According to Ad Age, the core rational benefit of the Bud Light brand is “drinkability.” And it has been for some time:

“Drinkability had been in fine print on Budweiser’s label since the 1960s and often raised in creative briefings to communicate Bud Light’s appeal: You could drink a lot of it, and it was less watery than Coors Light and less bitter than Miller Lite. Cambridge’s process strongly endorsed it as the ideal rational benefit.”

In spite of the inflammatory headline, there’s really nothing here that supports the “sound bite of blame” indirectly slamming Cambridge Group. Yes, a great deal of research was done, the results of which were handed off to Anheuser-Busch and their agency. But by everyone’s admission, Cambridge didn’t have a finger in the creative process, and there doesn’t appear to have been a directive to take the rational benefit of “drinkability” and make it the core of the ad campaign. Nor did the research appear to say “throw out all emotion, and just focus on the rational benefit.”

The fact is that CMOs are under increasing pressure to bring a little science to the creative process – as they should be. Which aspects of the brand have the greatest traction? How can touchpoints be optimized to drive desired results? Where is our marketing investment driving the greatest return?

The answers to these questions, and many related issues, is in marketing and customer research. What drives customer experience, brand perception and desired customer behaviors can be assessed by talking to the source of your revenue: your customers. But the kinds of answers you get will be based on the questions you ask. And even more importantly, you – and your agency – need to know what to do with those answers.

Is “drinkability” dead? No. In the immortal words of Monty Python, “It’s not dead, it’s only resting.” But if your agency takes the rational benefit for the brand and forgets the core underlying principles of buyer behavior (that we all make emotional buying decisions, but these need to be supported by rational benefits) then there’s no huge surprise when the sales dial doesn’t spin.

It’s a little like love. No matter how much your brain tells you someone’s “right” for you, if your heart isn’t engaged there’s simply no spark. And if your ad agency appears to forget that emotion is how you sell and logic is how you justify, then no matter how funny or highly produced your ads, they probably won’t be moving the dials that equate to increased sales.

So just don’t tell me about “drinkability.” Tell me how it makes me feel, and why I should care. And to better understand the answer to that question, it probably makes sense to do a little more research (or read beyond the summary pages of research results).

Since that time, there has been an un-ending push to find more (and better) ways to connect with, and track, these customer interactions. In fact, the explosive growth of CRM has created a multi-billion dollar IT and consulting services business focused on just this issue. But these technology-based solutions often cause organizations to lose sight of the core issues which drive the customer relationship.

While adept at helping companies market to and track interactions with their customers, these solutions do nothing to help companies to understand (and improve) customer impressions of these interactions. This is where moments of truth, touchpoints and customer experience intersect. If a “moment of truth” is the opportunity for an organization to make an impression on a customer or other stakeholder, touchpoints are the static, human and interactive interactions that actually create these impressions. Working together, touchpoints create positive or negative impressions at any given moment of truth. The result? Customer experience – as perceived by the customer, which is the only perspective that counts.

When touchpoints (and relationships) go bad

For a telecommunications company, the installation of a business line is a moment of truth. The touchpoints associated with that (service technicians, email or print confirmations, call center or web-based appointment setting, etc.) will deliver a customer experience that in an ideal state is consistent, positive and drives positive impressions of the brand.

Of course, it only takes one negative touchpoint (for example, an apparently tipsy and belligerent service technician being an unforgettable negative touchpoint in one customer’s mind, or the cable installation man caught in the wife’s underwear drawer another) to create the experiences that drive negative lasting attitudes towards a brand.

At the same time, the elimination of the onerous “service contract” for cellular phones by Virgin Mobile, or Progressive Insurance introducing “Immediate Response” claims service – assessing damage and paying claims at the accident scene – are game changers, taking traditionally painful moments of truth and redefining them with touchpoints optimized to focus on customer’s needs – driving new standards of customer experience and expectations in their industries, resetting the “competitive bar” at the same time.

