Customer Experience Management with the Forrester CxPi

Perhaps you could have safely ignored CEM (Customer Experience Management) three years ago, but you certainly can't now:

• Customer experience is growing up; it's been important to firms for long enough that your competitors are differentiating themselves on experience.
• The recession is strengthening the correlation between customer experience and customer loyalty, across all 12 B2C industries Forrester Research studied in its report "Customer Experience Correlates to Loyalty" (published February 17, 2009). 

As CEM comes of age, most businesses will cut other areas disproportionately more than they will cut areas that impact customer experience.  
So customer experience is more important than ever, but how should you measure your customers' perceptions of the experience you provide?  The service quality gap model is more useful for identifying areas that need improvement than for tracking overall sentiment. For this purpose, you might want to consider the Forrester CxPi, which is a succinct measure for evaluating customer experience that you can readily adapt to your own research.
Forrester calculates it customer-experience index using the net score for three key questions:

1. Usefulness - Thinking about your recent interactions with these firms, how effective were they at meeting your needs?  1 - Didn't meet any of my needs to 5 - Met all of my needs
2. Ease of Use - Thinking about your recent interactions with these firms, how easy was it to work with these firms?  1 - Very difficult to 5 - Very easy
3. Enjoyability - Thinking about your recent interactions with these firms, how enjoyable were the interactions?  1 - Not at all enjoyable to 5 - Very enjoyable

The individual indexes for each measure are calculated by subtracting the percentage of a firm's customers that reported a bad experience from the percentage that reported a good experience:  take the percentage of consumers who selected one of the top two choices (4 or 5) and subtract the percentage of consumers who selected the bottom two choices (1 or 2).

To calculate the overall CxPi, Forrester Research averages the net scores for all three questions. An example:



Forrester provides the following guidelines for judging a CxPi:

• Excellent: 85%+
• Good: 75% to 84%
• Okay: 65% to 74%
• Poor: 55% to 64%
• Very poor: <55%

What makes the CxPi an outstanding metric is its strong correlation to loyalty. Depending on industry, Forrester reports a very high correlation to willingness to repurchase, a high correlation to likelihood to recommend, and a medium correlation to reluctance to switch.

The minor disappointments with the index relate to the choice of scales. Unfortunately, the choice of scales is inconsistent: ease of use is a bipolar scale instead of a unipolar scale like usefulness and enjoyability. And scales that label each point have greater reliability and validity, especially among less educated consumers, than scales that label only the endpoints, as done by Forrester here. But those are minor quibbles. While the CxPi was only created in 2007, it has already emerged as a valuable and important index.  

Forrester makes available a complimentary copy of the 2008 results to the Customer Experience Index. This report provides the results for 113 organizations in a dozen different industries, making it an excellent document to use for benchmark comparisons of the customer experience your organization provides.