Open the Box

As CX professionals, we already know the value customer experience brings to a company, but you need to demonstrate that value to everyone else if you want their support.

So we’ve been collecting data from CX leaders and EX leaders, and we ask them a question that’s kind of like, you know, how well is your organization connected experiences to financial outcomes? And about 72% say not very well. So the headline is there’s a lot of a lot of room for improvement, a lot of room for growth.

We’ll discuss how CX pros can prove the value of customer experience on this episode of The CX Leader Podcast.

The CX Leader Podcast is produced by Walker, an experience management firm that helps our clients accelerate their XM success. You can find out more at walkerinfo.com.

Hello everyone! I’m Troy Powell, host of this episode of The CX Leader Podcast, and thank you for listening. It’s never been a better time to be a CX leader, and we explore topics and themes to help leaders like you develop great programs and deliver amazing experiences. I’m sure many of you have heard of Schrödinger’s Cat, the famous thought experiment in which a cat is in a box with a vial of poison, and until you open the box and observe the fate of the poor animal, it is simultaneously alive and dead. Its fate isn’t determined until you’ve observed its condition. Leaders in the company can sometimes feel that way about the benefits of customer experience management, and the fault really doesn’t lie with them. As a CX pro, you need to open the box and prove that your CX program brings value to your organization. My guest today has made it his profession to help show the value of experience management. Topher Mitchell is the Manager of Value Advisory at Qualtrics, the experience management technology company that we’re proud to call a partner. Topher, welcome to The CX Leader Podcast.

Thank you. Troy. Open the box. That’s a great opening message.

Exactly right. Anytime we can tie what we do to like, you know, quantum mechanics makes it cool. But there’s definitely some truth to that. Um, first of all, before we get going on some of the content, I just interested to hear kind of how did you get into this role at Qualtrics? You know, what kind of value advisory position, which is a really important one, but also a little unique. So what what drove you there?

Yeah. Thank you. Uh, you know, I really feel like I have found my my dream job. I love what I do, and it’s really just thanks to having been surrounded by great folks. Uh, mentors and uncle that talked me into. So my background is finance, I love math, I love finance, and I was choosing what to do after graduating, and I had done internships in, uh, at a hedge fund and a bank and working on my CFA and just didn’t feel like that was the path I didn’t want to take the traditional finance path. And so, you know, when my uncle talked me into doing software sales, which was crazy, and I tried it out at Qualtrics, just part time while I was finishing school, and, uh, was not good at it, but I really liked it. Fell in love with the culture. And, you know, ten years later, it’s grown into this profession that for me is really meaningful, bringing together customer experience and employee experience and finance and math and all these things that I care about. And many people along the way have supported and helped me. So that’s a little bit about me.

Yeah, that’s a great path and usually is the one that gets you where you need to go, right? Is the the people who support it. And uh, and an organization that allows for some creativity in how to utilize your talents. So, um, and, you know, we always talk about anytime we’re talking about this kind of value topic, the importance of having friends in the finance department. But there’s also this piece of having somebody on the CX side with that can speak well to them. And that finance background also helps a whole lot. Have you found that to be true?

100%. Yeah. That’s a that’s a friendship that you really are worth investing in.

Good. So, you know, this idea of, uh, proving the value of CX not a new idea, not something that has not, you know, it’s been discussed ad nauseam, let’s just say for many years, um, how do you think CX leaders are doing at proving the value?

So we’ve been collecting data from CX leaders and EX leaders, and we ask them a question that’s kind of like, you know, how well is your organization connected experiences to financial outcomes? And about 72% say not very well. So the headline is there’s a lot of a lot of room for improvement, a lot of room for growth. But I think there’s an important nuance there. Because it isn’t just this blanket. Like, let’s prove the value. I think we need to unpack the the big scenarios where somebody is trying to do that. Um, because that actually impacts how you would approach it. So sometimes you want support for an idea. Sometimes you have an ongoing initiative you need and you need to keep stakeholders bought in. And other times you’ve completed an initiative and you need to provide accountability. What were the results? What did you deliver? You know, all three are hard, but the third one is the one that really kind of keeps me up at night. And it’s the one that I think there’s the least useful advice out there on the internet. And so anyway, I think that’s where our conversation is going to be steered. But anyway, that context is important because the way that you approach it differs based on what what you’re trying to accomplish.

