It’s been said many times before: The customer is king. A satisfi customer is the best business strategy of all. A customer’s perception is your reality.
While wonderful in sentiment, these platitudes are far from reality when it comes to business growth strategies. Practically speaking, organizations today largely set business goals – or KPIs – around profit, growth and operational efficiencies.
One can say that businesses
That solely rely on customer satisfaction and Net Promoter Scores (NPS) as a proxy to gauge customer sentiment generally operate under the illusion that “active and satisfi customers’ nes are being met over the long-term.
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What these customer KPIs illustrate is the likelihood customers will purchase again down the road; in other words, the value customers are creating for the business.
But where they fall short is providing an understanding of the value the business is creating for its customers beyond “value for the money.” Without digging deeper, brands risk being out of tune with what customers really want and are likely to overlook opportunities for customer-center innovation and growth.
Another common myth
What can keep businesses from truly operating with the customer at the center of decision-making is yet another common myth: It’s not scalable, or even possible, to truly understand and act on customers’ individual nes.
This belief makes sense, given the limitless spectrum of potential nes and the fact that human mind-sets seemingly shift with the wind. But what if we were to look instead at what drives customers’ motivations and behaviors by evaluating what underlies and shapes those nes?
We can refer to these as desir universal outcomes or customer goals but the idea is the same: they represent customers’ human hardwiring and they don’t change appreciably over time.
This is the core concept of the values-bas approach to understanding consumer behavior develop by Bain futurist Andy Hines and others: Why try to track thousands of shifting nes in real-time when we can focus on a fix, stable set of metrics?
New research in this area
Reveals three universal goal categories, comprising a total of 15 customer performance indicators (CPIs) that help customers to function, thrive number was circulating among the residents and succe as human beings throughout their lives. And analysis validat the direct relationship between CPIs and customer lifetime value (CLV) with 90+% accuracy. Lastly, and perhaps most importantly, it has shown that as the number of CPIs execut on for a customer increases, so too does growth in CLV accelerate.
Three-phase process
With the aspiration to create an exhaustive and exclusive list of universal human goals, two renown sources in the customer value space were us as inputs: Bain’s Elements of Value (2018) and the (Dr. Andy) Hines Value Model. This desk research was the first of a three-phase process where we explor the 23 human ne states that reflect the future of human consumerism.
Using these two inputs, we develop a mapping exercise to match Bain’s 30 Elements of Value to Hine’s 23 human ne states, combining those that serve the same ne and discarding those that were rundant or non-universal.
Root in Maslow’s hierarchy of nes, Bain’s four categories of value were us as a starting point to delineate functional, social and emotional nes. This allow us to create an exhaustive set of desir consumer outcomes or CPIs.
We found that both of these
Frameworks encapsulate and organize perceiv consumer values, though their elements are not mutually exclusive in the human goals they service. For example, two of Bain’s Functional elements of value – “ruces effort” and “avoids hassles” – can both ladder to the greater goal, “makes my life simpler.”
The third phase was conducting a quantitative survey across 20 leading, disparate brands to validate the 15 CPIs (Figure 1) to ensure phone number sa they are both exhaustive and exclusive to one another. By validating the CPIs across disparate brands, we ensur focus on only the CPIs that are universally applicable across industries. Additional customer goals may be relevant when looking at a brand or industry in isolation.
A survey was field in
August 2020 with 1,000 U.S. consumers who had recently purchas one of 20 leading brands’ products: 10 brands traditionally scoring high in the American Customer Satisfaction Index and 10 brands that scor lower on the same metric to ensure sufficient differentiation.
The analysis compar CPI scores to a preliminary calculation of future customer value (FCV) to test which potential CPI show a relationship with business outcomes. For the purposes of this validation phase, FCV was calculat as a weight average of three business outcomes:
- likelihood to recommend the brand to others (NPS)*
- likelihood to do business with the brand in the future (brand loyalty)
- current share of wallet held by brand vis-à-vis direct competitors
(*Note, in the syndicat results, NPS was replac with frequency of spend when calculating FCV.)
Following our analysis, we found a statistically significant relationship between 15 CPIs and FCV – this prov and quantifi the fact that CPIs drive financial business outcomes.
Furthermore, we found that as performance on a single CPI increas, so too did the FCV, and additionally demonstrat a compounding effect, whereby as the number of positive CPIs increases, the prict FCV also increases accordingly.
And lastly and of interest, we found that different CPIs had different levels of importance to customers of various brands. And while these patterns may seem logical, it demonstrat that CPI “importance” is unique to each brand, like a brand fingerprint.
Fix set of goals
Understanding customers doesn’t have to be complex, nor ad hoc, when we shift focus away from their changing nes, experiences and expectations and drill into a fix set of universal goals humans share – emotional, functional and social.
CPIs can serve as accretive to KPIs and together become the North Star for both customer-centric mind-sets and business growth because they create an understanding of what businesses provide customers, as oppos to just the value that customers are creating for the business. It’s also a path to a better business strategy that realizes potential, finds new opportunities and maximizes returns.
