Measuring customer experience - Future Thinking

1 Craig StrudleyResearch Director, ExperienceMeasuring customer experience Beyond the acronymsTo measure is to knowFOUR OF THE MOST COMMON KPI SNPS, CES, CSI, VFM: the measurement of customer experience has yielded a lot of acronyms. But which is the right TLA (Three Letter Acronym) for your business? Most companies understand the basic premise that to truly know whether their customers are enjoying a good experience they need to quantitatively measure that experience . What is often less understood is the best way to measure the reality for your customers. Here we will look at the differences between some of the more commonly used measures. What questions should you be including in your customer surveys?

2 What are the pros and cons associated with each measure? What numbers should be reported; averages, net-scores, top-box percentages, indices? There is a surprising amount to consider. Future Thinking are experts in this field; we aim to offer some guidance in this short guide. The most common customer experience KPIs , pros and consAs a first step, we need to understand some of the most common measures out there. These metrics all have their merits; there are many reasons why they are so extensively used. They also have limitations and so numerous organisations use two or more of these KPIs to ensure they are not missing a trick. This is all well and good, although it often makes sense to have one lead measure that the whole company can get behind and focus on improving.

3 Overleaf is a guide to 4 of the most common KPIs often adopted by service-orientated organisations: To measure is to know - if you cannot measure it, you cannot improve KelvinMeasureCSATCOMPOSITE MEASURENET PROMOTER SCORE (NPS) customer EFFORT SCORE (CES)WHAT IS IT?Customers are simply asked how satisfied they are with their overall experience . Question wording can vary as can the scale used. Combines several separate metrics (such as CSAT, NPS, Value for Money) to calculate a single score. The number of metrics and the weight applied to each can vary. Calculated from a single question: On a scale of 0-10 how likely would it be for you to recommend [company name] to a friend or colleague?

4 NPS = % of Promoters (scoring 9-10) % of Detractors (scoring 0-6). A measure of the effort a customer feels they have to put in to engaging/ transacting with a business. Often relates to individual touchpoints rather than the entire relationship. Question(s) asked with an Agree / Disagree FEATURESA holistic measure; gauges customer opinion across all touchpoints and experiences Combines several measures identified as being important to the business; provides a powerful overall view of customer experienceA holistic measure; gauges customer opinion across all touchpoints and experiences A measure designed to take into account that it is not always necessary to delight customers in order for them to remain loyalA good indication of past company performance.

5 Accompanying diagnostics allow key issues to be identified and fixedOften a more academic approach based on advanced analytics; designed to ignore simplicty and transparency in order to produce more effective resultsMeasures two important drivers of corporate success: customer advocacy and customer detraction. Therefore believed to be a better predictor of growth than CSAT Often used to capture customer impressions at a transactional (touchpoint) level as opposed to a more holistic impression of the company. Results in actionable information for each touchpointFlexible dependent on needs: can be used to look at Satisfaction / Dissatisfaction / Averages / Variance etcLinking previous survey results with actual customer behaviour can result in a composite measure that is a better predictor of corporate growth than all the alternativesLevels of recommendation should have an effect on Future sales.

6 This makes NPS a leading measure that can be used to predict the futureSome studies show CES is arguably a better predictor of corporate growth than CSAT and even NPS. Based on past performance but strongly linked to retention high effort = churnDoes not involve complex calculations; results that are easy to explain and communicate throughout the organisationCan be based on holistic KPIs, transactional measures or even a combination Not as simple to understand as CSAT but still relatively easy to explain; the principle of recommendation will be grasped throughout the organisationNot quite as simple to understand as CSAT but ease of doing business is still a concept that will resonate throughout an organisationEasily understood by customers.

7 Survey questions will be simple and headline results can be used for marketing purposesA leading measure; if applied correctly, has the potential to predict the Future , not just measure the pastA very common measure; the use of one consistent question means results can be benchmarked across industriesBecoming more popular, allowing comparison to industry benchmarks where consistent question wording and scales are used Measuring customer experience | Beyond the acronyms3 Measuring customer experience | Beyond the acronyms2 Are there further alternatives? Of course, the answer is yes. A key message from this paper is that you need to do what works for your business at any given moment in time.

8 Future Thinking do use all the common measures extensively but we have also worked with our clients to develop bespoke metrics that fit their own unique circumstances. MeasureCSATCOMPOSITE MEASURENET PROMOTER SCORE NPS) customer EFFORT SCORE (CES)LIMITATIONSM erely measures satisfaction of a customer ; does not tackle advocacy, detraction or loyalty - satisfied customers leave businesses every dayThe calculation can be overly complex and is difficult to explainAn inherent lack of precision that comes from basing all analysis on a single question. Exacerbated by collapsing the results into just three categories: Promoters / Neutral / DetractorsThe opposite of NPS: works at a transactional level but cannot povide a holistic view Not as insightful for companies where satisfaction is already very high; can result in flat trends and lack of new insightOften leads to flat trends; substantially improving one or two components may not be reflected at an overall levelAlmost too simple.

9 Often results in a failure to conduct diagnostic analysis to interpret the resultsNot appropriate for all touchpoints and processes ignores elements such as the product or quality of serviceNot as strongly correlated to corporate growth as other measuresRecommended actions are often confused; which element are we trying to improve?A volatile measure, prone to high levels of fluctuation due to the calculationRequires a genuine customer interaction in order for a measurement to take place. Not as appropriate for all touchpointsA lagging measure; tackles what has happened rather than looking at what might happenNot suitable for identifying actions specific to individual touchpointsCaptures more holistic impressions of a company; difficulties when setting specific actions per touchpointNot a key driver of acquisition; less useful for those looking to expand their customer baseWhat Makes a Good KPI?

10 The phrase actionable insight is a clich in market research but it is appropriate to use it in this context. To put another spin on Lord Kelvin s famous quote, we could say there is no point in Measuring it, if you cannot improve it . In other words, the KPI must be something that customer facing staff can influence. If they feel they have little or no control over the results, the KPI simply becomes a number and potentially de-motivational one. Let s consider two further alternatives to expand on this: VALUE FOR MONEYQ uestions related to VFM are regularly included in customer surveys. Indeed, Future Thinking has conducted our own research that indicates that VFM is often the best indicator of whether a customer will remain with a company.