Today’s interview is with Peter Kriss, Senior Research Scientist at Medallia, whose software helps corporations track and manage the experiences of their customers. Medallia’s software, delivered as an Internet service, integrates and delivers data from everywhere that a company that touches a customer, analyses it and presents it visually so that employees can see very quickly what is going on and then decide how to respond. When he’s not at Medallia, Peter is also the Director of Research for Vision Prize.
Peter joins me today to talk about the work that he is doing on valuing the impact of delivering a great customer experience.
This interview follows on from my recent interview: Big and little data, building trust and B2B marketing – Interview with Charlie Peters of Emerson – and is number 119 in the series of interviews with authors and business leaders that are doing great things, helping businesses innovate, become more social and deliver better service.
Highlights of my interview with Peter:
- The inspiration behind this interview was the article that Peter wrote in the Harvard Business Review: The Value of Customer Experience, Quantified.
- Peter is a behavioural scientist and studies how people make decisions and how they can make better decisions.
- Peter’s research has found that in perfectly cooperative settings letting people communicate generally works and can help the situation.
- However, in competitive settings where one person’s gain is another’s loss, communication doesn’t really help very much.
- This is, perhaps, not very surprising. But, what is interesting is that we really don’t understand what happens in between these two extremes.
- Contrary to the behaviour of some firms in some industries, a far better strategy, in the long run, is to figure out how to cooperate more with your customers.
- Peter found that it’s hard to find real, concrete data that shows the value of having a better customer experience.
- So, Peter started some research to look into this very issue.
- His research in the HBR article study focused on two very different companies with over half a million customers, one transactional and one with a subscription based business model and looked at how much more their customers would spend if they had a great experience compared to if they had a poor experience.
- What they found from their research was that, in the case of the transactional business, spending by customers was 140% higher the following year following a great customer experience versus a poor customer experience (a multiplier of 2.4).
- In the case of the subscription based business, customer retention went from 43% to 74% following a great customer experience versus a poor customer experience, which translates into a customer lifetime of a little over a year for those that had a worse experience to an average customer lifetime of around 6 years for customers who had a great experience.
- They don’t define what is investment in customer experience as it could be any initiative that will improve the customer experience.
- However, Peter did say that it is not only the expensive things that matter.
- So, focus on finding things that have a disproportionate impact on your customer.
- However, it makes sense that as companies make more and more incremental improvements it is likely that they will reach the ceiling or limit on what can be achieved using those tactics. Once at or approaching that ceiling, companies will then need to innovate to continue to improve.
- I made reference to my interview with Gary Vaynerchuk and his comment about how customer service and caring can scale.
- Peter then referenced Rory Sutherland’s famous TED talk: Sweat the small stuff, where he says that there is a myth that big problems always require big solutions and that many big, expensive solutions crowd out or obscure better and simpler solutions.
- “Information isn’t what’s scarce; it’s the willingness to do something with it.” — Tyler Cowen
- There is a myth that soft data won’t stand up to hard analysis. That’s just not true.
- Just because it is hard to measure does not mean it is not valuable and we shouldn’t be sidetracked by things that are easy to measure.
- Don’t ignore things that are soft because people are soft.
- So, if implementing initiatives roll out incrementally to two diverse groups and compare the results. This approach has been used very successfully in science but is not used that much in business.
- Communicate more than you think you need to and experiment.
- Peter would love to hear stories from anyone who has experimented with new initiatives in their businesses and what tyhe impact has been and encourages anyone who has to reach out to him and let him know their results. You can get in touch with him on Twitter at @peterkriss.
About Peter (taken from his HBR article bio)
Peter Kriss is a Senior Research Scientist at Medallia and the Director of Research for Vision Prize. By integrating behavioral research and technology, he helps structure communication in ways that promote better social and economic outcomes. Connect with him on Twitter at @peterkriss.