How to prove the value of your customer experience programs – actionable advice from CX expert Jim Tincher

Audio Content Producer, Intercom

April 20, 2023

The reasoning is pretty straightforward: If you invest in the customer experience, it’ll improve. But by how much? And where’s the proof?

Say you’re the Head of Customer Experience. You’re in a budget meeting with the rest of the C-suite, prioritizing strategies for the year ahead, and you present a project you believe will significantly improve customer experience across the customer journey – maybe even improve CSAT or NPS by a couple of points. The customer experience is important; everybody knows it. But when the difference between an elusive plan and a concrete proposal is a million dollars in retention costs, you can probably guess what they’ll pick.

Companies are investing more and more in customer experience programs, but few can show that this investment has tangible results. And so, CX programs often end up getting cut. That’s what sets “Change Makers” apart, as customer experience expert Jim Tincher calls them. In his most recent book, Do B2B Better: Drive Growth Through Game-Changing Customer Experience, he set out to understand the differences between those who can prove that a better customer experience equals better business versus the ones who are just hoping it’ll happen.

Before starting his consultancy, Heart of the Customer, Jim Tincher led customer experience efforts at Best Buy and UnitedHealth Group, and over the decades, he learned just how important it is to build a business around the customer. No half measures, no shortcuts – just listening to them and creating experiences that meet their needs.

In today’s episode, we’ve caught up with Jim to talk about how B2B and B2B2C businesses can measure the impact and show the value of their customer experience programs.

Short on time? Here are a few key takeaways:

To run a successful business, it’s important to engage with customers directly and structure a growth strategy around understanding their needs.
A true Change Maker grasps financial metrics and ties customer experience efforts to the growth of the company and the KPIs that drive business decisions.
Change Makers don’t just rely on surveys – they use operational, behavioral, sentiment, and financial data to get a comprehensive view of the customer and the impact of their behavior.
Emotions are key predictors of behavior – positive impressions of a company result in increased purchasing intent and even forgiveness when there’s a bad experience.
Typically, only 5 to 10% of customers respond to surveys. AI can take customer data, fill those gaps, and even reveal issues that weren’t captured by surveys in the first place.

If you enjoy the discussion, check out more episodes of our podcast. You can follow on Apple Podcasts, Spotify, YouTube or grab the RSS feed in your player of choice. What follows is a lightly edited transcript of the episode.

Backing it up

Liam Geraghty: Jim, welcome to Inside Intercom.

Jim Tincher: Oh, thanks for having me.

Liam: We’re delighted to have you here. Before we get started, could you give us an idea of your journey to this point in your career?

Jim: In my first job out of college, I was going to visit my girlfriend, now my wife, in Connecticut. I went to my boss and said, “While I’m there, I’d like to visit a customer.” And he gave me this weird look and said, “Why? Go on vacation.” I couldn’t answer his question about why, but from the beginning, I just thought that’s what people do, spend time with their customers to understand how to create better products and services. From there, I went into small business. From there, I went to Best Buy. All are very customer-focused organizations.

“Growth covers up a multitude of sins”

Then, I joined a large health insurance organization. I led the nation’s largest line of health savings accounts. And literally, nobody in our product or marketing team had ever met a client. When I talked about the importance of talking with customers, the feedback was, “Jim, we don’t need to talk to customers. We are customers, so we know what customers want. And as long as you can make it so that our customers spend 8 to 10 hours a day thinking about health savings accounts, we’re very representative of our customer base.” But going on the wild assumption that most of our customers don’t spend that amount of time thinking about it, we’re probably missing something. We led the nation in sales. We also led the nation in customer churn. Go team, right? Growth covers up a multitude of sins. And because we are adding so many new people, nobody was noticing all the people leaking out the back. And that’s where I got the bug of bringing our teams out to hear from customers directly and building your business around a solid understanding of what your customers need.

Liam: Let’s talk about your latest book, Do B2B Better: Drive Growth Through Game-Changing Customer Experience. It’s an interesting angle because often, on the podcast, when people talk about customer experience, we’re talking about one consumer, but what if your consumer is an entire business? What made you write the book?

“You go to your CEO and she has two projects in front of her. One says, ‘We can improve NPS by 10 points.’ The other says, ‘I can save a million dollars in costs.’ It’s not a tough choice”

Jim: Three years ago, CustomerThink came out with a report that showed that three out of four programs can’t actually show that the work they’re doing is creating an outcome where customers want to buy more from you, stay longer, or interact in ways less expensive to serve. When we looked at our customer base, we could see a few that could actually draw a direct line. Most couldn’t. We wanted to understand what’s different about what we ended up calling the “Change Makers,” those who can prove that a better customer experience equals a better business, versus the vast majority, what we call “Hopefuls.” They’re “hopeful” because they’re doing good work and hope it matters, but they can’t prove it.

