I was meeting with the Executive VP of Sales for a national retailer, who asked me “Is there a holy grail of customer experience measurement? We use satisfaction, and I’ve heard about this Net Promoter Score. Is there one score that’s the best?”
This is an important question, and one I’m frequently asked. Opinions differ, with some companies advocating their favorite metric with the zeal of the converted. NPS is the only question you need. Satisfaction is absolutely not predictive. Or it’s just as predictive as NPS. Or more predictive. The Customer Effort Score is far more predictive than either one.
With all these contentions, why do I keep reading case studies that contradict each other? Why do some companies find NPS is more predictive of financial results than satisfaction, where others find just the opposite?
Could it be that there’s not one perfect score for everybody?
If there isn’t, then how are you supposed to know the right metric to measure your customer experience?
Let’s pull out that diagnostic tool “The 5 Whys” to help with this investigation. These answers are a composite of conversations with multiple clients.
- Why do you want to measure your customer experience? We want to understand the current state of our experience and see how it changes over time.
- Why is that important? We know that a great customer experiences leads to improved loyalty, which is the key to organic growth. (You could substitute loyalty with another financial metric, such as share of wallet or customer lifetime value. This example will use loyalty.)
- Why do you need a measurement for this? We want to understand where we need to focus to improve our experience, and to measure the impact of these changes.
- Why is this important? We need to ensure we are doing the right things to improve our customer experience so we can grow organically. (A similar answer is “To measure our various call centers, stores, restaurants, sales teams, etc. to see their impact on the customer experience.”)
We don’t even need to use all five whys – four is enough to get to the heart of the matter. If your goal is to measure the impact on loyalty of your call centers or customer experience changes, then we know enough to proceed.
There are other possible answers. For example, “We want to compare our customer experience scores against competitors to make sure we are at parity with the market.” In this case, my advice is different. Simply find an industry benchmark that your competitors subscribe to and use that. But understand there is no guarantee that this metric will actually predict the loyalty of your customers.
If your goal is to predict loyalty or other financial metrics, there’s a straightforward approach, although it requires patience. Create a survey that asks all the candidate questions – we typically use Satisfaction, the Net Promoter Score, Likelihood to Renew/Repurchase, the Customer Effort Score or Ease of Doing Business, and several others. Then wait.
(This is the part that drives companies crazy).
Once you have enough customers leave, compare these scores with your retention to decide which is most predictive. Of course, if your customers never leave, this approach will not work for you. The score that best predicts your retention is now Your Perfect Customer Experience Score.
For those looking at share of wallet, etc. the process is the same. Simply wait until a typical purchasing cycle is complete, and then do the analysis.
If the process is so easy, why doesn’t every company do this? Multiple reasons. First of all, it isn’t necessarily this easy. This process assumes you identify the respondents to your survey, so you can track their financial results. However, you can also accomplish the same results if you have identified markets. Compare the scores for each metric from period 1, then look at the financial results for period 2. This article isn’t meant to be about methodology – just to argue that it is possible to find the best metric for your company and customers.
Second, this process works best in B2C businesses or B2B companies with shorter decision cycles. It does not work for complex multi-year decision-making processes spanning multiple decision makers. But the biggest reason is that most companies simply don’t have the patience. Satisfaction is an intuitive measurement – it just makes sense. So people use it. NPS has a ton of buzz – you can’t get fired for using it.
But just because a measure is intuitive or popular does not mean it is actually the right measurement for you. Take the time to investigate what scores actually work for your business. This will not only help you focus on what is most important, but identifying the financial impact of your customer experience scores will be a huge help to your business cases.
So, the short answer: There is no universal right metric, as it is is different for every company. You need to take the time to test out different possibilities to see which is actually predictive for your customers’ loyalty.
Only then will you have found “The Perfect Customer Experience Score!”