Choosing The Right CX Metrics For Your Business
First of all, let me just point out that there is a lot more to customer experience than simply measuring a score. CX metrics are an important tool to help you improve your business but collecting the score alone will not suffice. However, it is a good place to start.
Before we go into an explanation of the main metrics used, it is important to understand why it is important to measure customer experience. There is an increasing correlation between loyalty and customer experience. Customer experience programs that report actionable intelligence can give organization a compelling competitive advantage by improving their customer service as well as increase loyalty.
So measuring and improving these metrics can ultimately lead to business improvements and increased revenue.
There are a number of different metrics that can be used so before we go any further let’s take a look at the main contenders.
Net Promoter Score (NPS)
What is Net Promoter Score?
Net Promoter Score (NPS) is a simple way of understanding how your customers feel about your organization by asking one simple question: would they recommend you to others?
This not only tells you how likely the customer is to recommend you but also how likely they are to purchase goods/ services from you themselves again in the future.
NPS respondents are grouped into three categories:
1. Promoters – If a customer scores you as a nine or a 10, they are a promoter – yay! They will actively state they are happy dealing with you and may well promote you to others.
2. Passives – If they score you as a seven or an eight, they are passive – meh! You may have delivered good service but these customers just don’t feel strongly enough to go out of their way to recommend you.
3. Detractors – A score of six or lower means they are a detractor – boo! The customer experience did not meet their expectations and these customers are actively stating they would not recommend you to others.
How NPS Is Calculated
To determine your official NPS score, take the percentage of promoters (nines and 10s) and subtract the percentage of detractors (sixes and lower). That number is your Net Promoter Score.
Let’s say you have 100 respondents split into 8 detractors, 54 passives and 38 promoters. Your NPS score would 30 (38-8). It is actually possible to receive a negative score but in an ideal world you are looking to get as close to 100 as possible.
• Common – NPS is the most common metric across all feedback survey types
• Simple – Easy to understand, NPS offers simple segmentation and adding a follow up question can give you even more insight
• Easy to use – Most customers are happy to fill these in given the short and simple nature
• Executive Buy in – Give a simple, big-picture gauge of customer loyalty to management
• Growth – Numerous studies have found high correlation between improving NPS and business growth
• Benchmarking – As it is a standard measurement used worldwide you can benchmark against competitors to see where you stand. However, you should be cautious of this as you need to be measuring the same thing, at the same time, in a similar way.
• Not always applicable – While suitable for most industries there are some situations where NPS is not the right choice
• Not Specific Enough – The rating itself does not provide enough insight to understand how your customer feel. However, you can add follow on questions to provide more context and actionable insight.
What is Customer Satisfaction?
Customer Satisfaction (CSAT) surveys are used to help companies measure satisfaction.
Customers express their satisfaction/dissatisfaction with a particular product, service or transaction. Often this can be just one main question – how satisfied are you with your product? Though this can be expanded into different aspects of the service for a deeper understanding.
Satisfied customers usually return and buy more and also tell other people about their experiences.
How CSAT Is Calculated
Your CSAT score is calculated by the sum of respondents that answered somewhat or very satisfied. The higher the number the better your customer satisfaction will be.
Along with a scale rating of how satisfied a customer feels, follow up questions may be asked that allow more open ended responses. This can often make analysis more difficult unless you have some sentiment analysis in place to help group keywords together.
The scores achieved in customer satisfaction surveys are used to create a customer satisfaction index or CSI. There is no single definition of what comprises a customer satisfaction index. Some companies may just use the overall performance rating. Others may use an average of two key measurements – the overall performance rating and the intention to buy again. Some companies may bring together a wider range of issues to form an overall CSI.
• Simple – Like NPS, CSAT is simple and easy to understand for users
• Classic – CSAT has been around for a long time and is originally from traditional market research customer satisfaction surveys
• Insight – It can provide rich analytics and metrics
• Popular – CSAT is still very common, though usage is reducing, meaning customers are used to these types of questions
• Longer – If measuring multiple areas this can lead to longer questionnaires and this is no always applicable to Voice of the Customer
• Personalize – It is important to add company branding and make your survey is personalized if possible. This builds trust and can improve response rates
Customer Effort Score
What is Customer Effort Score?
Customer Effort Score (CES) is a metric that tracks the effort a customer must use to complete a transaction to the desired state.
The main principle behind this is that organizations can create can create loyal customers by reducing customer effort. There are two main questions used to measure CES.