So, when it comes to budget time, you go to your CEO and she has two projects in front of her. One says, “We can improve NPS by 10 points.” The other says, “I can save a million dollars in costs.” It’s not a tough choice. But if they can say, “We’re going to increase NPS by 10 points, but more importantly, we feel we can get about a million dollars in retention savings and add in $2 million of cross-selling through a better customer experience.” Now the CEO has a different decision to make, and you’re in the game because you can actually show your work matters. Unfortunately, that’s rare.

I have a particular passion for B2B because it’s the unloved child of customer experience. There are a billion examples out there. Amazon, Best Buy, Target, E-Trade. But if you’re with a manufacturing company, you look at that and say, “What’s my equivalent to a friendly greeting?” I don’t have that. And so, there are very few examples of the B2B organization. And B2B2C is even rarer. In the book, I have four recurring case studies: Dow, the large chemical manufacturer that has done an amazing job at accelerating its customer experience maturity. There’s Hagerty, a B2B2C organization for car enthusiasts that sell insurance. There’s UKG, a SaaS software platform that does HR – payroll and other HR-related software. And then, a group who pulled their name at the last minute: “XYZ Software.”

The Change Maker’s playbook

Liam: How would you define the customer experience program?

Jim: I’ll use the definition of CXPA – the Customer Experience Professionals Association. Essentially, it’s how customers feel and their actions based on all the interactions with you; through your website, your salespeople, your product distribution, all of that. The cumulative impact of that leads to different decisions. The program, then, is a small group of people trying to get the entire organization to act against that and approve it. Dow is about 35,000 employees, and at least at the time I wrote the book, they had 15 people in their CX program. And that’s a large CX program. Our survey showed that about a third of companies have zero or one people in charge, a third have two to five, and a third have six or more. So it’s a small group of people using change management, hopefully, to get the whole organization on board.

“That’s the first thing a Change Maker does. They talk to finance, understand how finance measures success, and link all their work to those metrics”

Liam: You’ve talked to hundreds of CX leaders in B2B companies. What do you think sets apart the Change Makers from the Hopefuls?

Jim: We found four actions. It starts with them understanding how the company makes money off of customer experience. I will talk with people and say, “Well, how does your organization make money?” and they give me a blank look. Once, I was talking to a health insurance organization and asked, “So, do those customers who give you a better score on your survey have higher retention?” “I don’t know.” Well, that’s the first thing a Change Maker does. They talk to finance, understand how finance measures success, and link all their work to those metrics. It might be customer lifetime value, net revenue retention, order velocity, share of wallet.

Change Makers bring that financial data into their measurement. I’m a big fan of Daniel Kahneman. He won the Nobel Prize in economics and authored the book Thinking, Fast and Slow. One of his pieces of content was: “What you see is all there is.” When I was back with that health insurance organization, all they saw were health savings accounts. They assumed everybody thought about them as much as they did. They don’t. Most customer experience organizations look at survey scores and assume that’s all there is. But the Change Makers bring the financial data and start with, “Our net revenue retention last year was 103%. Here’s what the surveys tell us about those who are bringing more business and those who aren’t.”

“Yes, your CEO cares about the customer experience. But they care about the growth and health of the company a lot more. If you can’t connect your work to that, you’re always going to be struggling for budget”

In interviews, we’d ask, “If I were to ask you whether the customer experience is getting better or worse, how would you answer that question?” They would usually say, “Surveys.” I said, “Okay, how would your CEO answer the same question?” Some would say the same surveys, but I don’t think the CEO is spending a lot of time looking at surveys. Others would say, “They look at attrition and complaints.” Okay, much better. But then, I would say, “How would your favorite finance person answer the same question?” The Change Makers had an answer because they had already asked the question, but most were stumped. I remember one who said, “Jim, you’re making an assumption here. You’re assuming I’ve talked to people in finance.” Yeah, okay, you caught me. That was an assumption I made. And as I started probing more and more people, very few had actually talked to finance to understand how they monetize the customer experience.

IBM did a survey a couple years ago asking CEOs: “Which member of your C-suite will you rely most on in the upcoming years?” And the plurality was the CFO. Your CEO is spending a lot of time with your CFO. Yes, your CEO cares about survey scores, and they care about the customer experience. But they care about the growth and health of the company a lot more. If you can’t connect your work to that, you’re always going to be struggling for budget.

