How do Customer Experience Measures work?
Customer experience will be the most important competitive advantage and distinction of brands by 2020 (ref.). Futuristic and pioneering companies that focus on customer experience measures instead of fighting over prices have been successful in customer retention and development. There are three main reasons for focusing seriously on customer experience management: customer retention, customer reliance on the online views and opinions of previous customers, and spending more money on the brand which has resulted in desirable customer experience.
Every business becomes very eager to measure the investment results after investing. Regarding customer experience, conventional methods of customer satisfaction evaluation have been very inefficient. These methods have become obsolete for a few reasons: long questionnaires which have sometimes taken respondents thirty minutes to fill them out; incorrect sending time of questionnaires – once a year or even once in two years; and finally, brief reports of a few minutes, given to the board of directors once a year, the contents of which would usually be forgotten until the following year. As a result, customer experience is now measured through brief and efficient questionnaires developed through different methods.
There are five common customer experience measurement scores:
- NPS (Net Promoter Score)
- CES (Customer Effort Score)
- CSAT (Customer Satisfaction)
- Ranking (Scoring) Customer Experience
- Customer Attrition or Churn
These five scores measure loyalty, satisfaction, and quality. NPS or CES should be employed to measure customer loyalty. If the goal is to measure customer satisfaction, then CSAT should be used. For quality measurement, a five-star ranking question should be used. Now each score is dealt with meticulously.
NPS (Net Promoter Score)
Customer loyalty is directly correlated with business growth. In other words, it can significantly predict business growth. NPS is a simple strategy to collect, measure, and react to customer feedback. Frederick Reichheld invented NPS in 2003 when he was looking for a good and efficient framework for the measurement of customer loyalty and corrective action based on customer feedback.
NPS asks customers this question, “How likely are you to recommend the company/product/brand … to your friends or colleagues?” Respondents answer this question on a scale of 0 to 10 (not likely at all to very likely). The given score is the customer classification basis: scores 0-6 reflect the business detractors (i.e. the dissatisfied customers who say bad things about a brand/product/company); scores 7 and 8 reflect neutral customers, and scores 9 and 10 indicate the business promoters (i.e. the customers who are interested in a brand/product/company).
To calculate NPS, you should just subtract the percentage of detractors from that of promoters. As a result, NPS is a number ranging from -100 to +100. NPS should not be dealt with other common scores which reflect a bad status if they are below 60. Scores below zero indicate a very bad business status; however, scores 0-30 are generally considered good. Scores 30-70 are regarded as excellent, and scores above 70 mean very high levels of customer loyalty to a brand/product/company.
Then it is advisable to ask this question, “What are the most important reasons for this score?” to find a better insight into customer comments. There is an NPS questionnaire template available for free on Porsline.
Companies use this customer experience score to identify and evaluate customer satisfaction, perceive and discover hidden problems of work processes, predict customer attrition, and encourage customers to give feedback. The NPS questionnaire is so brief that it can be sent to customers via short messages and emails. You can automatically integrate it into the CRM system, Porsline, or an SMS panel to trigger and send the questionnaire to customers.
Many organizations have employed the organizational application of Porsline including hidden information insertion, webhooks, and API to implement and operationalize the NPS process.
After receiving the NPS questionnaire, contact the customers who have given scores 0-6 and apologize to them for the inappropriate customer experience. In addition to explaining the details to them, it is possible to offer a free product or service to compensate for the inconvenience. It is also advisable to train employees or modify internal processes at your organization. Although those who gave 7 and 8 are considered neutral, they may leave your business without saying a single word. Therefore, make sure that there is no serious dissatisfaction. You should thank those who gave 9 and 10 because they are the best choices from which you can receive positive feedback that you can post on your website, share on social medial, turn into business referrals.
The daily analysis of NPS provides an organization with an accurate insight into the long-term relationships with customers. NPS indicates customer willingness to make other purchases or extend subscribership with a product/organization/brand. Given the fact that the NPS questionnaire asks customers how likely they are to recommend a brand/company/product to others without focusing on a specific process, a comprehensive insight is given into customer experience. Since only two questions are asked, the NPS questionnaire response rate is very high; thus, it can easily be generalized to all of the customers.
However, customers may neglect to answer the second NPS question on the reason for their scores; therefore, you will be unable to properly perceive how to start taking improvement actions. Cultural defaults should also be taken into account in interpreting the NPS. In the Iranian culture, for instance, scores 5 and 6 mean the average when scores 7 and 8 are considered good. Hence, you should note that determining NPS is not the only step, but it is important how to make plans and take actions based on customer feedback.
CES (Customer Effort Score)
Gartner introduced the CES by considering the organizations which implement support processes and benefit from support centers or contact centers. The goal of CES is to facilitate interacting with customers and solving their problems through a request for support services. Customer loyalty depends on the efforts which customers should make to interact with the brand. This score evaluates the efforts and consequent effects on customers. The CES results lay the foundations for improving the process of presenting support services. According to Gartner’s studies, %96 of customers with high CESs have very low rates of loyalty to the organization/brand. Therefore, if you seek to measure customer loyalty, you should put CES results and relevant actions on the agenda.
For CES measurement, you should first select the interactive channel which you wish to improve. An instance can be calling the customer contact center. Then you should ask this question, “To what extent do you agree or disagree with this statement: The company has made it easy for me to communicate with the contact center.” Set the scoring scale from 1 (totally disagree) to 7 (totally agree).