1. How much effort did you personally have to put forth to handle you request?
2. Do you agree or disagree with the following? The organisation made it easy for me to handle my issue.
Version 1 was the original question designed in 2010 with a rating scale of 1 (very small effort) to 5 (very big effort). This version has a couple of issues though, such as the inverted scale causing some confusion (1 is good and 5 is bad).
Version 2 was published in 2013 and was seen as filling the gap in seeking better interpretation consistency, universal applicability, and cross-industry benchmarking capabilities. For this new version customers were asked to express their level of agreement/ disagreement with this statement on an enhanced seven-degree scale from 1 (strongly disagree) to 7 (strongly agree).
Where possible you may be able to adapt the question to be more meaningful, including personalisation if possible.
How CES is Calculated
Using one of the questions mentioned above, the customer selects from a scale of options giving you an overall effort rating. A high average rating indicates you are making things easy for your customer. A very low number means that customers are having to put too much effort in to interact with your company. Like the other metrics, follow up questions can also be used to gain a deeper insight around the overall rating.
• New – CES is relatively new compared to other metrics but is proving to be a popular way of measuring customer service satisfaction
• Data – Provides actionable data, immediately, meaning you can make changes quickly
• Short – This question type suits short questionnaires so is applicable for VoC
• Simple – Easy to understand for customer and company
Although the above are the most commonly used CX metrics there are a number of other factors that could be considered.
• Retention loyalty – how likely are you to remain with us?
Though retention and loyalty could be argued as being two separate areas to focus on. Loyalty is about growth, whereas retention is more about decline.
• Purchase loyalty – how likely are you to continue to repurchase?
Repeat purchases alone is not always the best indicator of brand loyalty and should be looked at separately.
• Met expectation – how much better (or worse) was your experience with our company compared to what you expected?
Asking a customer if a product or services has met or exceeded expectations is a great way of measuring customer satisfaction. They are measuring you against their own pre-determined expectations and not against your set criteria.
So now you know what metrics can be used the next question is which one is right for you. To better understand this let’s compare the main three used.
CSAT and NPS are used to measure customer satisfaction. CSAT is a useful score to measure short-term happiness of your customers whereas NPS focuses more on measuring long-term happiness, on customer loyalty.
NPS is said to be a better predictor of customer behaviour and is strongly correlated with measures of company growth.
Customer Effort Score looks at things from a different perspective than the first two measurement tools. The customer is asked how much effort they put into a certain interaction with the company. According to some studies CES V.2 should be around 1.8x better at predicting customer loyalty than CSAT and 2x finer than NPS.
Each metric has its own applicability and limitations and could be used either stand alone or in combination with each other. For example, if you were looking to create a survey to measure satisfaction from an event you could ask respondents to provide some CSAT scores around the event content, speakers and location. You could also ask a CES question to find out how much effort was needed to sign up for the event. Then at the end of the survey you could ask how likely they would be to recommend either the event or your company based on the experience.
There is no reason you cannot combine two or all three metrics together but you need to keep in mind the frequency you are asking for feedback and the length of any survey you send the customer.
Ultimately you need to look at what is the most relevant question to ask your customer. Ask yourself which question would they be expecting you to ask? Keep it simple and actionable and ensure you measure your response rates. This alone can give you an idea of how engaged customers are with your brand.
The numbers these questions provide should be used as an indicator of success. Don’t just jump into choosing a metric and collecting the data – have an understanding of why and what you are wanting to achieve. How does it fit in with business and brand strategy? What are the goals – customers to come back more – more recommendations? Once you understand your business goals you are in better position to decide which metric is best for you.
You also need to ensure you are taking action from the insight provided. In an ideal case you should link feedback directly as an attribute of a ticket/case so that ownership is given and action is taken.
As a basic starting point you should ensure you are looking at the following:
• Total number of feedback requests sent
• Total number of feedback collected
• % of collected from requests sent
• % distribution of feedback on scale or relevant metric
• Change of KPI’s over time
Hopefully now you have a better understanding of the metrics available and how each of them works but before you run off to get started here are some final points to keep in mind.
The choice of metric is not as important as you think – Companies are not going to succeed or fail based on the specific metric the company choose. Driving improvement is what is important – the measurement alone means nothing unless you are doing something with it. Ensure you are measuring your data in the right place at the right time. If measuring NPS for example, it should reflect how the customer feels about your company overall and not just based on one recent interaction.
When choosing your metric, always think about it from;
• The perspective of the respondent – is it relevant to them?
• The perspective of the business – can you use it, easily?
Remember the score is not the end game… it is the start!
• Focus on driving action, not reporting a score
• Articulate the benefits of these actions in financial terms
Whatever metric you decide on, you are starting your journey to improve your customer experience and so from here on things can only get better for you and for your customers.