Customer Experience Metrics: Understanding CSAT, CES, NPS, and 5-Star
In 2013, a research study by Walker predicted that by 2020 customer experience will overtake price and product as the main differentiator for brands. Validating that, AskNicely's 2018 NPS Benchmark Study found forward-looking companies that strategically step away from price wars to concentrate on customer experience metrics are discovering more retention and better growth.
Three Reasons Customer Experience Must be Top-of-Mind
More Retention
Only one in twenty-six people will actually come to you with a complaint. Even worse, 91% of unhappy customers who are non-complainers simply leave. ~Thinkjar
Online Reviews Make or Break
A 2016 Nielsen Harris Poll revealed that more than 80 percent of Americans rely on peer recommendations before making a purchase.
Greater Spend
That same poll goes on to say that consumers are willing to spend one-third of their disposable income – $100 per month on average – with brands they love based on great customer experience.
Tracking of Customer Experience Metrics Now Required
“What gets measured gets managed.” - Peter Drucker
Customer experience-focused professionals have known for a while that measurement is important to support their push for better customer experiences. Traditional ways have been wildly inefficient — think long surveys that take 30 minutes to complete — and infrequent — think once a year or even once every two years. These surveys were reported once a year in a board meeting, considered briefly, then largely forgotten until the next time. This made managing the customer experience difficult at best. So new, shorter, more efficient and actionable ways to measure customer experience were developed.
A simple search for customer experience, loyalty, and customer experience metrics brings up a number of different measures, but how do you know which one is best to use for a given scenario? Let's take a look at the different customer experience metrics, what they are, their strengths and weaknesses, and when to use.
Five Common Customer Experience Metrics
- NPS - Net Promoter Score
- CES - Customer Effort Score
- CSAT - Customer Satisfaction Score
- Five Star Reviews
- Churn
Three Things to Measure
The five common customer experience metrics measure one of three things: Loyalty, Satisfaction, and Quality.
The key is knowing which one of these things you want to measure.
- To measure loyalty, use NPS or CES.
- If you want to measure satisfaction, use CSAT, and
- to measure quality, use 5 Star Reviews.
Arguably, loyalty is the most important metric as it has been linked directly to growth. Here at AskNicely, we're first and foremost interested in helping you grow. Let's look at the customer experience metrics that measure loyalty first.
NPS: The Metric to Measure When the Goal is Growth
Net promoter scores help measure customer loyalty, but they can do so much more. NPS is a great metric when you're looking to take real, concrete action based on the feedback your customers provide.
What is NPS?
In very basic terms, NPS, as a customer experience metric, is a simple way of collecting, measuring, and taking action on customer feedback. The origins of NPS date back to 2003, when Fred Reichheld, a partner at Bain & Company, invented the framework while looking for a better way to measure and take action on customer loyalty.
NPS is a customer experience metric focused on loyalty. NPS asks one question: “How likely are you to recommend our company to a friend or colleague?” Respondents answer using a 0-10 scale, with 10 being “Very Likely” and 0 being “Very Unlikely.” The 0-10 scale makes it easier for you to segment customers according to their responses:
- Those that fall into 0-6 are called Detractors. (They are unhappy customers who will spread bad word of mouth about your brand.)
- Those who fall in the 7 and 8 categories are Passives. (They are customers who are relatively neutral about your brand.)
- And those who give you a 9 or 10 are Promoters. (They are the customers who love your brand and will tell others about it.)
How to Calculate NPS
To calculate your NPS score, you need to subtract the percentage of Detractors from the percentage of Promoters. Depending on how many and what kind of answers you get, your NPS score can be anywhere in the -100 to 100 range. This is not like a grade where anything under 60 is failing. Still, anything under 0 is usually a bad sign. While a score between 0 and 30 is normally a good score, a score between 30 and 70 is a great score, and anything over 70 means you have very high loyalty levels.
NPS delivers a one-question framework that gives you the right insight to help you understand your customers’ experience and make impactful business decisions. In addition, you can (and should) include an open-ended question afterward, like a simple “why did you give us that score?” This can give you even more insights.
Use NPS to Measure and Improve Your Customer Experience
Many people see NPS as a relational customer loyalty metric. At AskNicely, we see it as a way to measure more than relational or transactional loyalty. We recommend embracing the new NPS best practices, in which you measure sentiment at “moments of truth” in their customer journey. (“Moments of truth” are defined as “make or break” moments in your customer journey. They are specific to your business and your customers/clients.) Companies use this customer experience metric to find out how loyal customers are to their brand, discover hidden problems, predict customer churn rate, and encourage customer reviews.