To calculate CES, add up the total number of respondents giving 5 and higher scores. Then divide the summation by the total number of respondents. For instance, assume that you have sent 50 people a questionnaire on the easiness of the process of returning products, and you have received 30 questionnaires in return. Out of these 30 questionnaires, 10 respondents have 5 scores and higher. Therefore, 10 divided by 30 will be 0.3333, a number which shows two-thirds of respondents have experienced a hard process in returning the products.
According to Harvard Business Review, %94 of customers who have described interacting with a company/brand as low effort will make purchases again, and %88 of them stated that they would spend more money. Only %1 of them stated that they would say negative things about the company. By contrast, %81 of the customers who have tried hard to solve their problems stated that they would say negative things about the company. Unlike NPS, it is impossible to categorize customers based on CES. Besides, CES focuses practically on a specific process; therefore, you may not easily find out the reason behind this score. CES fails to give you a comprehensive insight into the customer-brand relationship.
These two customer experience measures focus on customer loyalty measurement.
CSAT (Customer Satisfaction)
This score measures the customer satisfaction level, indicating how and to what extent the provided product or service has satisfied customers or exceeded customer expectations (Ref.). CSAT is usually regarded as a transactional score for customer satisfaction. For instance, you can send the CSAT questionnaire link to customers after they finish making their purchases to properly perceive how much they have been pleased with the purchasing process or the purchased item.
On the CSAT questionnaire, customers are asked how much they have been satisfied with a product/service. They are also asked what score they give to their experience with a product/service. Consumers or customers give the scores ranging from 1 to 5 or from 1 to 10 (totally dissatisfied or satisfied). The CSAT items should be changed according to a product/brand/service/customer transaction. The CSAT score is usually reported in percentage, and a score above %50 is considered good. The number of satisfied respondents is divided by the total number of respondents. Then the result is multiplied by 100 to calculate the CSAT score.
The CSAT questionnaire can be employed to quickly find out the satisfaction rate. For instance, a passenger airline can easily ask customers what scores they give to the admission process. Customers can also be asked what scores they give to hospitality over during flight. However, it should be noted that CSAT focuses on a specific transaction, not on the whole brand. In other words, you should have a larger image of the customer roadmap in mind. The second disadvantage of this score is that more than one item should be put into the questionnaire and that the response rate decreases if the number of items increases.
Research has shown that cultural differences have great effects on scoring CSAT. For instance, customers in individualistic countries such as the US are more likely to score the two ends of a scale, i.e. very dissatisfied or very satisfied. However, customers in holistic countries such as Japan select satisfied or dissatisfied (no reliable data of Iran could be found in the results of cultural studies conducted by Hofstede). It should be noted that high scores of CSAT do not predict whether customers promote your brand or not. Nevertheless, CSAT can be used in different applications, the disadvantages of which should be determined. These applications include evaluating satisfaction with the processes of admitting guests, providing rooms, and serving foods in a hotel in addition to evaluating satisfaction with the customer contact center or a customer service request ticket.
Ranking or Scoring
The five-star ranking scale was first used in the hotel and restaurant industry. The goal of this scale is to distinguish between hotels in quality and luxury. Five stars show that you determine how exceptional services or products have been. Later on, eBay used the positive/neutral/negative scale for user comments in 1990. This scale gradually caught on in other industries. The five-star ranking questionnaire includes one question, “What score do you give to your recent purchasing experience?” You only need to use a ranking question shown by a five-star icon. For instance, you have just purchased from a website and received an email stating that:
The organizational user features of Porsline, including hidden information insertion, helps you generate an exclusive link for only a one-time response by using the user information and customer purchases. This link can then be sent to customers via email or SMS.
The advantage of the five-star ranking score is that anyone anywhere can easily understand and use it anytime. The disadvantage of this score is that a neutral score is considered negative over time and that five starts will be regarded as acceptable, not exceptional! Also, this score gives no insight into the entire roadmap of customers.
Customer Attrition Rate
Customer attrition can be regarded as a customer experience score. The customer attrition rate indicates what feelings and views customers have on a product/service and their experiences with a company/brand. Also, it is generally used and defined for joint ventures.
The customer churn rate indicates the number of churning customers in the current month divided by the total number of customers at the beginning of the month. The churn rate shows the number of customers which the business has lost in this month. For instance, assume that you had 250 customers at the beginning of this month. Then 14 of them left the brand. Now there are 226 customers; thus, the churn rate is obtained by dividing 14 by 250 multiplied by 100. It is equal to %5.6.
There is not an optimal churn rate. The churn rate is different in various industries. The churn rates of different industries are not very comparable with each other to determine a base benchmark. It is recommended that a customer regards its churn rate as a benchmark and plans actions based on the churn rate analysis to improve them continuously.
Which of the customer experience measures are appropriate for your business?
The answer to this question depends on your business goals. Different customer experience measures, their measurement methods, and their advantages and disadvantages have so far been described. Apart from the fact that what score you select to measure customer experience, the important point is to take actions based on the collected data. Asking customers is the first step in taking corrective actions. You should identify your customers and their views very well; therefore, you need to ask questions to achieve this knowledge. You can start practicing with Porsline to begin asking questions on customer experience.
