Customer Centricity

The happiness index and moving beyond NPS

 

Amit Akhelikar, Global Director. Lynx Analytics

“Customer experience is the next big battle ground for telcos,” proclaimed Amit Akhelikar, Global Director of Lynx Analytics at TM Forum Live! Asia in Singapore this week. A bold statement at a time where many providers feel they are fighting battles on several fronts: competing with over-the-top players; the need for internal transformation; and even finding the right people with the right skills.

In Akhelikar’s view though all these battles are intertwined, and the customer sits at the heart of it all. To back up this claim, he gave some powerful figures from research conducted by Gartner:

  • It costs six to seven times more to acquire a new customer than retain one
  • For every customer complaint there are 26 other unhappy customers who have remained silent
  • Happy customers who get their issue resolved tell four to six people about their experience
  • It takes 12 positive experiences to make up for one unresolved negative experience

Many providers are getting behind this customer-focused way of thinking. Akhelikar told us that 70 percent of 167 enterprise decision makers in Hong Kong believe fast-changing customer expectations is the single most important driver for transformation, while 89 percent of companies expect to compete mostly on the basis of customer experience, versus 36% four years ago.

“Customers are smarter than ever and are looking for more value,” said Akhelikar. “They want more than just customer service, they want a great customer experience.

“Telco’s understand the importance of customer experience across both consumer and enterprise segments.”

Negatives of NPS

However, understanding what the customer experience really is can be difficult. While the telecoms industry, and indeed many industries around the world use the Net Promoter Score (NPS) to gauge the loyalty of their firms’ customer relationships, Akhelikar highlights some drawbacks:

He characterizes NPS as ‘Touchpoint’ driven as it only captures when customers ‘touch’ a channel, and is not reflective of the true customer experiences. Furthermore, NPS is:

  • Strongly driven by emotion (as illustrated below) and hence influenceable, easily changeable and difficult to action in time
  • Reactive, not predictive
  • Available for some customers, not all
  • It is hard to associate the score to tangible actions


Source: Lynx Analytics

Combating customer attrition

As an alternative, Akhelikar profers the concept of the customer happiness index to deliver a more in-depth look at what the customer wants and needs. This index features the following characteristics:

Time is money – the index provides real-time measurements of experience indicators. Decision makers can follow the customers’ happiness continuously and take steps accordingly.

Reliable source of truth – data is based on customers’ actions and behaviours, not just their emotions at a single point in time.

Different information needs – From CEO level to business analysts, all employees can find the appropriate depth of information as the index information is hierarchical.

Actionable Insight – Firms can define areas of improvement potential through a multi-dimensional approach. They can then identify relevant factors, locations and customers influenced by those areas.

Predictive Power – The use of predictive technology to forecast the expected lifetime of the customers.

The graphic below illustrates three key stages for the happiness index

Source: Lynx Analytics

Akhelikar claims the application of such an approach, delivers short-term benefits of a lower customer churn and an increase in NPS promoters, while long-term benefits included newer customers, increased customer spend and new business opportunities.



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Arti has been writing and editing for seven years in the fields of technology, business and finance. She is particularly interested in how firms are innovating to bring us into the next digital age.

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