Yeah, a good reminder for sure. There’s not a one size fits all approach, you know, to even that third one. Really. Um, it depends on a lot of factors. But then the goal of it is definitely important to keep in mind as we’re moving throughout, you know, and… You know, it brings up a thought of, you know, we do live in a economy now, I would say that most business leaders understand there’s value in customer experience, you know, and and like delivering a good customer experience. It’s a competitive advantage. And most modern leaders kind of agree to that. But you know and so from proving the value from that standpoint, we don’t necessarily have to say, hey this is important. Well what do we miss out on if we don’t go through the steps of proving value of kind of our CX initiatives and programs, like what is it that kind of falls out and that we don’t, you know, that we miss out on by not doing that?

Well, I think there’s a trap that I see a lot where if we just accept that, hey, you know, CX is good for business. Um, there’s some nuance there. Like, not always like there’s sometimes when you’re overinvesting in a certain group of customers. You’re certainly making them happy, providing them a better customer experience. But it may not be good for the business or another kind of infamous one is discounts. Yeah, like customers are pretty happy with their experience. But is it good for the business? Or you know, we improved this experience, but our competitors improved faster or better or in more meaningful ways. You know, that improved the experience but may not have been good for business. I can go on if you’d like me to, but I think it’s really important to be specific in that. Customer experience is a great measure of value you’ve created for your customers, which may show up in your CX scores or time saved for your customers. Or if you’re a financial services provider, like helping your customers achieve their goals. But business value is a function of cash flow. So are we driving cash flow, which means increasing revenue, decreasing costs? And while A can be an important ingredient in driving B, A is not a proxy for B, so creating value for your customers is not the same as creating value for your business. So I’m really glad at how much attention and buy in and belief there is in customer experience. And CX professionals out there need to help their organizations level up and how they’re thinking about it. You know, CX is a great measure of value created for your customers, the same way that employee experiences value created for your employees. Business value is a function of cash flow.

Yeah, no. It’s a great example and a great way to think about it. And it’s you know, I always like to consider this idea of your scores are not just some monolithic thing, like your score is a 26 NPS or what? Well, it’s really about, you know, what’s underneath that and the segmentations and the looking at, okay, what how does this play out in different scenarios. Because yeah you’re right. You can over invest sometimes in areas or under invest or it looks like things are good but they’re still not meeting where customers want it to be. So digging in is is pretty important there. You know, what are some of it’s obviously again, something that’s on a CX leader’s mind all the time is like, how do I have some way of indicating the impact that I’m having? What are some of the biggest traps you think people fall into as they start along this path that can derail those efforts?

So I like to bucket them in, uh, there’s kind of three traps and we see a lot. And the first one we alluded to a little bit already, um, it’s when we’re obsessed with like, what’s the dollar value of a point in NPS or a dollar value and satisfaction? And we see that a lot. And I might get some hate for this, but that’s a fantasy. Like, that’s that’s a trap. Um, for the reason…

Only love for me for that. So keep saying it.

Okay. It’s a safe place. Um. It’s a trap for the reason we talked about, like, there’s a lot of reasons for these to move in different directions. Like, there’s there’s so many confounders there. Um, but also it it drives the wrong behavior. Like, imagine managing your business and then telling your employees like, hey, no, the this customer satisfaction will use it as an example is a is a good enough proxy for business value. Um, what kind of decisions are your employees and managers going to make, like they’re going to they’re going to take the best path to drive that score, which may not always be best for the business. Another trap is sometimes CX programs get stuck as a customer experience measurement program rather than a management program. That is, uh, when you ask them, you know, what actions are you driving? Either they aren’t driving meaningful actions or change in the business, or they are. They just don’t know where it’s happening. So they’re like sending insights over the fence, or there’s just dashboards and they’re hoping that teams will take action on it. And there should be that democratization where people can access the insights and take action. But the CX team also has accountability to making sure action is happening and knowing where it’s happening. And related, sometimes we think that, you know, we learned this thing so we launched a new survey. That was our action. Keep pulling that thread. It’s like, okay, what did you learn from the survey and then how did you make a change in the business or change in the customer experience? Or, you know, they they know how important actions are, but they’re just struggling to get by and it’s like, hey, you know, we we keep getting this information from our customers that really need to invest in, in, in fixing this experience. And no business has a shortage of ideas. It’s not like idle hands are the devil’s workshop. Like you got a bunch of people throughout the company who are doing important things, and so cutting through the noise can be hard. And then the third group of traps, um, that we see is, you know, they are driving meaningful action. But when asked, you know, what impact did this have on the business? There is no way of knowing that. Like the metrics we’re trying to influence, let’s say it’s customer churn. Like so are a hundred other teams at our company. And there’s also external market factors. How could we attribute any benefit to the actions that we’ve been doing. So it’s a it’s a causal inference problem. So I like to your Schrodinger’s Cat intro because I think there’s a tie in there. Or maybe it’s, you know, kind of more tactical. It’s like, you know, we just can’t get access to the operational data. Like we want to influence customer churn, but we just can’t get access to that, that type of data. So anyway, those are kind of the three big traps that we see people getting stuck in.

