Everything HR Needs to Know About Experience Management (XM)
We talk about experiences a lot. Some of the experiences that immediately come to mind are the candidate experience, employee experience, and the customer experience. But I must admit when I think about these experiences, I lean toward the feeling that the person might have, versus data.
While an individual’s feelings about an experience are important, as business people, we also need to be focused on the data that the experience can generate for our organizations. At this year’s Qualtrics X4 Summit, I had the chance to speak with Bryce Winkelman, global growth and strategy leader for Qualtrics’ EmployeeXM product. We talked about – in general terms – what experience management is and why people need to take notice.
Bryce, let’s start with a definition. What is experience management (XM)? And when we talk about experiences, whose experiences are we talking about?
[Winkelman] Experience Management (XM) is the discipline of using both experience data (X-data) and operational data (O-data) to measure and improve the four core experiences of any business – customer, employee, product, and brand.
For decades, businesses have depended on O-data to understand what is happening – hard numbers like costs, accounting, and sales – to inform business decisions. X-data measures the human factor data – an individual’s beliefs, emotions, and intentions – that tell you why something is happening. Together, X- and O-data ensure every business decision is based on both facts and perceptions.
Why is experience management important to the business?
[Winkelman] In today’s experience economy, the value of any organization is dictated by the experiences of its customers, employees, and other constituencies, and those experiences can be shared and amplified globally and instantaneously. As a result, brand perception and reputation can shift quickly. Organizations that detect these factors and thoughtfully shape interactions with customers and employees can close experiences gaps, create differentiated experiences and sustain competitive advantage.
During the Qualtrics X4 Summit, I heard some conversations about the “experience gap”. What is it and why should organizations be concerned about it?
[Winkelman] Experience is all-important in winning and retaining customers and employees; however, actual experiences often fall short of expectations. The difference between the experience an organization believes they are delivering, and the actual experience delivered is the ‘experience gap.’ Experience gaps often have detrimental consequences for an organization, including lost customers, lower spend, complaints, employee turnover, employee disengagement, poor performance, and product failures.
I’d like to elaborate on the detrimental consequences that organizations can face as a result of experience gaps. Do you have a real-life example that you can share?
He said that most customer and experience programs we see are based on a single instrument. Kmart went into bankruptcy with high customer satisfaction scores. How could they have high customer satisfaction yet declining sales on the other side?
Four years before their bankruptcy, Kmart hired Jared’s father to run a massive study. According to Wall Street, with $32 billion in sales, Kmart had the perfect retail model. The study was simple. A team of data scientists stood outside the stores and asked people coming in what they intended to purchase. And then, on the way out they grabbed their receipts and checked if they actually purchased what they intended to purchase.
So, what happened? Poor instrumentation. Kmart was a single instrumented system. And, believe it or not, they were ahead of their time, because they had a CX program in the 90s. It was only when they added additional instrumentation, in the case of purchaser intent, that they learned about the headwinds. By then it was too late.
Okay, lots of businesses track experience data. What can we learn from the Kmart story?
[Winkelman] As Jared mentioned, Kmart’s journey highlights what organizations should be worried about with XM programs today. They thought they were doing great, but in reality, they weren’t.
As Jared put it: performance is up and to the right, business looks great, things start to slow down, but management don’t notice, or they dismiss it and explain it away. Deep inside, people know something is wrong, but no one knows exactly what, because there’s poor instrumentation. At that point, you’re scrambling to get data and build the missing instrumentation to figure out what’s going on.
How can organizations use experience management to improve the business?
[Winkelman] Winning and not being blindsided takes a lot more instrumentation than sentiment analysis. The importance of building the right instrumentation at every step of the journey is the most pivotal.At Qualtrics, we help companies to:
- Collect experience data from stakeholders at every meaningful touchpoint (such as employee onboarding or on an employee’s 5th work anniversary)
- Analyze and understand why things are happening and what to do about it
- Automate the actioning process that drives improvement across customer, employee, product, and brand experiences
Last question. What do you see as the future of experience management?
[Winkelman] Organizations today succeed or fail based on the experiences they deliver. Many organizations are still using traditional methods to simply gather data about customer and employee satisfaction, but that is no longer working as a competitive advantage. They are unintentionally racing to the bottom. The complexity and nuance of delivering great experiences has compelled executives to take ownership of these matters directly and in real-time.
When it comes specifically to HR, we believe that XM is more influential upon employee experience than just HCM systems. We are at an inflection point in HR today, where organizations are raising employee experience to a board level priority and expecting HR to shift from a cost center to a growth driver. Disruption happens in the experience gaps – just think about the taxi, entertainment, or financial services industries. Companies that compete on experience will unlock growth engines. Experience management will revolutionize the future of business, because experience is the future of business.
Organizations who embrace XM for employee experience allow managers and employees to identify experience gaps, gather real-time insights, and quickly take action at every meaningful touchpoint, from recruiting to on-boarding to performance management.
A HUGE thanks to Bryce for sharing his knowledge of experience management with us. I thoroughly enjoyed attending the Qualtrics X4 conference and look forward to sharing more insights with you in the weeks and months to come.
Experience management isn’t going away anytime soon. As we spend more time talking about experiences, we need to keep feelings in mind but also focus on the numbers. And Bryce’s comments reminded me that we can’t simply use a single number to measure our success.
Image captured by Sharlyn Lauby at the Qualtrics X4 Summit in Salt Lake City, UT
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