If you were challenged to justify your CX spend based on a metric, what would you feel most comfortable demonstrating a contribution to the business? Satisfaction? What’s a sentiment worth? NPS, what’s an intention to recommend worth? Arguably nothing until it’s a realised behaviour. And if these are a proxy for something else, then measure that something else.

Several years ago, I was challenged to demonstrate CX’s contribution to business priorities. Whilst I have been able to show when there is a customer-centric focus in an organisation, an uplift of 5% in sales is achieved, I couldn’t show a reliable change in customer sentiment scores. Looking at customer metrics alone, I struggled to find a convincing connection between CSAT or NPS increases and key business targets. It should be no surprise. These metrics are based on sentiments or projected intentions. There is no certainty sentiments will result in improved customer decisions. What I realised I needed to measure was the behaviour change.

I considered showing a shift in share of wallet. A difference in commercial value between not improving the CX and improving it, based on an actual change in share of wallet (SoW) contribution. The Financial Director and the wider board would be able to see the change in terms of earnings taken from the competition, against the incremental cost to secure it. And whilst customer experience management as a practice is bigger than any touchpoint gain, overall share of wallet is a demonstrable indicator of value. Conventional CX metrics were nowhere near this, not least of all because they often do not consider the competition.

Beyond Sentiment: The Need for Behavioral Metrics

On the back of a customer insights project with Tesco Bank, which sparked my interest in behaviours as a measure, I set about developing a set of behavioural drivers which could represent specific customer experiences. My thinking was if I could understand these, and then match the performance across brands in a sector, I could show the change of share as a CX contribution. I was also working with PlayStation at this time so was tuned in to a wide range of digital and human touchpoints. I created a structure and shared with a few people who saw great value in it. If we could measure change, we could more reliably predict contribution.

It was at this point, around fifteen years ago I received a call from a Professor Dr. Phil Klaus, who was lecturing at Cranfield Business School at the time, now at the International University of Monaco.

He opened the conversation, with, ‘I understand we need to discuss a matter of plagiarism.’ When I explained what I was up to, he then shared a far superiorly developed concept, with a set of tested behavioural drivers which indicated the importance customers placed on various experiences. All of which measured against the impact they had on their share of wallet commitment with one brand against another from the same category.

Needless to say, after appreciating we were aligned, albeit the Professor many laps ahead of me, we started to speak more often. (that’s us below in Monaco after a guest lecture I’d presented on the Customer Centric Operating Model to his master’s degree students).

He went on to explain his work on Experience Quality Measurement (EXQ) had identified there are 25 customer experience drivers which account for 90% of customer’s decision-making. Over 2,000 studies have now been conducted across multiple sectors globally to reinforce the international strength of EXQ.

Unlike conventional relationship studies, EXQ questions cover all brands in a category. The significant advantage of this approach is that EXQ can explain what drives share of wallet decision-making.

I’m grateful to say, it was the start of a great consulting partnership, and friendship which has grown stronger over time.

The EXQ Advantage: Measuring What Matters

As a CX consultancy practice knowing what really matters most to affect the share of wallet is significantly more valuable than relying on verbatims from scales of satisfaction and advocacy surveys. If results show an increase in CSAT or NPS score, it still needs to be connected to a business target. If you try to explain share of wallet through satisfaction or advocacy, you can only account for 1%. In comparison, EXQ provides 90% of the share of wallet answer. This makes it a much more reliable metric if you are looking to secure resources.

The value of EXQ insight allows the organisation to progress with confidence:

• Create differentiation through CX on the drivers which are unique to the business
• Estimate the cost of a CX improvement against the return
• Identify which CX actions increases the share of wallet
• Prioritise CX investment effectively around these experiences

As part of the EXQ studies, Professor Klaus’ results highlighted only 3% of companies achieve their potential from customer experience. But these vanguards, enjoy a 600% return on their customer experience investment. They achieve this by identifying what customers value the most and prioritising how to deliver it.

The numbers are eye watering, but it’s only with almost ten years of working with EXQ can I categorically state that it’s their value as a tool to engage and empower colleagues to be customer centric which is the real potential.

Through our partnership with Professor Klaus, Lexden has delivered several projects for clients using EXQ. We understand the metric having applied it in banking, utilities, education, manufacturing etc. It’s very versatile, adaptable, and most importantly forensic in identifying where the focus for gains should be.