Yeah. You know, double click into a couple things on that. It came up as you were talking for sure. You know, this knowing understanding kind of the actions being taken. You know, I think that’s such a key piece. And, you know, in your interactions with organizations that are really, you know, trying to push this idea forward, how often do you see the CX team being kind of tied in or involved with the actual deployment of initiatives or change management functions or those things, um, versus it being maybe more informal that they’re just making sure that they’re kind of keeping up with going with what’s going on.

Yeah, we see both. I couldn’t, uh, I couldn’t give you a percent on that. But I think both are important. Um, I think there does need to be this scale motion, like, you’re you’re functioning as a center of excellence. And so you can’t be there in the weeds on every single action you need to enable others. Um, on that point, I would say there’s something you could do to measure action, like who’s taking action across the organization on your insights and what kinds of action are they taking? That’s something you could probably do via a survey. Like you could capture that. And that would be really valuable information to know, you know, what types of insights are getting acted on, what types of teams or individuals are acting on them, and then why or why not. That would be so valuable for a CX team that wants to drive more action. And then the other motion that you talked about is, you know, getting really involved and there’s a capacity limitation there. So I think call it picking your shots, picking your battles there. You know, having at least one, though at any given time that you’re really involved in and helping with the experience, design and the employment, you can sometimes offer your your services as like a, you know, a value add, like let’s say you’re trying to help the contact center team deploy a new experience for customers, you know, offering, hey, let us help you measure this.

Like let us help you deploy this in a way that’s going to allow you to tell a business impact story. There are not many teams throughout the organization that would say no to help with that, because this whole impetus of this conversation is not unique to CX. Like cross organizations, teams struggle to attribute impact to the work that they’re doing. Some functions may be better at it than others. I mean, like the supply chain function has been around for centuries. Um, and so their playbook is pretty well mapped out. Um, but a lot of teams really want help with this. Yeah, a lot of them rely on correlations between what they’re doing and kind of hoping that that’s adequate. Um, and so the KCS teams can help drive some maturity in how they’re approaching and thinking about driving impact.

Yeah, yeah. Everybody wants to be a hero in a story and sort of, you know, in some sense so you can help somebody tell their story. Um, they are rarely going to turn that down.

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Your second piece, I think it was interesting, is this idea of, I guess, of really understanding how we’re going to, you know, measure some impact of those initiatives. So understanding what’s going on, where they’re going, you know, what’s happening. But the ability to kind of use those initiatives as ways to measure value. So kind of treating them as experiments, you know, pilots etc. Talk a little bit about that, you know, the role that kind of experimentation really can play in this.

I’m excited to go into this topic. Core to experimentation are the actions, like, what are the changes that you’re making? And so having that as like the central unit of analysis. So we have this framework that we recommend. We call it a value chain which is what’s the insight or capability that you brought to the organization? What action was taken based on that? What KPIs were impacted by that action and by how much? And then what’s the business value of those KPI improvements? Um, when I say it and when you see it written out like insight, action, KPI improvement, business impact, it’s like, okay. Yes. Very simple. Like not not groundbreaking. Um, but it is because the the traps that we just talked about, um, follow adhering to this framework actually helps you avoid all those traps. And so, um, before we get into experimentation, just having that framework is extremely valuable. Like what insight or capability do you bring? Actions were driven, KPIs were impacted by how much and then what’s the business value of those KPI improvements? Now, uh, column a insight or capabilities? Not. Not usually the heart like zone. Like, that’s that’s usually kind of front center all the time for CX teams. Uh, driving action can be hard. And we’ve talked about that a little bit. And then doing the causal inference. So going from 2 to 3 which is what KPIs did we impacted by how much, uh is hard, but let’s call it what it is like. This is a causal inference problem. And once we give it a language like we can now tap into all the causal inference tools. And experimentation just happens to be the one that I think is most accessible for CX professionals. And that I think will, um, solve additional challenges that CX pros face. And. Sometimes people don’t lean into experimentation. I mean, there’s a lot of reasons. Um, sometimes it’s like, you know, I don’t have formal training. Um, maybe it’s, you know, our organization just doesn’t have an appetite for experiments. A number of other reasons. Um, but it really is something that you can jump into. And people are running pilots all the time, like, just do it as an experiment. Like there’s a I like this story about, um, the CEO of Caesars Entertainment, uh, Gary Loveman. Um, the rumor is he said there’s only three reasons for you to get fired.

