Monday, September 23, 2024

You Might Say Experience is Correlated to Outcomes?

At a global leadership conference in the past few months, Marcus Buckingham tried to show that improving customer experiences (X axis) led to better store outcomes (Y axis). He showed a scatterplot for one retail chain that sort of looked like this:

And he drew a rough linear trend line slightly on an upward slant. And then he said he focused on those who had high customer experience levels and what made them different. He concluded that "love" was the key--love being the "deep, unwavering commitment to the flourishing of another human being."

The problem is that his analysis' foundation is flawed. High outcomes were just as likely to be generated in low-medium customer experience stores as high customer experience stores. 

In statistics we look for an r-squared value that shows how much one factor influences the results. Any r-squared less than 60% is suspect--40% of the outcome is influenced by other things. This particular scatterplot might have an r-squared value of 20%, which means most of the stores' results are determined by other factors than customer experience.

So to follow the path that love is key, one is starting in a different place. I don't know where it is, but Buckingham's research here didn't get us on the right path.

 

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