What’s the right metric when it comes to measuring customer experience?
Afinancial services survey across East Africa cited a lack of customer experience (CX) data as their main obstacle (33%) in implementing effective CX within their organisation. This was followed by 21% indicating that they did not have meaningful insights to help with decision-making. Many companies simply didn’t measure CX or the success of associated CX initiatives.
Measure it if you want to optimise it…
Businesses need to measure CX before they can optimise it. Optimising to improve CX begins with establishing your baseline (your current score) and forming hypotheses on how to improve. These are tested and even re-tested for further improvements.
Businesses need to decide what metrics are critical to measuring CX and how often they should be measured. With today’s customers demanding quick responses, it’s better to collect survey data and interpret results in real time. This means smarter and quicker decisions on how to maintain and improve CX.
There are 3 commonly measured quantitative metrics:
- Net Promoter Score (NPS)
- Customer Satisfaction Score (CSAT)
- Customer Effort Score (CES).
NPS:
The key question asked: “How likely are you to recommend us to a friend, family or colleague?” 11-point response scale: Extremely unlikely to extremely likely.
Companies like to use this metric because of its simplicity and strong correlation to long-term loyalty and revenue growth. Despite its simplicity, NPS allows companies to measure the overall health of their customer relationships and determine transactional health across key customer touchpoints.
Measuring NPS is easy, but companies need to understand what is driving their NPS and drill into what is causing customers to become promoters, passives or detractors. Companies also need to determine if revenues are increasing from customers who indicated they would recommend their brand.
Some biases can creep in when you measure NPS. We’ve learnt that you can’t just ask customers the NPS question in this region (East Africa). The overall CX maturity of a business sector or the dominance of key players within it can skew results significantly. For example, ask the average Kenyan to recommend a telecoms provider and they will likely recommend Safaricom to you. However, they may not be getting exceptional or even acceptable service.
CSAT:
The key question asked: “Overall, how satisfied are you with [interaction]?” 5-point response scale: Very dissatisfied to very satisfied.
CSAT uses a 5-point scale to determine a customer’s satisfaction. This is usually used to gauge short-term happiness. The idea behind this question is that exceeding expectations generates no additional loyalty compared with customers who are just satisfied.
CSAT, however, does not focus on the broader relationship a customer may have with a company and therefore is a poor predictor of loyalty, although a low CSAT score could indicate possible attrition.
Generally satisfied customers don’t often behave much differently from generally dissatisfied customers. That begs the question; why ask if what you are getting is not useful? CSAT can be useful when the customer is asked something specific e.g. assessing their satisfaction with an account opening process. The 5-point scale, however, means that results are typically skewed to the extremes i.e. very satisfied or dissatisfied or sometimes in the middle ground i.e. neither. For example, a poor experience with a specific interaction can result in a low CSAT rating, even if a customer loves your brand or your product as a whole. This can make it easy to panic in response to ratings that might not mean as much as they seem to.
CES:
The key question asked: “The company made it easy for me to handle my issue” 7-point response scale: Strongly disagree to strongly agree.
Out of the 3, this is the newest in terms of theory and has less research to support usefulness from a company’s perspective. CES takes a different angle and asks customers to indicate how much effort they put into an interaction with a company.
The underlying premise behind this question is that companies should focus on consistently meeting expectations by making it easy for their customers to do business with them; rather than exerting effort and expense towards exceeding expectations.
However, many companies have noted that this metric is limited in its use and is typically geared towards support interactions e.g. issue resolution. CES does not factor experience drivers such as product or price, which can influence those answering the question. Like CSAT, CES does not focus on the broader customer relationship and is also a poor predictor of loyalty.
Is blended measurement the key?
NPS is the most commonly used metric in the region despite its limitations. Several companies go as far as embedding NPS into their strategic planning process, cascading it as an organisation-wide Key Performance Indicator (KPI) to drive strategic decisions and investments and to hold employees accountable for treating customers right.
All 3 have their benefits and limitations though a company may want to consider a blended approach. Whatever metric a company decides to use, they should be asking their customers to explain why. This will allow you to understand which drivers of loyalty/ satisfaction/ effort are most important to your customer segments and which drivers require improvement.
We’ve incorporated NPS, CES and CSAT in our surveys (in addition to sentiment and unstructured text analysis), to help companies understand both short-term satisfaction (by triggering feedback requests at key interactions), long-term experience and loyalty. Our CSAT questions are focused on asking the customer how satisfied they were with the quality of service received, with the staff they interacted with, with the exchange of information/ communication and with value for money. Each of these is further broken down into sub-drivers and as a result, companies can indirectly understand ease/difficulty at a transactional level.
Measurement is just the beginning!
Measuring customer experience isn’t the end game. Organisations need to close the customer feedback loop; in particular with dissatisfied/ disgruntled customers. Company-wide changes may also be required — bold leadership and cultural changes complemented with operational changes. These can include sales force execution, marketing strategies, channel optimisation, product and pricing optimisation or issue resolution/call centre effectiveness; and improvements to the supporting enablers — people, processes, data and technology.
Companies can only create value when they change data into insights and insights into actions.
We’re keen to hear your experiences — what metric(s) do you use and what benefits and limitations are you experiencing as a result?