Liam: In terms of most customer experience programs, they can’t show impact, but advanced programs can.

Jim: Exactly. It was surprising that about half of the Change Makers use net promoter score, which is very popular. Almost all of the Hopefuls did. But most Hopefuls said, “We want to do customer experience, and it seems like everybody’s doing net promoter score. Let’s do that, too.” The Change Makers ask, “Does net promoter score predict anything I’m interested in knowing? Does it predict retention? Does it predict cross-sell and upsell net revenue retention? Customer lifetime value? If it does, I’m the biggest believer in NPS that ever existed. But if it doesn’t, I never want to use it again.” It’s got to predict something we care about, and most of the time, nobody knows if it does or not.

The way to the customer’s heart

Liam: You talk about something you call the “CX Loyalty Flywheel.” Can you tell me a little bit about that?

Jim: Sure. The concept is kind of a “no duh” at the basis, which is that when you invest in the customer experience – let’s say, for example, you streamline your ordering process or improve how you manage complaints – the customer experience gets better. Customers become more emotionally engaged with you. They actually feel more confident and have more trust in you. Their behaviors change, they order more from you, stay longer, interact in ways less expensive to serve, and your company gets healthier through better net revenue retention and customer lifetime value. I have never heard of anybody who disagrees with that as a concept. That’s not what separates the two. What separates them is that a Change Maker actually measures it, and when they improve the complaints experience, they can show that data.

“Emotions are the best predictors of behavior”

When we worked with Dow, they shortened their complaints turnaround time from 30 days to one. That’s pretty impressive. But most would never go back and measure that. They measure the behavioral data. “Did customers have to call us less often because we improved the process?” They do a survey, too, but they bring in a lot more data. They measure emotions. One of the strangest findings from the book is that business customers actually have emotions. Who knew?

Liam: It’s such an interesting aspect of your book. It’s fair to say that most people believe that B2B decision-making is just rational and price-based, but there’s an emotional component to it.

Jim: Oh yeah. Emotions are the best predictors of behavior. I’m going to get a little controversial here. I know you had a podcast member who talked about the importance of an effortless experience. My research shows that is largely irrelevant. Not totally. It matters. But if you look back at the book The Effortless Experience, it’s a great book, but its methodology is entirely centralized on the contact center. So, yes, if you own a retail store and your POS is down, then yes, fixing that problem effortlessly is the most important thing. But the most important thing for staying with that organization is: Do you have a positive impression? If you feel that this point-of-sale manufacturer has your back, they’re always there for you, and it’s down one day, you’re like, “Oh, that’s unfortunate, but I’m sure they’ll get it solved right away.” But if you don’t have that emotional connection, then confirmation bias kicks in: “Here’s another example of this stupid company who’s taking all my money and doesn’t care about me.” Same rational experience – the POS is down – but there are very different emotions around it based on how you felt about the organization in the beginning.

Liam: Can you measure emotions?

“We look at the most loyal customers and the least loyal, ask them about their emotions, and look to see which emotions best predict what I care about, which are those financial outcomes”

Jim: XM Institute has found that when you have a positive emotional experience with the organization, 74% of the time, you’ll forgive them. If it’s a negative emotional experience, we only forgive them 19% of the time. Negative or neutral. So, it matters. But can you measure emotions? And yeah, you can. Roxie Strominger with UKG is fabulous at this. Nancy Flowers, formerly at Hagerty, also did a lot of work in this space. Dow measures enjoyability. First, they look at the most loyal customers versus the less loyal customers. That can’t be defined by revenue because, by definition, a big company would always be more loyal. It’s around share of wallet, net revenue retention, cost to serve.

We look at the most loyal customers and the least loyal, ask them about their emotions, and look to see which emotions best predict what I care about, which are those financial outcomes. We worked with a SaaS software company and measured eight emotions with them. Customers who are confident are buying more products from them and have a higher intent to purchase, whereas customers who are frustrated have a much lower intent to buy more. And if they’re exhausted, they very deliberately intend never to purchase any more products from that company again.

And again, we use surveys to measure that, and you can also use texts and voice analytics. So, you can get ahead of that and say, “The most important thing we can do as a company is to send extra resources to that client to get them out of that before it sets in.” Because once it sets in, confirmation bias kicks in and everything you do is seen in a negative light.

Liam: Which surveys matter for a B2B company? Can you even survey the economic decision maker, who, as you were saying, is typically an overworked executive?

