Why CX metrics stop working when they become KPIs

Companies are pouring significant sums into customer experience programs, but many still struggle to show what they are getting back. The problem may not be the program itself, but what happens when customer feedback stops being used as a diagnostic tool and becomes another KPI to manage, writes 5D founder and CEO Lyndall Spooner.

Building and implementing a customer experience program across a business isn’t cheap, costing anywhere between $500,000 and $2.5 million or more a year.

Yet ask senior executives what return they are getting on that investment and many struggle to answer.

The big issue is that CX metrics have become performance KPIs instead of effective diagnostic tools.

A diagnostic tool exists to find out what’s working and what’s not and to provide feedback without the judgement of a KPI. Once you confuse a diagnostic tool with a KPI, it can no longer function as a true independent source of business intelligence.

A company invests in a voice of customer program, selects a customer experience metric – usually net promoter score (NPS) or satisfaction – and the metric gets reported to the executive team and added to the CEO’s scorecard. It also gets linked to performance reviews, bonuses and team targets.

It’s at this point something changes.

The metric stops being a tool for understanding customers and starts being a tool for managing internal performance, an inversion of the intended purpose of the program.

The moment a CX metric becomes tied to rewards, bonuses or performance evaluation, its purpose changes. Instead of helping the organisation discover where customers are experiencing problems and where weaknesses exist in the business, the incentive flips. Staff become motivated to protect the score and defend their performance, rather than focus on the uncomfortable truths the program was built to find.

In some cases, organisations begin filtering the customers they ask for feedback, defending negative responses, questioning research methodologies and focusing on improving scores rather than investigating the root causes of problems that have been found.

What was supposed to be a discovery system designed to drive improvement becomes a validation system that reinforces current performance.

A business that wants to become a leader in customer experience needs to separate customer intelligence from business performance measurement.

Customer experience metrics should help an organisation identify problems, friction points, unmet needs and emerging customer expectations. The customer KPIs on the scoreboard should instead be business outcomes that are harder to manipulate: customer retention rates, relationship depth, share of wallet and sustainable revenue growth.

When customer intelligence is separated from performance measurement, negative feedback becomes useful rather than threatening. A low satisfaction score stops being only a problem for the team responsible and starts being information the organisation can act on.

High-performing teams do not necessarily find fewer problems. They are better at identifying and reporting issues so they can design the processes required to remove them, treating every problem uncovered as a chance to improve rather than a judgement to be avoided.

The purpose of a customer experience program should be to reveal where the business is falling short, early enough and clearly enough that something can be done about it.

Every problem that goes unreported because someone is protecting a score is a risk the business cannot see. Every problem that surfaces and gets fixed is an opportunity to improve.