As the adage goes, you can't manage what you don't measure. So, it's important for companies to apply customer experience metrics such as customer satisfaction and Net Promoter Score (NPS) to help determine how and whether customer programs are making a business impact. But just as some companies don't go far enough in applying customer metrics to gauge their progress, some companies tend to go overboard with these measurements.
Whether your company chooses to use customer satisfaction, NPS, or another metric to track its progress with its the customer-centric journey, it's not going to be the solution to your organization's customer satisfaction or customer experience problems. Any significant change tied to measuring customer centricity requires a great deal of effort, including process and culture changes, which are impossible to translate from a single metric.
When it comes to measuring customer experience, it doesn't matter which metric or metrics your organization settles on, regardless of your company's maturity as a customer-centric organization. Too often, companies struggle to choose the right metric for measuring customer experience. In the end, what matters is where the company perceives itself to be in its journey. From that point, a company can use a metric to develop a baseline for its current state and future goals.
If your organization is behind the curve, pick one metric and then begin developing some experience using it. Once a metric is selected, the company can begin to build alignment from senior management to frontline staff, create momentum behind its efforts, and come up with quick wins.
By selecting a customer experience metric to measure the company's progress, this will make it easier for everyone in the organization to begin to understand the importance of customer satisfaction scores or whatever metric is decided upon. In order to drive adoption of the metric across the organization, senior management must be a vocal champion about the importance of using and analyzing the results of the measurement.
Ultimately, one metric is not enough
Customer experience metrics such as customer satisfaction and NPS (the likelihood of recommending a brand or product to a friend or colleague) are each useful in helping to gauge the impact of customer experience on business outcomes. Settling on a single metric is an important starting point. But if your organization is intent on creating and maintaining competitive advantage, one metric won't be enough.
Measuring customer experience and its impact on business outcomes (e.g., upsell/cross-sell, long-term value) requires a much more holistic understanding of all interactions with customers across various touchpoints, including transactions and operations. A single metric doesn't tell a complete customer experience story. Therefore, the results from a single metric don't provide business leaders with enough information to make high-stakes decisions.
For instance, Sprint consistently generates one of the highest NPS scores among mobile providers. By comparison, Verizon Wireless carries one of the lowest NPS ratings among wireless carriers but enjoys a higher retention rate mostly due to the reliability of its network As a result, the NPS scores for either company aren't necessarily reflective of customer loyalty, nor are they an accurate indicator of long-term customer value. This demonstrates why it's important for companies to gather, analyze, and distribute insights from a cross-section of customer inputs tailored for their own needs.
A customer-centric approach to measuring customer experience
Companies that are further along the path of measuring and acting on customer experience metrics, including those that have multiple concurrent initiatives underway, should determine their own metrics to use which combine several KPIs and makes use of predictive modeling, sophisticated reporting, and enterprise feedback tools. For instance, one alternative customer experience metric that was devised by the Corporate Executive Board is known as the Customer Effort Score (CES). Highlighted in a July-August 2010 Harvard Business Review article, the index is based on research by the group that finds that there's a diminishing rate of return for companies when they exceed a customer's service expectations. In other words, exceptional customer service does little to strengthen loyalty, so it doesn't make financial sense to invest additional capital towards these goals.
However, the ease of a customer service transaction does strengthen loyalty, according to the Corporate Executive Board. This includes the amount of effort that a customer has to exert to resolve an issue, which is the basis for the CES score. The group found that it's easier to predict the behaviors of customers based on a CES score compared to customer satisfaction and NPS.
For example, among those customers who reported having to exert a low level of effort to resolve an issue (e.g., didn't have to repeat the basis of their problem with a contact center agent or didn't have to make repeat calls to the contact center to resolve an issue), 94 percent expressed an intention to repurchase with that company and 88 percent said they'd increase their spending.
Although CES is just one metric for companies to consider using, it reflects an outside-in approach to measuring the types of customer experience requirements that matter most to customers.
For companies that are just starting down the path to measuring customer experience, it's best to stick with a single metric like CES and build momentum from there. For organizations that are further along the customer experience measurement journey, try branching out with new measurements, including self-tailored gauges that more accurately capture what your company is trying to achieve.
About the Author: Orkun Oguz is a Partner of Peppers & Rogers Group. Contact him at ooguz@1to1.com.