The gloves are off - A new challenger in the quest to keep the customer
How time flies. About 10 years ago I was at an industry leaders meeting (over breakfast, because “leaders” get up early!!) and I was struggling with my decision to reach for the apple danish or fruit-yogurt-muesli combo in a shot glass (who knew a shot glass had any other use?), when we had a presentation from the international consultancy that had their foot stuck in every door in town spruiking the new religion: Net Promoter Score (NPS), or “the one number you need to grow”.
Today there isn’t a boardroom meeting imaginable, nor even a balanced scorecard, without NPS as the central customer measure. If memory serves, there was a lot of caution around putting this measure in staff scorecards. I’ve written on this before. You can find it at –https://www.businessnews.com.au/article/What-is-NPS-and-should-you-even-care
But now there’s a new kid in town: Customer Effort Score (CES), and it has designs on the Iron Throne of performance metrics (c’mon Khaleesi!). CES is a newer, hipper customer metric, and it attempts to address the relationship between customer satisfaction and loyalty.
Both NPS and CES have their good and bad points. When do we need to use which measure, and is it really necessary that we choose anyway?
Net Promoter Score
The Net Promotor Score is based on the concept that a company can divide its customers into three main categories: promotors, passives and detractors. Your customers can be segmented by asking them all the same simple question: “How likely is it that you would recommend this company to friends, family or a colleague?”
So to calculate your Net Promoter Score (above chart) we look at the percentage of promoters (in green) of your business minus the percentage of detractors (in red). And yes, an NPS score can be negative.
Source: Bain & Co
The main complaint some have with NPS is that it may not measure or be a poor predictor of actual customer behaviour. Customers will tend to make a prediction about their future behaviour when answering the NPS question. However, scientific research has shown that customers assess a recent and real experiences much more reliably.
In addition, critics argue that it is not only important to measure the likeliness of a recommendation to others, but also the customer’s eagerness to continue to do business with a company or to even purchase more services or products. Unfortunately, some in research feel that NPS does not drill down on this perspective, so sorry if you already have NPS tattooed on your arm.
Most feel the great strength of NPS lies in its simplicity. With just one simple question, two key points are measured: customer loyalty; and future financial growth. Promotors will, after all, remain customers of your organisation, while there is also the snowballing effect of attracting new clients. Given its simplicity, each employee within your company will understand NPS after a brief explanation. Hence, the popularity of NPS makes it easier for marketers and researches to use the metric and to benchmark results.
Customer Effort Score
CES takes a different tack to NPS. The customer is asked how much effort they put into a certain interaction with the company. Research by Gartner, the creators of CES, shows that service organisations create loyal customers “primarily by reducing customer effort – that is, by helping them solve their problems quickly and easily, not by delighting them in service interactions” proclaims Gert Van Dessel from CheckMarket.
For the propeller-heads amongst us, there are two versions of CES available. The first version asks: “How much effort did you personally have to put in for us to handle your request?” It grades responses on a five-point scale from very low effort (one) to very high effort (five). It has caused some complications because the scale is inverted (that is, a score of one is “good” and five is “bad”) and the word “effort” wasn’t easy to translate across ethnographic lines.
The second version is a disagreement/agreement-rating question: “The company (or individual) made it easy for me to handle my issue”. This question solves the scale issue and avoids using the word “effort”. I’d prefer (after reading opinions of much smarter thinkers than me) to keep the scales in the same order, from negative to positive, so CES Season 2 is a welcome new version.
Choosing the best measure
Both metrics have their pros and cons. NPS measures the entire relationship between the customer and the organisation and makes a prediction of the customer’s future behaviour. A customer can recommend an organisation but it is never guaranteed that the customer will remain a customer. We see this a bit in our shadow shopping work, where a shopper recommends a financial planner but doesn’t eventually take up the services of that financial planner. The NPS score is affected by customer service, but also by quality, price and overall value. If an organisation focuses on NPS alone, one may not be able to determine which customer service improvements will have the greatest impact on loyalty.
From that point of view, CES may be of interest to you. This metric only focuses on the ease of doing business with a company. CES provides more useful insights to address the obstacles that appear during the service experience.
It is definitely not inefficient to measure both NPS and CES. In fact, we would suggest using them in a complementary fashion. Indeed, companies focused solely on NPS at organisational level must focus on measuring and reducing customer effort at a service-interaction level.
CoreData and Customer Experience
Getting to know your customers more intimately relies on asking the right questions. At CoreData, we’re experts in customer-side research, uncovering the hidden gems to help you build strong, lasting relationships.
Our customer experience measures are comprehensive and founded in proven theoretical frameworks, and have been tested for effectiveness over many years.
If you would like further information or support with regards to your own client experience please contact me - firstname.lastname@example.org or 0401 199 995
NPS are marks of Bain & Company, CheckMarket, Gartner and Mobius Groups for background research for this article.
NOTE: This article was originally published on LinkedIn by CoreData's head of customer experience, Sean Allen, and has been adapted in part and shared here with permission.
Follow Kristen on LinkedIn: www.linkedin.com/in/kristenturnbullcoredata