Many business leaders link performance pay (employee’s variable compensation) to satisfaction or loyalty survey results to improve the customer experience provided by their company or to game the survey results.
Why you should not automatically link performance pay with survey results
The fundamental reason is that metrics and compensation should only be connected to influence behavior that will result in the business achieving its desired outcomes. Some of these outcomes are increased profitability, growing customer lifetime value, and mitigating business risks.
With many capital equipment products, the cost of changing brands is so high as to make the likelihood of modification non-existent and, therefore, the impact on the desired business outcomes also non-existent.
B2B capital equipment products generally have very high switching costs. For example, airlines that fly the Airbus A320, or have them on order, cannot quickly stop purchasing new ones as their needs grow. Crew training, maintenance and logistics, and long deliveries from Boeing means that existing users and customers who await delivery will fly the Boeing planes for many years.
When a company has selected brand X products for one manufacturing site and decides to increase capacity by duplicating the production line at another location, they will usually buy the same equipment; it will reduce startup time and costs and make it easy to benchmark each facility against the other. Intel has used a practice it calls Copy Exactly! for many years to deploy each new generation of manufacturing equipment. They not only duplicate equipment but also use the same paint (color, manufacturer, and type) and flooring to troubleshoot production problems by eliminating everything that is the same across their factories. Standardization overrides experiences.
Another practical data point. In their article “CX Metrics Aren’t Customer-Centric, But Should Be. Learn How”, Peter Fader and Sarah E. Toms describe how companies with high switching costs break their customers into three segments based on any CX metric. The three segments are:
| Segment Name | Hostile Hostages | Neutral Hostages | Caged Loyalists |
| CX Metric | Bad | Neutral | Good |
Either your customers are hostages or are at least caged. In either case, they must be agitated even to consider switching, if possible.
You might be wondering, “what about referrals?” In my survey work, many people rate a company 9 or 10 on the NPS question but never actually refer. There are many reasons why but their behavior doesn’t match their intent. I have also found people who rate a company with a 0 or 1 NPS score who referred the company to associates. When I asked about the difference, I heard things like, “They were not good for us but would be perfect for my friend.” The takeaway is – intent does not always match behavior.
Why improve the customer’s experiences with your company?
Even though your B2B capital equipment customers are likely locked into your products, you should still work to improve all the experiences you create. There are still referrals (some people do what they say), and they will make a new purchasing decision when the current product reaches end-of-life. They will still purchase the product they believe is the best for their intended use, but if the final choice between you and a competitor is close, service experience may be the deciding factor.
Where to invest your CX money?
You should invest your time and money in motivating your teams to improve on the actions that will help your customers extract the most value from your products because this is why they originally purchased from you. Their business outcomes are much more important than how they feel about the intangible interactions with the service engineers. Areas to invest in include:
- Improve product ease of use and reliability.
- Minimize call center handling time, so invest in a knowledge base and chat
- Add more value to your contracts and reduce the price
- Help the customers improve how your product fits into their overall operation
- Status tracking and notifications
- Become proactive with predictive maintenance
- Increase spare parts holdings to improve first-call fix rates
- Employee training – both hard and soft skills
In other words, with B2B customers using products with high switching costs, fixing down equipment is much more important than employee empathy for their situation. And that is why you should not automatically link performance pay to survey results.
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization create better experiences for your customers, please get in touch with us or check out some of our free articles and white papers here.
This article originally appeared on the MIZE blog and was published on April 23, 2019