Here’s the thing that many organizations seem to have trouble grasping: every interaction between you and your customers (or those you’d like to be customers) is part of the brand experience. Every single one, every single time.

This means that your brand attributes are communicated clearly – both positively and negatively, whether you like it or not – every time you “touch” your customer. These interactions include obvious touchpoints like advertising, your website, call center and sales team. Then there are those touchpoints that aren’t usually at the forefront of brand experience planning, such as Google SERP’s, billing statements, online customer forums and more. At the end of the day, virtually every point of contact between you and your customers impacts the customer experience. The lesson to be learned? Everything matters.

So when it comes to planning customer experience, keep their point-of-view in mind. Look at the customer relationship through the lens of his or her “journey” as individual interactions string together to create experiences, driving brand perceptions and attitudes. You’ll be amazed by what shows up when you start mapping customer experience. It often isn’t pretty, but it sure can be illuminating.

It’s pretty straightforward, in theory. Know what customers want and need at each stage of their relationship, and give it to them. Be consistent in what you say, how you say it, how it looks, and how what you say and do supports your brand promises. And always keep your customers in mind.

Simple, right? Surprisingly, it often can be. If you take the step of auditing a typical customer journey, you’ll likely be ahead of 90% of the competition. We see it every day – simple steps often lead to big returns. After all, knowing what the issues are is the first step to fixing them.

One bank we worked with was astounded that their customers took umbrage at the prominent eye-level signage on all branch doors: “Remove your hat and glasses before entering.” A practical step to reduce robberies, as the bank thought? Or an unintentional message that says to customers “You are not trusted” or “You are not good enough to do business with us,” as more than a few customers said?

Another bank had a teller that gave dog biscuits to pooch-loving customers when Fido and friends showed up at the drive-through teller. When the teller left the bank (and took the doggie treats with her), brand loyalty scores at the branch turned stale, as well. In fact, they plummeted. It took some time to discover the reason, but now fresh doggie biscuits are a staple at every branch, and the bank is creating powerful connections with dog lovers (and their friends and families!) throughout the area.

This is where the power of stories comes into play. Consumers tell themselves stories. They also tell their friends (also known as “word of mouth marketing”). And the power of brand stories to influence actions and beliefs is as old as the spoken word. And as much as consumers distrust financial services providers, they trust their friends and business associates. This is why delivering a consistent, differentiated and branded customer experience is so important.

It really comes down to better managing and improving the experience, earning loyalty by proving your commitment to your customers, delivering a consistent brand experience one interaction or touchpoint at a time, over time.

Though this is going to sound like a self-evident truth, the implications will still confound many marketers. Here it is: all customers are NOT created equal. “Duh,” you say. For instance, a typical community bank will actually lose money on nearly 70% of its customers, yet they often still market to them all equally. (Now I’m not advocating that a customer should ever be treated less well based on the size of their account, but hey… and there’s those marketing dollars….)

Instead of trying to improve satisfaction for all customers at all touchpoints, I believe that an organization must intimately understand the financial and satisfaction metrics associated with each individual audience segment, as well as individual touchpoints.  If you don’t know which touchpoints drive loyalty, you’ll have a hard time “turning that dial.”

One reason is that less valuable customers can often be served with less expensive touchpoints that still make it easy to do business, increase overall satisfaction levels, and add value to each interaction with a customer.

To achieve a measurable return on your communications investments, your organization must intimately understand the needs and associated economics of each customer group throughout their Customer Relationship Lifecycle. This includes identifying the cost of acquisition, customer lifetime value, service and retention cost, purchase tendencies and other key metrics, for your customers.

With this data in hand, you can identify your most valuable existing and potential customers, and understand the metrics of your other customer segments as well. This will allow you to tailor appropriate offerings and service levels for each segment. If, for instance, a web-based transaction costs your organization $1, a telephone transaction $5 and an average in-person transaction $25, you can make better decisions on how to deploy resources knowledgeably, ensuring that all offerings, communications, and interactions are delivered at the highest appropriate level of quality for each audience.