Theft, harassment, and running an experiment without a control group. And, uh, we do all these pilots or proof of concepts? Um, there’s so much more value that we can get from them if we just define a really clear control group up front. And what that does is it allows us to establish a causal relationship. So once we’re doing this, um, I don’t know if you’re familiar with, uh, Judea Pearl’s ladder of causation, where he talks about, um, there’s three rungs. The first rung is association. So when I see A, how likely am I to see B or in other words, when I see an unhappy customer, how how likely, uh, are they to churn? The second rung is interventions. So when I change A what do I see with B. So when I change the experience that customer receives excuse me it receives how likely are they to churn or to not churn? And then the third rung are the counterfactuals. So what would have happened had we not changed that experience. And rungs two and three are the types of questions that usually get asked like, hey, what’s going to happen if we invest in this experience improvement? Or you know, what value did CX create? Like we have to understand round two and round three, but unfortunately and again not unique to CX professionals, it’s just in the business world in general, people are stuck on rung one like they’re they’re looking for correlations. And if we find that like let’s say NPS is correlated with this business value metric like customer spend, it solves all our problems.

It doesn’t. It doesn’t because the game changes once we start intervening and once we start wanting to ask the counterfactual questions. And so anyway, back to experimentation. Like that’s a great way to climb the ladder.

Yeah. No, it is. And I think, you know, you bring up so many elements versus I love the value chain concept. You’re right. Not rocket science, but kind of is actually that’s you know again that’s core value build rockets. There’s just a lot more math to it. Um, but you know, this idea of, of really understanding that this isn’t about just, you know, proving that, hey, people who have a higher NPS score, give us more spend or people are more satisfied, recommend us more, or, you know, these correlational things that good like, hey, let’s, you know, establish some stuff but doesn’t get down to, okay, what do we do, you know, and what do those actions mean? And what impact do they have? And, you know, one thing that I’ve definitely seen that gets in the way of that is not planning for it, right? Like not really thinking through like, this is what we’re working on because it’s got there’s a time period, right. Causality. Also, you know, there’s some element of observing this over, over a little bit of time or maybe a lot of time, depending on what we’re talking about. And then also, yes, your idea of that control group, which is one not something all people think about, but two also, you know, there is some difficulty in often if you’re doing a pilot, you know, it’s like, hey, well, we got this group to buy into it and they wanted to do a pilot and you’re like, okay, well, now do we hold some of those group customers out or do we find another group that’s similar? You know, but again, it doesn’t have to be like, we’re not looking for FDA approval of, you know, pharmaceutical here, but we are looking for some level of rigor.

Yeah. And that’s a great call. I mean, like the purpose of a randomized controlled trial is to randomize out the confounders. And so what are the factors that might influence A and B because that’s when it gets messy. And that’s what we talked about earlier. Like you know satisfied customer decreased churn. Like there’s a lot of confounders there. Like you know customer personality. Some customers might be happier and also have a propensity to not churn. Um, that doesn’t mean that you caused them to not churn through your CX initiatives. And so the randomization, you know, avoids those challenges. So when you’re running an experiment, you want to accomplish the same thing. And you’re right, like you can’t run a randomized controlled trial in your business usually. Um…

You can try.

Yeah you can try. But you might think, you know, what are the factors that are most likely to be confounders for the outcome that we’re trying to accomplish and, and the input and can we control for those, at least for some of the big ones there, um, that you can go a long way with that.

Yeah. Yeah. And it gets around, you know, we see it a decent amount where you’ll like, hey, customers who are showing up as being, you know, truly loyal customers, but they’re like they’re declining their spend with us. Like, that means it’s wrong. You know, like we’re categorizing them incorrectly, like, well, there could be a hundred reasons why, you know, like their business is struggling. And so, you know, they’re not making as much. So they’re not spending as much with us, you know, any number of things, um, that, you know, you’re just not controlling for when you’re looking at that high level. But…

Yeah. And I think there’s an important reframe here too, like the way you’re creating value for your business is not by improving your scores. Like that’s the way that you’re creating value for your customers. And so you don’t have to use that score in your equation for creating business value. It’s almost like they’re, you know, two independent equations. Like we have our equation for creating value for our customers. We have our equation for creating value for our business. And when we run an experiment, we’re looking at both of them. Like we want to know that we’re creating value for customers and for the business.

