In this highly competitive era, where customer experience and loyalty are the key brand differentiators, businesses count on metrics in order to measure the current health of their organization and to anticipate the future performance. A relevant customer feedback metric is significant so as to
- Understand what you need to change to improve customer loyalty
- Compare your progress from previous months or quarters in terms of providing customer experience
- Determine how each one of your products and services impacts customer loyalty
There are many options out there such as CSAT (Customer Satisfaction Score), NPS (Net Promoter Score) and CES (Customer Effort Score). But the question here is, which is the best metric to measure the present performance and predict the future performance of a company?
Let’s try to gauge each one of them one by one to come to a conclusion:
CSAT (Customer Satisfaction Score)
The traditional CSAT scores include questions to uncover how satisfied the customers are with a product or a particular service. A respondent has to express his satisfaction on a scale of 1-5. For example, how would you like to rate your experience in the last customer support call?
- Very Satisfied
- Somewhat Satisfied
- Neither Satisfied nor Dissatisfied
- Somewhat Dissatisfied
- Very Dissatisfied
Companies conclude that they are doing well, if at least 70% of the respondents opt for either “somewhat satisfied” or “very satisfied”.
But the limitation of CSAT score is that the question targets only a specific event or interaction rather than focussing on a customer’s wider relationship with the organization. It only measures short-term happiness of the customer.
NPS (Net Promoter Score)
While CSAT typically measures a general level of satisfaction, Net Promoter Score (NPS) clearly determines customer loyalty based on the question “How do you like our company and will you recommend it to others?”. It is not based on a single interaction or a product delivery rather incorporates a combination of various aspects that go into deciding whether a customer is going to recommend you.
NPS can help in foreseeing the actual future purchasing pattern of a customer.
For example, how likely will you recommend our company to your friends or colleagues on a scale of 0-10? The scale is categorized as
- 9-10- Promoters
- 0-6- Detractors
NPS can then be calculated as
The Net Promoter Score = % of promoters (respondents that gave a 9-10) – % of detractors (respondents that gave a 0-6)
Again, NPS has its own drawbacks. It measures the overall customer experience but does not pinpoint the actionable improvement areas. For example, if you conclude that your company’s NPS scores are low. Then where would you begin from? How will you identify the problem areas and which particular thing you will fix first?
Another limitation of NPS is that there is no proof that the promoters are actually going to recommend your company to others.
However, keeping apart these limitations, NPS has been claimed to be a better predictor of customer behaviour as compared to CSAT and that it measures long-term happiness of the customers focussing on customer loyalty.
CES (Customer Effort Score)
One of the recent metrics that has gained popularity is the Customer Effort Score (CES). It is a product of five-year research of a US research and advisory firm, Corporate Executive Board (CEB). Contrary to what previous metrics assumed, this research concluded that customers simply want a satisfactory solution to their problems rather than to get delighted by the company.
There was not a notable increase in the loyalty behaviour when moving from meeting expectations to exceeding expectations. The real difference in loyalty was found when going from below expectations to meeting expectations. So, the best way to improve customer loyalty is to reduce the barriers and effort that the customer has to put in to get their issues resolved.
As a customer, typical obstacles that cause high effort could be:
- Getting transferred to multiple departments for information
- A highly complex IVR system with number of menus
- Making repeat calls to resolve an issue
- Switching channels of communication from email to phone and so on
- Telling the things that a company should already know
These are certain things that have nothing to do with product quality but can be handled with effective support services.
So, in order to overcome these problems, CES came into picture wherein the customer is asked how much effort he had to put forth to handle his request on a scale from 1 (very low effort) to 5 (very high effort).
However, this version of CES question caused some complications as it offers an inverted scale from 1 (very low effort) to 5 (very high effort) and also there were issues in translating the word “effort” in various languages. Now, the latest version of the question is based on agreement/disagreement rating. It goes like “The company made it easy for me to handle my issue”. The rating ranges from 1 (Strongly Disagree) to 7 (Strongly Agree).
According to the research by CEB, Service organizations create loyal customers primarily by reducing customer effort – i.e. helping them solve their problems quickly and easily – not by delighting them in service interactions.
CES helps in minimizing the effort made by the customer and makes it easy to pinpoint actionable service improvement areas, thus making customers more loyal to the company.
Now that all the metrics have been described, we come back to the same question – Which is the best metric to measure the present performance and predict the future performance of an organization?
According to me, one metric or one question can’t measure loyalty or satisfaction. Neither of them alone can help in addressing the problems that are specific to any business and its environment. Whereas, CES particularly points out how a company performs in handling individual customer issues, NPS elucidates your customer satisfaction on an overall level.
Companies can combine these customer satisfaction measurements and figure out through various experiments, which mix of these metrics is the best and most effective for them. Based on the results of these scores, they can define actionable points to work on and improve customer satisfaction and loyalty.