Jim: You can. It may not be that you should. There are often better methods. Typically, it’s more of a structured interview. So, you still put the data into the survey platform, but you use a different mechanism. Let’s say your client is the VP of Finance for a Fortune 100 organization and you expect them to fill out your survey. You’re sending a really clear message, which is, “I don’t have the time to talk to you myself. I just want you to give that feedback to me.” Whereas if you show up on-site, for example, and say, “Hey, I’d like to talk to you more about your experience,” you’re sending a very different message, which is: “Your opinion matters to me.” You can’t necessarily do that for every client, but for your most valuable clients, you really should wonder whether an emailed survey is the best method of getting that feedback.

Liam: Within customer experience leadership, there’s always the persistent silo problem. Why do you think some of these silos happen in customer experience, and what can leaders do to get through them?

“Middle management is where the customer experience goes to die”

Jim: Silos are inevitable. Even my organization, with 15 people, has silos. Once you scale beyond about five people, they’re going to happen. What’s different is that the Change Makers use very deliberate change management and don’t call it that. Nobody wants to be changed. But they start with understanding what their audience cares about, and then they communicate customer experience in a way that helps them accomplish their goals. Jen Zamora was the customer experience leader at Dow. She’s now been promoted to a global change management position. She would start with the middle managers because middle management is where the customer experience goes to die. There’s a lot of research on that: middle managers work with the KPIs that got them promoted and will get them promoted again. That’s what they care about.

Yes, they’ll say customer experience matters and so on, but they’re going to go back to, “How do I get promoted?”. So, she deliberately links customer experience to what they care about. For example, inventory turn. Most of us don’t think about inventory turn and customer experience together. But when we start thinking that it does matter because if it’s a better customer experience, they order more, therefore inventory turns faster, she can draw that direct line. Great programs don’t break down all silos – they connect the silos by, first of all, helping them understand how they improve the customer experience. But most of all, understand how a better customer experience improves their life.

Bridging the survey gap with AI

Liam: Before we wrap up, I want to get your thoughts on AI. How do you think ChatGPT is going to affect CX going forward?

Jim: Well, it’s going to have a huge impact on our understanding, first of all. Today, most of our clients see survey response rates of 5 to 10%, and they’re only focused on the 5 to 10%. Sam Wegman at Univar did a great job on this. They looked at, “What do we know about that 7% of customers who fill out surveys? Let’s look at the operational data, the behavioral data, and the financial data. What do we know is going on?” And we can actually create a synthetic survey score based on what we know about the rest of the experience. While only 5 to 10% of your customers are talking to you through surveys, all are talking to you through their behavior.

“Taking, for example, the contact center, conversations with your sales team, email communications – AI can take that and help you get a sense of your real issues”

Things like the number of issues that are opened, complaints, and on-time delivery vary depending on the operational behavioral data and on your industry, but AI is getting better at helping us fill in some of those gaps from those that don’t fill out surveys. Even better is taking that unstructured data and helping us learn from that at scale. And so, taking, for example, the contact center, conversations with your sales team, email communications – AI can take that and help you get a sense of your real issues, which are often things you don’t ever think to put on a survey.

And so, I see a bright future for AI. There’s software out there called Journey Analytics and Orchestration which will actually use AI to change the experience based on the data. So, if we see, for example, that you’re always ordering at a certain threshold and then you stop, it can, first of all, recognize that and reach out. It can tell a salesperson or customer service to reach out or send an automated communication to say “Hey, we noticed your order didn’t go through. Have you had any issues?” It can recognize patterns and actually kick off changes to the experience. I’m bullish on AI’s future in customer experience.

Liam: I know this book has just come out a little while ago, but what’s next? Do you have any plans or projects for the rest of the year?

Jim: Well, a couple. First of all, with the launch of the book, we held our first Do B2B Better conference, and we’ve gotten amazing feedback because it wasn’t us speaking. We brought in the six leaders that inspire me the most – Ricardo from Dow, Nancy from Hagerty, Roxie Strominger from UKG… six wonderful speakers to talk specifically about how they do the four actions. So, coming up on September 12th, we’ll have our next one. We’re also looking to conduct a survey to understand what drives B2B loyalty, and instead of starting with survey outcomes, we’re going to start with share of wallet – what in the customer experience increases the share of wallet. And we expect to have that out for our next new B2B conference.

Liam: Brilliant. And lastly, where can people go to keep up with you and your work?

Jim: Our website is heartofthecustomer.com. I’m also very active on LinkedIn and love to have people connect with me.

Liam: Brilliant. Jim, thank you so much for joining us today. Really appreciate it.

Jim: Thanks, Liam.