Ooh, that’s a great reframe. Love that. Um, all right. So thinking about a couple maybe specific cases. So you I’ve worked a lot with B2B companies in the past. And you know, what are some unique considerations there when you’re trying to, you know, kind of create this value statements.

Yeah. There’s a hot off the press story, uh, that we just, uh, wrapped. Up with a technology company, a B2B technology company, and in 2020, 2021, I’m going to give you it in the value chain. Um, they found that responsiveness was the most cited topic among customers that were having issues or among customers that, uh, you know, were providing negative feedback overall. And so what the CX team did in response was they took it. I mean, they did a lot more listening and deep dive and kind of simplifying the insight here. Um, they they did a few things that I think are really meaningful actions. So they first defined what responsiveness is, and they provided that playbook to their field. And they provided trainings. They provided reporting on responsiveness. They set accountability targets. They set up a closed loop system that allowed them to further monitor responsiveness. And so that’s column two and the value chain. And because of how they deployed that initiative, you know, they were able to find that those that were adhering were that started adhering to responsiveness best practices, realized a 4% reduction in client churn on their accounts and a 10% increase in sales opportunity win rates on their accounts. And that jumping from that to the fourth column of business value is just algebra. So over the two and a half years since deploying that initiative, it’s about $10 million net of the, you know, variable costs of selling and the costs of deploying the initiative. And so I really was impressed by this team. And it comes back to that really meaningful action that they drove like that. That was a substantial lift. Um, so anyway, there’s a there’s a B2B example for you.

Yeah. No, it’s a great one. And I think, you know, there’s so I know in B2B, you still do have a lot of this personal interaction piece, you know, that’s going on. And so the ability to really understand the employees role in that. And there’s a ton we could talk about there. But we don’t have hours to talk. So but the bringing the employee into this too is another great thing to do. Okay. Well we are running short on time as usual because this topic I love. So I’m, you know, going to go deep into things. But to kind of wrap up, we always like to ask this take home value question of our guests. So if you could provide kind of, you know, one piece of advice to a CX leader that they could kind of take and then immediately start putting into play in their, you know, program to drive some value, what would that be?

I would say to build a value chain. So whether there’s a recent action that you recently drove or an action you’re about to deploy, it’s actually a great timing for a value chain. Or let’s say, you know, you’re stuck in like insight gathering. It’s been hard to drive action. Think about a perspective action that you might like to drive and then fill out the value chain for it. So what is the insider capability that’s leading to the action? What is the action itself? Uh, what KPIs were impacted by the action and by how much or what KPIs would you hope would be impacted by the action? And what evidence do you have that that action would actually impact those KPIs? And then what’s the what’s the business? So how would you go from those KPI improvements to business value and doing that gets to comment you made at the beginning, like having a friend in finance, uh, so valuable, uh, they can often be the person who provides access to the operational data that you need. They can also help provide the formulas like, hey, here’s how much, uh, customer churn is worth. Like, if we retain a customer, here’s what they’re worth. So having a friend in finance or FPNA is really valuable. And I would give a bonus for the listeners, um, for anyone that wants feedback. And you got to really want feedback because I don’t pull any punches. Uh, send it to me on LinkedIn. And I would love to see what you put together. And I’d be happy to give you feedback.

Yeah, no great advice. And you know that that gets a plan started. And, you know, I think so much of these things fail because there isn’t a plan in mind when we start out with something. And then all of a sudden we’re being asked to prove value. And we haven’t been working towards that or working on a plan towards it. Um, you know, in advance. So good advice and definitely, uh, take Topher up on that. You know, anytime you can get advice from somebody who’s done it, you know, a thousand times or something. Yeah. Um, it definitely helps. So thank you for that. Topher. Uh, so I’ve been talking to Topher Mitchell, manager of value advisory at Qualtrics. So, Topher, thank you so much for being on the show.

Thank you. Thanks for having me.

If you want to talk about anything you heard on this podcast, or about how Walker can help your business’ customer experience, feel free to email us at podcast@walkerinfo.com. Remember to give The CX Leader Podcast a rating through your podcast service and give us a review. Your feedback will help us improve the show and deliver the best value to you, our listener. Check out our website cxleaderpodcast.com to follow the show and find all our previous episodes, our podcast series, a link to our blog which we update regularly and contact information. The CX Leader Podcast is a production of Walker. We’re an experience management firm that helps companies accelerate their XM success. You can read more about us at walkerinfo.com. Thank you for listening and remember, it’s a great time to be a CX leader. We’ll see you next time.