The beauty of NPS as a customer experience metric is that it is a short survey that is easy for customers to complete. It can be sent in a wide variety of channels — email, web, SMS, etc. And it can be integrated with your CRM to readily and easily trigger surveys to go out at important moments.
Here's an Example:
Let’s say you are an internet provider who needs to gather customer experience metrics. You set up your NPS at moments of truth in your customer’s journey. What does that look like? Let’s say you send out an NPS survey after installation and the first billing. This moment of truth will tell you what is going right and what is going wrong in the initial customer experience. How satisfied is the customer with their personal introduction to your service?
But don’t just collect customer experience metrics. Action them.
Let’s look at the example above to learn how to take action.
You get a 1 out of 10 and the customer comments: “The installation was less than smooth.” This triggers a workflow for someone to follow up right away.
The manager of the installation tech for this customer calls the customer. “First of all, I’d like to apologize that your installation was not smooth. Can you tell me more about what happened?” The customer explains that the installation tech had to come out three times before the internet worked to the customer’s satisfaction. The manager then offers the customer a free month or free movie channel for six months to compensate for the issue.
The customer feels not only heard but now has a positive story to share with his family and friends. The manager can then go to the installation tech and find out what happened and offer him more training so that he can address the issue better next time.
What if you get a 7, which is a passive score? The customer doesn’t leave a comment. Do you just let it go or “keep an eye on it?”
Best practice is to trigger a workflow for a particular customer service manager to contact the customer to ask if they could take a moment and let them know why they gave their score. Perhaps they simply felt like the process met their expectations - nothing more nothing less. This is still good information. It gives your company a talking point for what you could have done to do more than meet his expectations.
Why is this important? Because a passive customer is more likely to leave you without saying a word. It’s not that you did anything wrong, but they might have heard that someone else could do better.
What if you get a 10, which is a promoter score? Do you do nothing? If you do, you’re missing out on an opportunity for a conversation. You can reach out and thank the customer and even ask them for a review or referral. Most happy customers would be glad to comply.
What are other “moments of truth” for our example internet provider?
What about thirty days before renewal? Then you can touch base with your customers to make sure that nothing has happened that would encourage them not to renew.
Another moment of truth? Maybe after you roll out a major improvement you send out another NPS survey to measure your customer experience. Was your improvement a hit or a miss?
NPS – Further Advantages and Disadvantages
Advantages:
Self Segmentation
NPS gives you a look into how your customers self-segment. You can see clearly who you need to focus your efforts on (Promoters, Passives, or Detractors) to get better results. By analyzing the ratio of Promoters and Detractors daily, you can gain accurate insights into your long-term customer relationships. This will give you a clearer view of your company’s growth potential.
Stickiness
Further, NPS surveys offer accurate insights into your customer’s willingness to stick with you. The question used is larger in scope than the others and gives you unbiased, accurate feedback about a product or service. Unlike asking about a specific experience, NPS’s broader question looks at your customers’ likelihood to recommend your company as a whole.
This way the score and feedback are less likely to be affected by individual events. This more aggregate score means your business gets specific and meaningful feedback with fewer outliers caused by individual positive or negative customer experiences.
The Broader View
As a broader-view customer experience metric, NPS focuses on the overall referability of your brand. People are unlikely to recommend a brand they don’t trust. If they trust a brand, then they’re more likely to stick. This means more retention and added word of mouth.
Touch Every Customer
Another advantage of NPS surveys is that they can be deliberately dripped across your entire customer base, not just recent users. This gives you an opportunity to reach out to “dormant” customers and get an accurate view of how your brand holds up over the long term. This allows for a much more realistic view of your overall customer experience.
Simple, Easy, One Question
One final advantage to NPS surveys is that they tend to get a higher response rate due to the one question format. The highest response rates come when surveys are quick and painless, according to the Nelson Norman Group.
That higher response rate means that even a small group of NPS survey respondents produces meaningful, statistically significant data that you can use to improve retention and increase sales.
Let’s look at the disadvantages of NPS surveys as a customer experience metric.
Lack of Engagement
The key to NPS is getting the customers to answer the open-ended why. A disadvantage is if they don’t leave a comment. This can leave you in the dark as to where you went wrong and make it difficult to action your NPS. But like we’ve shown above, the way to address this is to think of the NPS as the start of a conversation. No matter the score, you can reach out again to re-ask the why.
