Not long ago I shared a blog post entitled Calculate ROI of CX: a simple example where I used Customer Satisfaction (CSAT) as a Customer Experience metric and customer’s Average Spend as a business metric. Recently I was asked about the impact of another popular CX metric, Net Promoter Score (NPS), in the bottom line.
Most of you know that NPS measures the customer’s loyalty to the brand. It measures the customer’s “long-term” happiness, and tries to predict what customers will do in the future. And you also know that NPS is calculated by subtracting the % of Detractors, from the % of Promoters.
Measuring NPS, comparing your NPS to the competition’s, and bragging about a high NPS score might be fun. But in the end, it could be useless if you cannot show your senior leadership or C-suite how it impacts the companies bottom line.
Truth is loyalty means much more. Sure, you want customers to buy your product. But more than that, you want them to buy into your company – your values, your mission, and your care for each and every client – and when they do that, you will see a reflection in your NPS, and you will be well on your way to increased revenue and sustainable growth.
So, how do you prove your board that having a higher NPS impacts revenue and growth positively? You can start by stating that higher NPS scores usually result in 4 very tangible things:
Higher Retention Rates
Increased up-sell and cross-sell
Lower cost to serve
Lower marketing costs (due to word-of-mouth)
But let’s get to the fun part, of calculating the impact of NPS in the company’s revenue. So you can have some data and facts to backup your blurb. For this example I created a scenario of a company with 1 million customers, and used average spend as a business metric.
Let’s say that Promoters represent 54% of customers and spend $500 per year; And Detractors represent 14% of customers and spend $100 per year… NPS would be 40 and the revenue $348m
Now let’s say we were to convert 10,000 Detractors into Promoters… NPS would be 42 and the revenue $352m
Now let’s convert another 10,000 Detractors into Promoters… NPS would be 44 and the revenue $356m.
The correlation between NPS and revenue is obvious. And would allow us to conclude that by converting 3,75% of Detractors into Promoters, would move the NPS needle by 1 point, which would in turn increase the revenue by $2m in a year.
Note: An interesting study from Satmetrix shows that, among the various CX metrics, NPS has the highest correlation to profit and growth. You can also see from the chart below that CSAT seems to have the lowest correlation.
There are at least two very good reasons to measure the experience you’re providing customers.
The first is best summarised by the father of management thinking, Peter Drucker, when he said “if you can’t measure it, you can’t manage it”. As CX Managers we need to understand the experience we are currently providing customers in order to transform it.
The second has to do with your CX strategy. Any strategy worth its salt will be comprised of three components:
An understanding of where you are today,
The desired future state, and
A plan for how you’re going to get there.
And metrics are crucial to building out your understanding of your current position.
If you Google “CX Metrics”, once you get through all the ads for feedback vendors, you’re going to quickly find that most people like to talk about Net Promoter Score, Customer Effort Score (CES) and Customer Satisfaction (CSAT). All three have their pro’s and con’s but when used as part of a system they’re all good.
But there’s enough posts about them on the internet (hell, I’m guilty of even publishing one or two) so I’m going to look at a few metrics today that you’re probably not using.
Now, the metrics you use to measure your CX are going to differ depending on the type of business you are. An e-business that operates 100% online will need different metrics to a physical store which will need different metrics to a national cable company with a call centre and technicians visiting customers in their homes daily.
So let’s look at each of those examples in turn:
In this scenario, customers order a product online for it to be delivered so there are two aspects of the experience we can measure: the online experience and the delivery experience. Metrics I’d be looking at for each include:
The online experience
Webpage uptime – What was the percentage of time that customers could not access our website? When did those periods occur?
Bounce rate – What was the percentage of visitors who came to our site and then left rather than continuing to view other pages on the site?
Abandoned carts – What percentage of customers began shopping and then stopped mid-purchase? What page were they on when they stopped? If customers had logged in prior to abandoning their cart, what was the general demographic profile of customers who abandoned their carts?
Page load time – How long did it take each page to load causing our customers to wait?
How many times was the FAQ guide accessed? This indicates customers weren’t able/didn’t know how to do something.
How many times was an online agent requested mid-purchase? Again, this indicates customers weren’t able/didn’t know how to do something.
The delivery experience
What was the average time between a customer ordering the product and receiving it for both metropolitan and regional areas?
What percentage of deliveries were made after our commitment date?
What percentage of returns on the first day were because of damage (which we will assume was caused by delivery)?
What percentage of customers were notified that the product was being delivered on the day?
How did customers rate the delivery person? How many complaints were received about delivery people?
Owners of a physical store are going to need a completely different set of metrics to measure their CX. I’ll break these down between the store itself and the service provided by employees within the store:
The shopping experience begins before the customer enters your store. If they drove, how easy or hard was it for them to find a park?
Did we have the product(s) the customer was looking for?
How easy/hard were those products to find in our store?
How did customers rate the general appearance of the store for cleanliness/tidiness?
The customer service
How did customers rate the employee(s) they interacted with whilst on site for appearance, service, courtesy, knowledge, communication and professionalism?
National Cable Company
In this scenario, I’m using a cable company because I’ve worked at a few of them and know them well but it could be any company with a contact centre that sends technicians to customers’ homes or businesses. The two aspects of the experience I’ll focus on here is the contact centre and the technician visit.
The contact centre
Every good contact centre will already be measuring things like FCR, AHT, ASA, and QA (boy there’s a lot of acronyms in the contact centre world!) so let’s look at some other metrics:
Average After Call Work Time – A subset of AHT, this is the average amount of time it takes to wrap up a case after the customer has disconnected.
Unplanned agent leave days – people not turning up to work when you’d planned for them to be there affects CX.
Agent Turnover Rate – What percentage of agents leave each year? Not only will this increased hiring and re-training costs but less experienced agents can’t provide the same level of service to customers that an experienced, knowledgeable agent can.
Escalation Rate – What percentage of cases were escalated both from self-service to a live agent, as well as between different tiers of agents and managers. More agent-to-manager or cross-tier escalations may indicate expertise or confidence issues with the service agents, particularly among those agents with the highest rates. A high escalation rate from self-service to live agents could mean current self-service options are not effectively answering customer questions.
The technician visit
Right First Time – Did the technician do the job they were originally sent to do or was rework involved?
Call On Approach – Did the technician call the customer before arriving to let them know they were coming to ensure the customer would be there?
Appointment Window Met – Did the technician arrive within the specified appointment window?
How did customers rate the technician they interacted with whilst they were on site for appearance, service, courtesy, knowledge, communication and professionalism?
In all cases mentioned above, I’d also be measuring complaints and the time it took to resolve them. Complaints are a key indicator that your customer experience has broken down and Time To Resolve tells you how long it took to fix. As a CX Manager, your goal should be of course, to get the first metric down to 0 and the second as low as possible.
So there you have it, some of the more uncommon metrics that can be used to measure customer experience. If you’re using any others I’d love to hear about them. Please add them in the comments section of this post.
“Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” – Dr. H. James Harrington.
Ben Motteram is a customer experience consultant with over 20 years’ experience in customer acquisition and retention. Through his company, CXpert, he helps companies become more human in the way they interact with customers and employees to increase loyalty, engagement, and ultimately profits. An avid golfer living in Melbourne, follow Ben on Twitter for insights on CX, customer service and employee engagement or connect with him on Linked In.