Prioritise what matters most

We have found working with EXQ findings is complex and requires the experience we have amassed to understand what you have, what you don’t have and how to apply it to make sense across the business. We have developed a tool kit to empower CX leads to rapidly learn and socialise the findings in a digestible way, so that everyone recognises and can prioritise what matters most in their day-to-day activities, and across critical customer touchpoints.

Instant savings can be realised by removing the experiences invested in which are associated with drivers which do not impact customer behaviour. In other words, the things customers are not bothered about or judge you by. These may misleadingly attract high CSAT scores but are eroding profit with it (we experienced this in retail banking). Remove them and the ROI from CX has to go up.

The most valuable benefit for clients is that you can use the findings from EXQ to set the CX Strategy. Meaning clients can own their strategy (based on key behavioural drivers rather than increasing scores from 7 to 8) and focus on adding value through CX to customers which they know will correlate with an increase in share of wallet.

How to create an EXQ score

With EXQ, there are 25 customer behaviour drivers. This list of key attributes is the result of years of scientific research. Initially, 300 were identified which inform 100% of a consumer’s decision making relating to their actual share of the category. Yes, we are complex, which is also why AI does not yet have an full picture on what makes us tick. Refinement has led to the arrival of 90% of decision-making being accountable to the top 25 behavioural drivers.

First, customers assess the 25 statements in depth interviews to ensure the questions are contextually relevance. Next, a survey of 150-250 consumers, or 70 business customers, asks customers to rank importance of behaviours against each other, and provide a share of wallet indication. Finally, we capture similar information from social media data, offering an alternative or complementary data source.

As you will appreciate, this is not a transactional survey approach, its relational. And we have found clients working with the same output several years later, although we’d advise a refresh every two years.

Ranking EXQ drivers

The table below shows the metrics from EXQ. The codes reflect where on the journey the customer is (so you can also work on which are the most significant stages of the customer’s journey). What becomes clear is that some experiences are more valued than others.

Below is the output from an EXQ study, coupled with the verbatims which describe the touchpoints these relate to.

EXQ Scale of Priority

The second chart shows the importance of EXQ. We have found that many CX improvement programmes have quite arbitrary approaches to prioritisation. Our focus ensures we ‘demote’ experiences which have little to no impact commercially because customers neither value them. In the same vein, we can elevate focus on those 3 to 6 attributes most important to customers. These are what drive change and share of wallet if delivered well. Or will lose SoW if they are sub-standard. We can review the current CX strategy provision against these and propose where rationalisations should occur and where to redeploy budgets.

The fewer drivers accounting for the highest level of CX correlates to higher levels of CX ROI.

Competitive benchmarking

As mentioned, EXQ permits meaningful competitor benchmarking. We can highlight which CX matters to customers when dealing with competitors. This highlights which drivers differentiate and which are sector expectations. Sadly we do see Comms agencies promoting experiences from one brand which is expected by everyone…not the best use of marketing spend. The chart shows behaviours BR6, SPE1 and SPE3 are considered more important by customers, and delivered better than the competition. This is a real area for presenting a superior offer. However, SP6 which is important is delivered worse than the competition, which needs attention rather than marketing.

In Summary

EXQ empowers you to directly demonstrate your CX contribution, unlike sentiment measures. You can pinpoint where to increase investment, identify where it yields poor returns, and determine how to differentiate through CX with a robust customer experience management approach.

This is part 1 (method) of EXQ in part 2 (application) we will share how to bring the EXQ results to life in an organisation. How to make them digestible for the widest audience, so that all focus on them to deliver meaningful change. This is requirement often not achieved using conventional metrics for CX.

If you would like to understand how an EXQ study could work for your organisation or are interested in how we translate this data into a tool kit the business can use to drive improvements, contact me. christopher.brooks@lexdengroup.com.

You can also read more about EXQ in the following publications:

• The Journal Of Service Management: EXQ: A Multiple-item Scale for Assessing Service Experience
• WARC: ‘EXQ ties customer experience to business results’
• The Journal of Business Research: Measuring customer experience quality: The EXQ scale revisited
• CX Network: How to link CX to profitability

Further information

Prof Klaus has written an excellent book on the methodology called Measuring Customer Experience, available from Amazon.

In addition, as part of the CX Superheroes podcast series, I interviewed Professor Klaus about EXQ and how it was making a difference to those organisations who switched away from sentiment to behaviour metrics for CX.

Christopher Brooks, Global CX and EXQ expert