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A business that cannot win the loyalty of customers is a business that cannot succeed in the long-term. It’s that simple. In this age of rapidly-changing customer expectations and a crowded market of competing companies, every business leader should prioritize customer experience (CX) as a key performance indicator.
It’s clear that customer experience should be a concern for not just CX professionals, but for leaders in all areas of the business.
gettyRecent research shows that 87% of CX professionals say customer feedback has become more important since the onset of COVID-19. As we all adjust to a new normal, organizations are relying on CX teams to provide strategic direction that’s grounded in customer insights and data. In recent years, research by CustomerThink, Forrester, and Gartner have found at least 70% of business leaders believe CX will help their companies differentiate in a world where products and services are increasingly commoditized, and competing based mainly on price is not a viable long-term strategy.
It’s clear that customer experience should be a concern for not just CX professionals, but for leaders in all areas of the business. To put it plainly, brands that excel in CX outperform their rivals. McKinsey research of 27,000 consumers found that increased customer satisfaction has the potential to lift revenue by up to 15% while lowering the cost of serving customers by as much as 20%.
We designed GetFeedback, our CX platform, to make it easy to take action on customer insights. The data shows that just the mere act of measuring customer satisfaction has been shown to improve customer retention.
But how do you measure success in CX? While there are many ways to quantify customer satisfaction, the most popular metrics that signify excellence or failure in this area are NPS®, CES, and CSAT.
Use Net Promoter Score (NPS) to measure customer loyalty
Have you ever been asked the question, “How likely is it that you would recommend this company/product/service to a friend or colleague?”
The odds are high that you have in a post-purchase survey. This is the simple question that the Net Promoter Score (NPS) is based on.
Proposed by loyalty consultant Fred Reichheld in 2003, NPS is an easy, but effective way to measure loyalty. It is also the most popular, with two-thirds of the Fortune 1000 using it in some way. Here’s how it works: based on responses to the “would you recommend” question on a scale of 0 to 10, the percentage of Detractors (0 to 6) are subtracted from Promoters (9 or 10) to get the Net Promoter Score. The theory is that Promoters are the most valuable customers, and Detractors can do the most damage.
NPS is popular with executives who are invested in CX because it is a simple concept to understand and communicate the importance of. It is also popular with CX professionals who understand that the shorter the touchpoint survey, the higher the response rate.
However, a ratings question and the standard follow up open text as to why the rating can still be hard to act on. In GetFeedback, we added driver ratings questions that can give leaders a glimpse into what matters most. By leveraging survey feedback as a flashlight that points you in the right direction, CX leaders reconcile feedback with operational data and other voice of the customer avenues to determine where to invest. Of course, CX leaders cannot ignore those “in the middle'' customers known as Passives (7 or 8) as these customers are not stating loyalty and are at risk of moving to a competitor. Another critique is that the simplicity has its drawbacks; a company can improve its NPS by having Detractors stop patronizing the business, but fewer customers will negatively impact revenue.
Use CSAT to measure customer satisfaction
Much like NPS, CSAT (Customer Satisfaction Score) is assessed by asking customers: “How would you rate your overall satisfaction with our company/product/service?” Typically a five-point scale is used with the options very unsatisfied, unsatisfied, neutral, satisfied, and very satisfied. Assign each response a value from 1 to 5 and you can calculate your CSAT score from there.
GetFeedback recommends this formula to calculate CSAT: (Number of 4 and 5 responses) / (Number of total responses) x 100 = % of satisfied customers.
CSAT is useful because the calculation is statistically sound and the question is very common. It is easy to implement and understand.
CSAT is a metric commonly used by support, professional services, marketing, and product organizations to measure a particular interaction or transaction. The benefits of a holistic CX program on a single platform is to embed consistency in the ratings, the questions, and the follow up questions. Of course, the purpose of ratings is not the score but measuring the impact of the improvements made over time. Further, while a percentage of “satisfied” customers is useful information, it does not necessarily correlate to loyalty. To truly excel in CX, organizations need to do more than earn a satisfactory rating.
Use CES to understand how much effort a customer put into the interaction
The CES (Customer Effort Score) question asks customers how much they agree with the statement: “The company made it easy to handle my issue” with a 7-point scale from 1 being strongly disagree to 7 being strongly agree.
The score can be calculated in various ways. One way is to measure the percentage of respondents that answer 5 (somewhat agree) or higher. Another way is to divide the sum of all individual scores by the number of customers who provided a response: (Total sum of responses)/(Number of responses)=CES score.
The usefulness of CES depends on your business's primary value proposition. If your company is a fast food restaurant and quick and easy is your goal with each interaction, CES works well to understand your customer. If that isn’t your business’s differentiator, then CES is perhaps best used in customer service interactions to measure effectiveness there.
Measure CX performance in several ways, not just one
After reading this, you may wonder which of these three metrics is the best.
In reality, you should not measure CX in one way, but in several ways strategically. In 2015, the International Journal of Research in Marketing published a paper analyzing the ability of different Customer Feedback Metrics (CFMs) to predict customer retention. The study found that “combining CFMs tends to improve predictions” and suggested that organizations use a dashboard of CFMs.
As you and your team become more skilled in measuring CX performance, you may realize a combination of metrics offer a fuller picture of your customers’ journeys. Different CX metrics serve different purposes. If you want to measure loyalty or retention, a time-triggered NPS is best. If you're trying to measure completion of a task particularly with a human interaction, consider CSAT. If you want to understand how easy it was for your customers to get something done, particularly useful for digital channels, CES is your metric.
Net Promoter®, NPS®, NPS Prism®, and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld. Net Promoter Score℠ and Net Promoter System℠ are service marks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.
