From measurement to management: why investing in improving relationship health pays dividends

Learn why customer relationship measurement isn’t enough - and why customer relationship health management is the new way to create impactful experiences.

Customer relationships form the heart of any business, but how these relationships are managed is still a point of contention for many brands. Whilst many monitor the interactions and subsequent experience a customer has,  going one step further to actively manage these relationships is a challenge many companies fail to address. To improve loyalty, businesses should move from measurement to management.

What is customer relationship measurement?

A customer relationship is defined as the sum of all interactions and experiences that a customer has with a brand. Customer relationship measurement is simply translating customer relationships into metrics, such as Net Promoter Score (NPS), customer retention cost, Customer Effort Scores (CES), and more.

Though useful, brands often fall short of their goals by only focusing on the measurement results of their customer relationships. Using a formulaic approach to gathering feedback and scoring makes it near impossible to keep up with changing customer expectations, as customers often get stuck just measuring the experience, and if they get to the action, that action is usually focused on fighting individual fires and not driving systemic improvement. The result? Stagnant customer experiences that don’t attract new customers, and open the door for competitors.

Common pitfalls of a customer relationship measurement program include:

• Follow a rigid cadence and structure

Most relationship measurement programs follow a set structure and distribute identical surveys to all customers on an annual or bi-annual basis. This periodic cadence limits the strategic value of the survey as it only surfaces insights about poor experiences after it’s too late to take meaningful action. Businesses should be primed and ready to take action on issues before it’s too late – with this approach, that’s not possible.

• Obsess about scores

While relationship metrics – such as NPS, satisfaction, or likelihood to return – are undeniably useful and important for tracking and improving customer experiences, existing measurement programs tend to treat these metrics as the ultimate goal, rather than what they actually are, which is a tool that helps organizations take meaningful, targeted action and track the impact of those actions.

• Lack meaningful context

While topline metrics, like NPS and OSAT, are simple and easy to understand, they are narrowly focused on the company’s own performance, assessed by its current customers. Relationships are influenced in other ways, whether that be by competitors or whether a brand has lived up to its promise.

To resolve this, instead of customer relationship measurement, we propose customer relationship health management.

So with that in mind, the real question is...

What is customer relationship health management?

Relationship health management is the monitoring of experiences customers have with your brand, with a focus on taking targeted actions to improve them. Every experience matters  – and knowing how to improve them matters even more.

Successful relationship health management encompasses metrics such as NPS to understand your customers’ views on their interactions with your company, and supplements these traditional metrics with additional indicators of health including competitive performance,  brand strength, and loyalty drivers.

But your work isn’t done once you can see your scores in a dashboard. Taking action after understanding how your customers perceive you is where relationship measurement becomes management. Your tools should provide you with the means to take influential action on problems and further improve the things that you are doing well.

Relationship management isn’t just a one-time event; it’s a constant process of improving, re-measuring, and improving again to ensure your customer relationships remain healthy as needs evolve.

The benefits of customer relationship health management:

Loyal customers are more likely to forgive you for poor experiences, as long as you manage them, communicate well and recover the relationship. It's more expensive to acquire new customers than to retain the ones you have. Relationship programs improve retention, loyalty, and lifetime value. Not only will they stay longer, but they’ll recommend you to others if they're happy too.

According to Qualtrics XM Institute, customers are:

• 4.2x more likely to trust an organization after a positive customer experience
• 5.1x more likely to recommend an organization after satisfying customer experience
• 3.5x more likely to purchase more from an organization after a positive customer experience

Read now: How relationship health management can elevate your relationship program and drive unwavering loyalty

Why now is the time to update your relationship health management program

According to research from Qualtrics XM Institute, just one bad experience can lead to a 9.5% decrease in sales across all industry types. Every interaction matters.

Creating a relationship health management program – which turns relationship measurement into active relationship management – will significantly improve loyalty, retention and increase customer lifetime value.

Taking this step can’t come too soon, as every customer interaction can be the difference between a good experience, or a poor one, and the consequences that come from that.

Our insight-led eBook details why you should craft a relationship health management program that is:

• Dynamic and always-on
• Laden with comparative insights
• Linked to business results
• Action-oriented

With an effective relationship health management program in place, you can build trust with your current customer base, transform customers into brand advocates and increase your customer lifetime value.