Just as we believe that delivering a positive customer experience (at every touchpoint, for – almost  – every segment) is critical to broader relationship metrics, we also believe that customer experience delivery and marketing communications investments based on a given segments value is simply good business.

Where does your organization fit? Maybe you have it nailed. A leader, you know who your customers are and what they want – and they love you for giving it to them.

An inspiration, you set the standards in your industry for customer experience management. Your customers experience excellence at just about every touchpoint they encounter, and outstanding talent is clamoring to work for you.  You excel in comparison to your competitors, increasing sales and boosting retention for your best customers and employees.

Maybe you’re a “fast follower”, and your organization is benefiting from being slightly ahead of the curve. While you may be doing well, you’re finding it difficult to compete with the customer service leaders in your industry.

Maybe you’re a laggard –  you wish you could establish yourselves as customer service leaders… but are having troubles getting your hands around what this means (much less how to accomplish this). All the places where it interacts with customers? (“Touchpoints”)

Wherever you are on this continuum, there are some basic questions you can ask to help figure out where you stand.  Without getting too complex, answer these questions honestly on the 5 point scale (see below) and see how you’re doing.

Recognize that if your average score is 4 or better, you’re doing great by any measure. And if you’re not doing so well, know that if you focus on improving your performance on these questions, you’ll be a leader in no time.

The 6-Question Customer Experience Audit

How well is your organization doing at understanding…

1. Which customers are your most valuable, and why?
2. Which interactions (or “touchpoints”) these key customers most value, and why?
3. Your key customers’ needs, in each lifecycle stage with your organization?
4. The most common sequence of “pre-purchase” touchpoints, as prospects (or repeat purchasers) progress from awareness of your offerings to selection?
5. The influence of “post-purchase” touchpoints on satisfaction, loyalty and advocacy?
6. Whether your key customers are dissatisfied, satisfied, or loyal? And who your advocates are?

You can answer the 6-Question Customer Experience Audit using this scale

5 = Extremely Well (We have it nailed.)

4 = Moderately Well

3 = Just OK

2 = Not that well

1 = Not well at all (We have no idea!)

In Proving ROI on Customer Experience Part 2, we presented four “experience investment” lenses to help you plan, measure and improve interactions with your customers, and prove significant ROI before you invest.

Job number one in improving customer experience is to identify the touchpoints you have, and create a map of where you are today.

Touchpoints are the places where companies interact with and “touch” customers, delivering value or driving customers away.

Experiences are defined at these touchpoints, and the opportunity for mapping ROI is based on finding out which touchpoints work, which don’t, and why. Then, improving them. In fact, most companies don’t even have a complete picture of existing touchpoints —even the ones they control. So where do you start?

A typical process for experience improvement can include these steps:

1. Audit individual customer touchpoints across the Customer Relationship Lifecycle stages (from awareness through to advocacy).
2. Map out the key processes for each of the lifecycle stages.
3. Understand how individual touchpoints work—in sequence or alone—to move customers through the lifecycle and closer to your company:
   1. Gaps where touchpoints should exist—and don’t
   2. Redundancies—where touchpoints do exist, and shouldn’t
4. Identify the specific interactions where touchpoints drive value across different segments, with regards to:
   1. Customer loyalty
   2. Value to your business, and to your customers
   3. Revenue generation (or cost savings)
5. Determine the gap between desired and actual experience, and desired and actual results at these points.
6. Construct a specific plan for moving forward – one that sets priorities, maps out the costs and benefits, and provides specific metrics for measuring the results.
7. Codify the optimal experience, and begin the process of operationalizing it.

Building an ROI case: Measuring Customer Experience
There is no doubt that improving customer experience is important. Whatever approach you take, knowing where to focus limited resources, and how to use experience as a competitive differentiator is key to justifying—and prioritizing—investment.

This understanding is at the core of our business and it’s why we’ve developed our suite of Customer Experience Mapping tools. Our perspective is that improving experience starts with an understanding of customer touchpoints and the emotions they drive. We identify, understand, measure, and improve the experiences that drive your customer relationships, with statistically precise approaches for gathering, listening to and acting on the voices of your customers.

