for instance (half ranked their satisfaction as 0 to 2 on a scale of 10), moved their net promoter score from negative 70 to 0. How? They identified the onboarding process for new customers – the start of the journey – as its most critical customer interaction.
In another instance, a car rental company decided to make the promise of speedy service a priority every step along the way – at the online booking, the call center, the airport shuttle bus, the car selection, and the car checkout. Over 12 months, sites that launched this program captured 5 percent growth in service revenue, a 10 percent labor cost reduction, and a 70 percent reduction in car substitutions.
The paradigm shift away from “moments of truth” and toward Customer Journeys has profound implications for what customer centricity really means, and for how companies will organize to deliver and excel.
(McKinsey has also written about the Consumer Decision Journey, which encompasses all the various, and often complicated, ways consumers go about making their purchase decisions. The concept we're introducing here–a Customer Journey–is different in that it relates to the experience existing customers have while interacting with a company, not only in their purchase decision but in all the touchpoints that come afterward [such as installation issues with a cable company or billing questions for a utility company].)