Be aware that customers may not engage in a conversation after giving the score. It’s a limitation that you must accept. They bought in enough to give you a score, but may not feel like telling you why. It may hurt your brand if you don’t stop pestering until they tell you to go away.
Cultural Bias
Another disadvantage, just like CSAT, is there can be a cultural bias. Some cultures will see a 5 to a 6 as average and a 7 to 8 as good. This may give you a lower NPS score than the same industry with a different audience. Comparing NPS scores across cultures is not the reason to use NPS. Remember the key here is NOT the final score. It’s how you take action on the feedback. It’s how you drive a conversation and create a better customer experience.
In order to gain the most out of your NPS program, you have to do more than collect data once a year. You have to act on the feedback, enlist frontline staff and continually iterate customer experience to reap the benefits of higher response rates, better customer experience, retention, and growth.
What kinds of results do companies who action their NPS receive? 2018 NPS Benchmark Study
Customer Effort Score (CES) Helps Measure Customer Experience in Resolution Effort
What Is CES?
Gartner created the Customer Effort Score (CES), a customer experience metric that enables service organizations to account for the ease of customer interaction and resolution during a request. CES is typically indicative of customer loyalty.
It is thought that customer loyalty is tied to the amount of effort they have to put in when interacting with your brand. This customer experience metric measures that effort and its effect on your customers. The premise is that you can discover if customers have a hard time taking action when interacting with your brand. This allows you to evaluate and take the necessary actions according to the survey data to make processes easier.
Why is CES a Customer Experience Metric?
According to Gartner, 96% of customers with a high-effort service interaction become more disloyal compared to just 9% who have a low-effort experience. If measuring loyalty is the goal, then you need to take into account the effort it takes for customers to interact with you.
How Does Customer Effort Score Work?
Companies who use this metric are hoping to reduce the effort it takes for their customers to interact with a call center, website ordering process, or to leave a review.
They choose the interaction they want to understand and send out a single question. An example is: “To what extent do you agree or disagree with the following statement: The company made it easy for me to (insert action).”There is a scale from 1: Strongly Disagree to 7: Strongly Agree.
To calculate CES, add the total number of respondents who give a 5 or above and then divide that by the total number of respondents surveyed.
According to Gartner, this threshold was set because the difference in the degree of loyalty of customers who give a 5 or above is basically identical and there’s a much bigger opportunity to build loyalty if customers can move out of active disagreement or neutral territory.
Here’s an Example:
Let’s say you send out 50 surveys about the ease of returning an item and get 30 back. Of those 30 you have 10 that score you 5 and above, so you divide 10 by 30. The result is .3333, which means 33% is your score. One-third of your respondents were satisfied with the effort it took to return an item. You may have to look into your return process to discover why 2/3rds of the people took more effort than expected to return an item.
Annie Woo, Mind Body, Inc, VP of Customer Service said in a recent Webinar with AskNicely, that they use CES surveys when they have a question about the effort it took for the customer to take an action such as become a member. CES surveys are best used when trying to discover the customer’s ease of interaction with an employee, website, or any part of the customer journey.
CES – Further Advantages and Disadvantages
The best advantage of CES surveys, according to Gartner research, is that 94% of consumers who report their interactions with a brand as “low effort” will buy again. According to HBR, “of the customers who reported low effort, 94% expressed an intention to repurchase, and 88% said they would increase their spending. Only 1% said they would speak negatively about the company.
Conversely, 81% of the customers who had a hard time solving their problems reported an intention to spread negative word of mouth. Which means consumers who report that their interactions with business are “high effort” say they would speak about that brand in a negative manner. Also, you can collect actionable data from CES to discover your customer’s effort at any point in their journey.
The disadvantage of using a CES type of survey is that — unlike NPS — you can’t segment your customers to discover what type of customer had to put more effort into their interactions with your company or product.Also, it’s limiting as it is only asking about a certain process, product or service. It is sometimes difficult to discover the why behind the question without asking further questions. Plus it doesn’t give you insight into the relationship between your customer and your brand.
Without asking deeper — and possibly intrusive — questions you may not be able to truly discover what is influencing your customer’s answer.Now that we've talked about Loyalty metrics, let's look at other types of customer experience metrics.
Customer Satisfaction Score (CSAT) Helps Measure Customer Satisfaction
What Is CSAT?
Customer Satisfaction Score (CSAT) is a customer experience metric that measures customer satisfaction levels. Wikipedia defines it as a measure of how products and services supplied by a company meet or surpass customer expectation.
CSAT surveys are most often used transactionally. For example, companies use CSAT surveys when they want to see how satisfied clients are with an action or certain aspect of their products/services.