This is why you must focus on what can be directly measured. There are many less tangible benefits (ranging from brand affinity and preference to employee satisfaction, to name but a few), but the case for Experience ROI should be made with a clear understanding of which measurable monetary and value levers can be moved—and how.

In Proving ROI on Customer Experience Part 1, we discussed the background of Customer Experience, as well its critical nature of in business today.

Because the process of improving customer experience has the potential to be both involved and resource intensive, most businesses wonder how they can prove ROI before they start. To assist you in this initial assessment, we have developed 4 “Experience ROI Lenses” to help you begin.

Future revenue is affected—either positively or negatively—at every single touchpoint (or interaction) between your organization and your customers.

While by no means exhaustive, these “Lenses” are all examples of – and point places where you can find – real world ROI. Looking at your organization through them will help you speak the “language of investment return” and should give you ample ammunition to begin thinking about – and planning – your own experience improvements.

Experience ROI Lens No. 1: Increase loyalty (and reduce churn).

Increases in loyalty (and reductions in churn) are some of the most basic ROI models you can use. Armed with Net Promoter® (NPS) as a loyalty metric and Customer Lifetime Value to measure what a customer is worth, you can drive – literally – millions in savings for even a small to mid-size company.

Multiple studies have proven the value of loyalty, with benefits ranging from customer who spend more, cost less to service, and buy more over time. Both Loyalty and NPS are proven (and widely accepted) indicators of future revenue growth. Overall, the goals are to both increase retention, and reduce the cost of keeping the customer.

These are but a few of the ways that experience improvements can drive loyalty:

• By establishing a line of sight between your customer experience and increased Net Promoter® (NPS) scores, you can directly boost satisfaction and loyalty.
• You can pinpoint the individual touchpoints that affect loyalty, investing in those that improve it – and eliminating or modifying those that don’t.
• What if better delivery of “post-purchase” experience could reduce churn by 5% a year? For some companies, this can translate to a 60%+ increase in annual profits.
• Implementing a customer experience feedback loop could allowing you to deal with complaints more effectively, and improve delivery overall. In a $40M Retail Company, this could affect the $8M at risk from customers who have had a poor experience.

Experience ROI Lens No. 2: Reduce the cost of delivery.

Delivery cost can be reduced in several areas, including functional tasks, hard costs, and overhead. Ranging from reduction in marketing costs (or reallocation to more effective channels) to reductions in customer service staff or call center overhead, the potential is significant.

A few examples of the tangible benefits from reducing delivery costs can include:

• Eliminating a redundant marketing tactic or program that is both costly and ineffective. For one client, eliminating a single printed touchpoint saved millions – with over $500,000 in postage alone. Or eliminate an entire series of programs that don’t drive desired results. (Eliminating an ineffective touchpoint = lower cost/higher satisfaction).
• Reduce the cost of touchpoint delivery overall; by eliminating nearly 40% of all touchpoints. For another client, we were able drive up satisfaction and customer re-purchase as a result. (Fewer touchpoints = lower marketing/service costs).
• Migrate customer-facing tasks from the call center to the web; Adding a series of pages to your website could have the direct effect of reducing call center volume overall, decreasing handle time, and increasing first call resolution. (Decreased volume/increased speed = lower costs).

Experience ROI Lens No. 3: Speed movement through your Customer Relationship Lifecycle.

The potential for ROI in this area is huge. By understanding where experience can be improved in the “pre-purchase” stage of your lifecycle, you could boost your pipeline and conversions by 10%, 20%, or more. Improving experience in the “post-purchase” phase boosts satisfaction, loyalty and advocacy.

The benefits from measuring Relationship Lifecycle improvements include:

• See which marketing channels are most effective at driving brand awareness, and which are less effective. By shifting investment to the most effective channels, you boost awareness without increasing costs. (greater awareness = more prospects).
• Understand where your marketing is NOT driving desired behavior, and boost consideration. (more prospects = more sales).
• See where the sales process is bogging down to close more deals. (more customers = more revenue).
• Learn which individual touchpoints are most effective at driving advocacy (or influencing prospects) to boost positive Word-of-Mouth. (greater advocacy = increased awareness/improved loyalty).

