Net Promoter Score® (NPS), Customer Satisfaction Score* (CSAT), Customer Effort Score (CES) – these are just three commonly known customer metrics among several worldwide. Some provide basic metrics; but there are those that go beyond just that number to provide strategic insights. And that’s precisely what I’m going to share this month with you.
About 20-30 years ago when shops displayed the sign Customer Is King, it was quite amusing. We always went in, picked what we wanted, paid for it and left – because we believed the sign that it was below our dignity to bargain for a lower price. Over a period of time, the play on the mind behind the retailers’ message on the board started sinking in and customers began to bargain. Then the sign lengthened itself to say Customer Is King And The King Never Bargains. That put an end to practically all enthusiasm to bargain… up until the ecommerce boom.
With practically every smartphone or internet-enabled computer owner beginning to explore and enjoy the discounts coming in with online purchases, the message on the board has gone back to its initial version of Customer Is King. And now, the competition to satisfy this King has taken a whole new dimension.
Initially, it was all about how businesses could satisfy their customers. Customer satisfaction scores, in fact, are all about how satisfied are a brand’s customers. Call centres with a focus on customer satisfaction sprang up; retail staff were trained to ensure their customers’ needs were met. Basically, the focus was on two aspects:
In effect, this approach ensured that the customer was satisfied with the brand meeting his/her expectations. This was, and is even today, an extremely Hygienic approach. After all, if you are in business, the very least you MUST do is satisfy your customers.
An improvement to the CSAT is the Customer Effort Score (CES). This is about how much effort a customer needs to put in to get an issue resolved. As this is a very emotive interaction it definitely provides a better metric than the CSAT for the simple reason that it measures not just the issues faced by customers, but also the amount of time invested by each customer to get the issue resolved by the brand. Feedback from these interactions help organisations fix their operations and strive towards plugging gaps and improving services.
CES was touted as the most important metric. But is the effective and efficient resolution of a customer issue the only important aspect? It obviously is if you only have hygienic service issues. What about other factors such as product quality and performance, customer service, a unique value proposition, channel performance, etc. Will a high CES score drive loyalty and growth, or is this a hygiene expectation that if there is an issue it should be fixed effectively and quickly? Can a happy customer be equated to loyalty and growth?
This is where the Net Promoter Score plays a critical role.
Satmetrix and Bain & Co. conducted considerable research to understand the difference between using just a satisfaction measuring metric and a more comprehensive metric linked to loyalty and growth. They found a strong correlation between NPS and loyalty & growth across most industry sectors. In addition, they also found that brands with the highest NPS score in a specific market enjoyed two massive benefits:
A brand growing 2.6 times its category average can lend its growth story to several factors. More importantly, these were the brands that enjoyed powerful word of mouth benefits with a strong base of loyal customers.
What people couldn't come to grips with is how did the operational costs drop by 15%!
Businesses went on to realise that organisations with high NPS scores followed a simple discipline – Don’t just listen to customer feedback, but also take action.
So was it just the NPS way to grow the strategic CX attitude? Not exactly.
They went beyond just plugging gaps to conducting comprehensive surveys. While their standard beginning included the regular 2-question survey of How likely are you to recommend our brand to your friends and family on a scale of 1-10? and Why did you give us this score?, they also probed further with a few strategic questions to understand the WHY better. Let me explain this better.
NPS clearly asks an existing customer if they will recommend a brand to their social circle, and why. While this can provide a score, the insights required to improve the business can often be vague. I recommend asking a few additional strategic questions that provides performance insights on key touchpoints, brand attributes and your value proposition. Effectively, your insights approach should identify key pain points and drivers. Armed with these insights that impact the loyalty of every customer towards a brand, organisations can take strategic measures to enhance customers’ experiences from being just satisfied with their brand to promoting it via word of mouth.
Brands that practiced this as a discipline were able to quickly understand key pain points of not just Detractors, but even that of Passives that helped them improve their CX and convert them into Promoters, and also that of Promoters to enhance their experience with the brand.
This discipline helped them streamline their processes, enhance their operational efficiency and simultaneously build a STRATEGIC loyalty base. They didn’t just stop at customer satisfaction but went above and beyond to deliver a great customer experience that started building a Relationship of Trust between the brand and its customers.
But how did these brands offer such high-quality customer experience via just survey responses? The answer lies with their staff. Several analyses have shown a strong link between customer engagement and staff engagement. This strong customer focus may also provide an additional benefit of a lower employee churn rate and an increase in discretionary effort that also adds to the bottom line.
This is where businesses started recognising the smartness of this strategy. After all, who wouldn’t want to lead their respective business category and also operate with low costs?!
So, from just being a hygienic metric of measuring customer satisfaction, organisations that were committed to grow and thrive began looking at higher order measures such as ‘likely to recommend’ - and not mere satisfaction - that were more Strategic and could contribute to their healthy growth story.
This is what makes a brand iconic and become worthy of recommendation by the King. And the more Kings an organisation provides a great experience to by Strategically shaping its People & Processes, the faster it will join the global club of the 15% lower operational costs and higher levels of organic growth like NPS leading brands.
NPS®, Net Promoter® and Net Promoter Score® are registered trademarks of NICE Satmetrix Systems, Inc., Bain & Company and Fred Reichheld.
*The Customer Effort Score (CES) is a customer experience metric introduced by the Corporate Executive Board (CEB) consulting firm.
Chris is a Global Brand and CX Expert. He is the Managing Director of Engaged Strategy, which is the world’s first official distributer of Nice Satmetrix. Chris is the developer of the Total Engagement Model, which designs and aligns key elements to maintain brand integrity and customer focus. He is a published academic author and a guest lecturer at the University of Queensland at a Masters Level.