For instance, you may send a CSAT survey after a client made a purchase and discover how satisfied with the purchase process or the item purchased.
CSAT surveys don’t mirror the customer journey, but simply discover how satisfied a customer is with a moment in time or a particular aspect of your product. We’ll illustrate the pluses and minuses of this in a few minutes.
How Does CSAT Work?
A CSAT survey asks customers how satisfied they are with a particular service, product, or interaction with your brand. Here’s an example of a CSAT question:
“How would you rate your overall satisfaction with the product you received?”
Consumers rate their satisfaction with answers in the “Very Satisfied to Very Unsatisfied” or in the 1-5 or 1-10 range.
You can usually customize your closed-ended answers to make them more relevant to the transaction and your brand.
CSAT surveys can be more than a single question. Companies like American Airlines use multiple questions both open-ended and closed-ended in the same survey. We’ll discuss the pluses and minuses of this as well. Your CSAT score is an average of the results of the survey and is expressed as a percentage from 0% to 100%.
Success here is more like a grading scale where higher than 50% is good.
So how do you calculate a CSAT customer satisfaction score? Take the number of “Satisfied” respondents and divide it by the number of responses you received in the survey, then multiply it by 100.For example, if 100 people respond to your survey, and 75 of them are “Satisfied,” that means your CSAT score is 75%.
What are the Advantages and Disadvantages of CSAT as a Customer Satisfaction Metric?
CSAT surveys can be used to find out in minute detail how satisfied customers are with every transaction. Want to know how their check-in went? Or their seat? Or how satisfied with the time it took to board? CSAT is your survey.
There are Two Main Disadvantages With This Customer Satisfaction Metric
The first and most important disadvantage to be aware of with CSAT is that customers might be satisfied with a specific transaction and still not happy with your brand overall.
Comcast is a perfect example of this. Their transactional scores were good, but customer churn was still high. (We’ll discuss churn as a CX metric later in this blog.) What were they missing? They realized they were missing the big picture of their customer journey. Their surveys showed them data points, not the entire customer journey. How many times have you been satisfied with a phone conversation and still unhappy with your overall customer journey?
The second important disadvantage with CSAT surveys, if they are not properly managed, companies can get overzealous and they can get too long. In the market today, surveys that are more than one question long have higher drop-off rates. Studies show that survey response rates lower the more questions you ask.
CSAT – Further Advantages and Disadvantages
The advantage of CSAT is a flexible customer satisfaction metric. You can easily customize questions for an in-depth analysis. The CSAT also allows for different formats depending on your audience. The disadvantages include relying on short-term customer sentiment and subjectivity. Think about it - what does satisfied mean to you? Does it change on any given day? How is that different than what it means to your friends and family?
There is the Problem of Cultural Bias
According to a Psychological Science article, people from more individualistic countries (like the US) are likely to choose the more “extreme” sides (“Very Satisfied,” “Very Dissatisfied”) than people in collectivist countries (someone from Japan who’s more likely to offer a “Not Satisfied” or “Satisfied” rating). CSAT scores can also be skewed by “Neutral” or “Dissatisfied” customers who may not fill out the entire survey. And, the CSAT score doesn’t tell you a lot about consumer loyalty, therefore, at best, a low score might be able to predict customer churn.
Also, a high CSAT score doesn’t really predict whether or not a customer will promote your brand. They might be happy with what you offer, but unless you ask if they would refer you, you can’t know for sure. They might not even think about referring you.
As we’ve discussed in previous blogs, studies show that a majority of people will refer a company they like if asked. The key is to ask them. Edwards Deming, the late internationally-renowned quality expert, explained that satisfaction was an insufficient state of acceptance in his TQM book, Out of the Crisis, “It will not suffice to have customers that are merely satisfied. An unhappy customer will switch. Unfortunately, a satisfied customer may also switch, on the theory that he could not lose much, and might gain.”
A Real World Example
"Customer satisfaction is measured at the individual level, but it is almost always reported at an aggregate level. It can be, and often is, measured along various dimensions. A hotel, for example, might ask customers to rate their experience with its front desk and check-in service, with the room, with the amenities in the room, with the restaurants, and so on. Additionally, in a holistic sense, the hotel might ask about overall satisfaction 'with your stay.'"[wikipedia]
A call center will often use CSAT right after a call or help ticket is complete to capture how satisfied the customer was with that particular interaction. This is then used to help develop employee experience management to improve processes.