Experience ROI Lens No. 4: Increase Customer Value.

Most organizations have a startling lack of knowledge when comes to the economics of individual customers. One study states that 85% of executives lack an understanding of acquisition or service costs, much less overall CLV (Customer Lifetime Value). Yet for virtually all organizations, their enterprise value springs entirely from their customers.

This value is driven by three things: 1.) The amount they spend on any given product or service; 2.) The amount of this budget that they spend with you, and; 3.) What they are willing to pay for your product or service. By looking at experience improvement as a way to boost CLV, you’ll be able to look at experience based on actual customer behavior, vs. intention.

Some of the benefits of looking at experience improvements through this lens can lead directly to increased CLV by:

• Reducing the cost of sales leads: By driving down the initial cost of getting customers (lower cost through more effective marketing or sales touchpoints) you boost overall customer value.
• Lowering service costs: By decreasing the cost of servicing customers (through web, call center, in-person or other touchpoints and channels) you increase CLV.
• Reduced cost of acquisition: By having more leads at a lower cost, you indirectly affect the sales metric. If the cost of closing a deal can be reduced as well, you benefit twice over. More efficient contracts, environments, sales pitches and more – all designed around the experience of turning prospects into customers – reduce costs.
• Increased purchase activity: A more efficient experience can be targeted towards getting existing customers to either spend more at each purchase, or purchase more often. The result? You guessed it. Increases in overall revenue (and value) per customer.

• Improved retention: As discussed in Experience ROI Lens No. 1, above, increases in loyalty boost retention. The longer a customer stays with you, the greater their value.

Once you’ve developed a hypothesis around prospective ROI on customer experience, what next? In Part 3 of Proving ROI on Customer Experience we talk about ways to identify the touchpoints you have, and create a map of where you are today – helping you find out which touchpoints work, which don’t, and why. Then, improving them… (Continue to Part 3…)

It seems self-evident that access to more accurate customer opinion, experience, and needs information will help make improvements to your customer experience, marketing and branding programs. After all, customer insights are a key decision-making factor for virtually all aspects of your business, from product development, acquisition and retention to market strategy.

Here are a few of the questions you can ask, to help you determine if you already have some of the answers…

• Do you have customer listening tools in place?
• Do you where (and why) your prospects and customers engage?
• Do you know what a loyal customer looks like?
• Do you know why customers choose you (or a competitor)?
• Do you know why you lose customers?
• Do you lose any customers you want to keep?

Answering these questions – and others like them – will help inform your strategies. The insights they drive can help focus messaging, address real customer needs, and remove barriers to relationship building – increasing brand loyalty and return on your customers as a result.

Of course, as with any program, the ability to leverage data is based on the systems you have for gathering and analyzing it. And as critical as this data is, the systems can be relatively simple. When it comes to gathering customer insights, the first step is the most important of all.

Just as with financial performance, measurement is critical to customer experience improvement. Creating a culture of measurement-driven customer experience initatives will help executives better understand how to derive the greatest return from their investments.

And moving past the fundamental first step of understanding that customers do have inherent value, a measurement-driven customer culture will maximize the effect on tangible business results in critical areas including brand awareness and preference, customer retention, loyalty, profitability and value.

Moving into these areas in an incremental manner will begin to provide marketers with the baseline data needed to pursue key management support as well. For example, the ability to quantify gaps in organizational alignment behind your brand, or discontinuity in the customer experience, can have a profound impact at the executive level.

This is the kind of data that your “C Suite” can see, understand and react to.  More importantly, it has the potential to drive the types of improvements that can markedly improve your investments, and your overall business performance.

After all, virtually all enterprise value flows from the same source – your customers. Measuring and improving their experience can only benefit your top (and bottom) lines.