(Over the course of the next 5 blogs, we will examine the FIVE ways to measure CX)
How Do We Measure Customer Experience?
Many of our clients have no Key Performance Indicators (KPIs) by which to measure customer experience. There are five areas of concentration on which EVERY organization of ANY size should focus. These KPIs are ones on which every employee at every level can become a cheerleader.
They are, in no specific order,
1. Net Promoter Score
2. Employee Engagement Survey Scores
3. Total Sales Growth
4. Customer Retention
5. Employee Retention
“High performing organizations which focus on CX, have Net Promoter Scores TWO TIMES higher than the average company.”
— Gary Simpson, author
Asking the ultimate question allows companies to track promoters and detractors, producing a clear measure of an organization’s performance through its customers’ eyes, its Net Promoter Score.
To calculate NPS, start with the ultimate question, “How likely are you to recommend us to a friend or colleague?” and score the answers on a zero-to-ten scale. Your Net Promoter Score is simply the percentage of customers who are promoters (those who scored 9 or 10) minus the percentage who are detractors (those who scored 0 to 6).
The Net Promoter System was developed in 2002 by Fred Reichheld, a Bain & Company consultant, out of the need for a customer experience metric that is predictive of customer loyalty and business growth.
After scrutinizing how traditional customer satisfaction survey questions correlate to consumer behavior, Reichheld concluded that evaluating customer loyalty versus customer churn was the answer. The carefully phrased NPS question, “How likely are you to recommend [company] to a friend?” has since been adopted by top brands worldwide.
A customer that is willing to recommend (promote) your company is also more likely to stick with you for the long haul. However, a customer that rates you poorly is more likely to detract from your business by churning or spreading negative word of mouth. NPS helps you identify both types of customers so you can improve your business.
Score the answers to the ultimate question on a simple zero-to-ten scale. This scale is familiar and easy for customers to understand. And the responses tend to cluster in three groups, each one characterized by different attitudes, and more importantly, different behaviors linked to economic value.
Although there are many NPS question variations, the NPS methodology for improving the customer experience follows four basic steps:
STEP ONE
Ask the question
NPS is comprised of a carefully crafted single question survey. Customers answer this question in two parts. The first part is a 0–10 numerical rating. This provides a standardized quantitative benchmark that can be tracked over time.
The second half of the NPS survey is a free-form follow-up question. This is where the real power of NPS reveals itself. It allows the customer to provide context for their rating in their own words, free from any bias that targeted survey questions might impart. For example, it might simply read, “Tell us more about why you gave us the number you gave.”
One warning I give clients is that you have to read this second response carefully. If a customer indicates that they gave you an ‘8’ because “I never give higher than 8 to anyone,” then they are actually a promoter of your business even though a score of 8 would label them as ‘Passive.’
STEP TWO
Group the responses
Customers are segmented into three groups according to their numerical response to the 0–10 rating question. But what do the different groupings actually mean?
PROMOTER (Score of 9 or 10)
“I really love your product. It’s exactly what I have been looking for!”A promoter will go out of their way to recommend your product or service, often unprompted. They are willing to put their personal reputation on the line for it.
PASSIVE (Score of 7 or 8)
“It’s pretty good. I had a few issues here and there, but it got the job done.”A passive probably liked your product or service, but it wasn’t a slam dunk. They may mention it in the right context, but they are unlikely to personally vouch for it.
DETRACTOR (Score of 6 or below)
“I wasn’t able to get it to work. I tried for hours. This is so frustrating!”A detractor will proactively take any opportunity to dissuade people from using your product or service. They often speak louder than promoters.
STEP THREE
Calculate your NPS
NPS provides a score, ranging from −10 to 100, that serves as a report card, grading your overall customer experience.
So, as an example, a recent client found that 71% of their customers are promoters and 14% are detractors.
Your NPS numerical score is the percentage of promoters minus the percentage of detractors.
In this case, our client’s score was 71 − 14 = 57
STEP FOUR
Keep track of your NPS scores over time.
Seeing the breakdown of the categories with NPS lets you focus on which group you want to target to increase your company or product’s rating.
While the score itself gives you a really easy way to know where you stand with your customers at a glance, the true value of NPS comes from the customer feedback. Analyzing and acting on customer feedback insights is what will continue to move your business forward.
Traditional surveys bias customer feedback to what the company wants to hear, not what the customer wants to say. If you’re asking the wrong questions, you’ll never get the right answers. NPS passes the microphone to the customer, so they can validate or course-correct your business decisions.
When NPS is fully integrated into your organization, it creates a perpetual cycle of product and customer experience improvement. As trends emerge, your teams can address them quickly, and immediately measure the impact they have had, in very human terms.
The downsides of NPS
It’s no secret that we like to imagine the world as simpler and more predictable than it actually is. To do that, we construct narratives and frameworks that allow us to make sense of the world.
When you take a short personality test, you get a result that lumps you with all the other ENFPs. When you’re born in September, you’re a Virgo. If you were good at drawing as a kid, you might have been labeled right-brained.
Problem is, the world is more nuanced than that. Lots of research has refuted Myers-Briggs, right versus left brained, and other lenses you use to view yourself and the world. When you attach a business metric to “one simple question,” you’re competing with these other simplifications to try to fit a complex network of data into a single number or lens.
Net Promoter Score has been shown to correlate with customer loyalty, retention, and growth—but not always. It does give you an anchor though, a number you can move up and down, a sense of progress.
I am saying, do NOT throw away analytics and your other customer research tools! Don’t think that this one simple question will grow your business in your spare time! We know that no single question can tell you everything.
NPS can tell you what your customers think of you, but not necessarily why they feel that way about your brand. This is true of any quantitative metric, of course. And that’s why NPS tools should ask the follow up question as I indicated before. I am NOT a fan however, of the question, “What can we do to improve?” From personal experience, we have found that if this is the follow-up question, only 34% of customers will respond with an answer.
NPS captures just one point in time with a customer, and the customer’s response will depend heavily on their most recent experience. Focusing solely on NPS as a measure of overall CX is a dangerous habit that could eventually turn loyal promoters into detractors.
While many consulting firms that tell you NPS is the be-all-end-all metric, know this: No single survey question can predict your company’s success. It is simply used as a metric by which progress in the customer experience initiative can be measured.
Either way, NPS isn’t all bad. If anything, it triggers an organization-wide attitude toward improving the customer experience. There’s nothing wrong with that. And, if used in conjunction with user research and analytics, NPS can be a solid addition to the conversion research arsenal.