Metrics to Measure Quality: 5 Star and Churn
What Is 5 Star?
5 Star began in the hotel and restaurant business. It was a way of distinguishing the luxury/quality level of the hotel. 5 Stars — literally highlighting the number of stars you feel a product or service deserves — used to mean a product or service was exceptional. Think Michelin Stars in restaurants. But today, 5-star reviews are seen everywhere from Amazon to Uber.
Paul A. Pavlou, Ph.D., professor of management information systems and marketing at Temple University’s Fox School of Business in Philadelphia, says that this trend started with eBay in the late 1990s. They used review options “positive,” “negative” or “neutral.
Why is 5 Star a Customer Experience Metric?
Many companies are more comfortable using a five-star rating. The metric is so prevalent among companies that they feel the customer more readily understands the process and that response rates may be higher.
How Does 5 Star Work?
It’s based on one question:
How would you rate your recent (experience/product)?
Then it gives five empty stars for the customer to fill in.
Here’s an Example:
Jenn just finished purchasing a sweater from an online retailer. She then gets an email survey.
How would you rate your purchase experience?
Then there would be five blank stars for the customer to fill in.
Another example based on Jenn’s purchase:
How would you rate the quality of your sweater?
Then there would be five blank stars for the customer to fill in.
5 Star – Further Advantages and Disadvantages
The clear advantage to 5 Star surveys is that they are used everywhere and well understood. You can ask about any point in the customer journey.
A disadvantage, according to Pavlou, is that research has shown that as time progressed neutral reviews began to be seen as negative and 5 stars is now seen as acceptable and not necessarily outstanding.
Another disadvantage is it doesn’t give you insight into the entire customer journey and it struggles to build a relationship with your customer.
Churn as a Customer Experience Measure
What Is Churn?
Most business people fully understand churn, but let’s define it. Churn is short for Churn Rate: the number of customers or subscribers who cut ties with your service or company during a given time period.
How do You Calculate Churn?
The calculation of churn can be straightforward to start off with. Take the number of customers that you lost last quarter and divide that by the number of customers that you started with last quarter. The resulting percentage is your churn rate.
As an example, a company that started last quarter with 100 customers and lost three over the course of the quarter would have a churn rate of 3%.
How is Churn a Measure of Customer Experience?
Unlike the surveys listed above, churn is not a survey. What it is is a clear indicator of how customers feel about their customer journey with your product or service. If customers are leaving you in droves, it’s time to stop the leaky funnel and implement new processes and procedures to make the customer’s life better.
The Customer Experience Metrics Bottom Line
Which Customer Experience Metric Is Best for Your Needs?
The answer is it depends on your business objectives and goals. By now you have an understanding of what each customer experience metric measures and how and why to use them. Depending on your goals, there may even be room for multiple types of survey programs. But you must understand that multiple programs may be cumbersome, conflicting, and difficult to action. Each of the three most common customer experience metrics has its use case with pluses and minuses.
The most important thing about customer experience metrics is to take action on them. Businesses grow with happy customers and you don’t know how happy your customers are unless you ask. You want to be sure and ask before they churn.
NPS For Growth
If you are looking for the most actionable metric and a true measurement for growth, we suggest you use NPS.
Remember CSAT can give you helpful information on specific actions and features, but the feedback doesn’t encourage retention. Meanwhile, CES only gives you a peek into a few specific situations, like a product’s or process’s ease of use.
NPS, on the other hand, gives you more than a score — it generates relevant feedback that you can use to improve your consumers’ experience by asking an open-ended follow-up question: “Why did you give us this score?”
Starting a Conversation
Because the standard NPS question isn’t related to a specific experience (like CSAT or CES or 5 Star), respondents are free to talk about the specific things they like or dislike about their experience with your product or service.
There’s less bias. Customers provide their honest feedback on any aspect of their experience that surprises, delights, upsets, frustrates, or disappoints them. They determine what is and isn’t important, and therefore, they can provide the most meaningful feedback.
The resulting feedback is direct, actionable, and meaningful to your business — feedback that your team can use to make real changes that boost retention and increase recurring revenue.
Long-Term Growth
Also, NPS – unlike CSAT, CES and 5 Star – focuses on long-term growth. When you use NPS to action customer feedback you can see greater than 100 percent growth and net negative churn. You can download the NPS Benchmark Study to learn more about the results of an advanced NPS program.
Compared to other customer experience metrics, NPS provides unbiased and accurate data — in context. This helps you make smarter, more effective decisions to create better customer experiences. Better experience means more loyalty and higher growth.
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