A best practice among leading companies is to use a few focused metrics together, as no individual measurement can provide a complete picture on its own. The goal of your metrics is to help your leadership predict future business needs and make adjustments to operations that can lead to lasting improvements in customer satisfaction, relationships, and revenue growth. Here are four essential metrics that have stood the test of time and remain effective measures of customer satisfaction.
1. Net Promoter Score (NPS)
The Net Promoter Score is a complex metric that presents a lot more information about your brand. The NPS was first introduced in a 2003 article by Fredrick F. Reichheld in Harvard Business Review after two years of research on customer loyalty. It remains an important metric for any organization serious about customer engagement as it captures the overall sentiment a customer has based on their interaction with a brand.
The NPS asks customers to answer a single question: “How likely are you to recommend [this company] to a friend or colleague?” Customers rate this question with a score of 1-10, with 0 being never likely to 10 being definitely likely. Based on the ratings, customers are divided into three categories:
- Promoters (9-10) – These are your most loyal customers who are very likely to purchase more from your brand in the future.
- Passives (7-8) – A difficult group to influence, these customers are generally satisfied by your product or service but are unlikely to remain loyal in the face of reasonable competition.
- Detractors (0-6) – At best, this group can be considered indifferent, and, at lower scores, these customers are highly dissatisfied. They are very likely to share their dissatisfaction with others.
To calculate the actual NPS, you take the percentage of Promoters from your overall survey pool and subtract the percentage of Detractors. This calculation provides a score that ranges from -100 to +100. A positive score is considered good, anything over 50 is excellent, and a negative score means that significant improvement is needed. Most industries have an average score of around 30-40.
2. Customer Satisfaction Score (CSAT)
The Customer Satisfaction Score gives you an indication of how satisfied a customer is with your product or service offering. It is measured by asking the customer to rate their satisfaction on a scale of 1-5, with 1 being very unsatisfied and 5 being very satisfied.
This metric is especially useful because it can be easily presented at the end of a customer service interaction and gives you real-time feedback about your performance. Reviewing these results over time can highlight trends in your ability to improve service, and it provides a simple and direct baseline metric for your service organization. Along with other customer satisfaction metrics, monitoring how CSAT scores change over time can reveal the impact of new customer service tools or processes. For example, you might find that CSAT scores improve after implementing a solution such as a shared inbox to ensure that no customer service inquiries fall through the cracks.
3. Customer Effort Score (CES)
Customer Effort Score gives you a measurement of your customer’s effort required to interact with your business. The metric is typically collected by asking customers a single question that asks them how difficult it is to perform a specific action. Some examples include the ease of leaving a review, making a purchase, or contacting the customer support staff.
Like the CSAT, it is usually asked right after a service call or visit to collect a timely and accurate measurement based on the customer’s experience. The primary benefit of the CES is the very focused nature of the question. It gives your team direct information about a particular aspect of your customer experience process that may need improvement.
4. Customer Acquisition Cost (CAC)
Customer Acquisition Cost is an important metric that has become especially relevant in today’s digital environment that enables highly targeted advertising. It’s used by companies and their investors to understand how profitable a company’s marketing efforts are and what may be done to improve them. To measure CAC, you divide a company’s marketing costs during a time frame by the number of new customers acquired during that same period.
It’s important to audit the data to understand any factors that affect the results, such as significant or long-term investments in marketing infrastructure or campaigns. Tracking your CAC metric over time will allow you to focus on improving your conversion metrics, measure the effects of any improvements to customer experience, and measure the impacts of major system improvements such as implementing a customer portal or knowledge base software.
It can be challenging to understand a customer’s journey with your brand from end to end. As mentioned above, the best strategy for measurement is a holistic approach. By evaluating multiple points along your customer experience journey, you can make more informed business decisions and, most importantly, understand the effectiveness of any changes you are making as your business develops.