It’s the season to be jolly and start planning the next year’s projects and activities! We at Futurelab research would like to help you get your Voice of Customer program up and running in 2017. We will do it by posting a series of materials, covering such important areas of Voice of Customer programs as program strategy, data collection and analysis, activation of the results, etc.
But first things first: you have to get the right program design of course. For these purposes, choosing the right metric is essential. Below you will find a list of the most important Voice of the customer KPIs, their upsides and downsides, plus a download presentation with a guide to choosing them.
What Voice of Customer metrics should you choose?
The Voice of Customer KPIs track your customers overall feelings towards your products or services. You can use them to assess their attitudes towards the whole company in general, or certain touchpoints.
Which are the most important Voice of Customer metrics?
- Customer Satisfaction (CSAT, OSAT) – Customers express their satisfaction / dissatisfaction with a particular product / service / transaction, or even overall with the whole company (OSAT). The main question for measuring this metric is: How satisfied are you with our product?
A fairly popular metrics, one of the first ever. Plus: intuitively understood by everyone in the company, it won’t cause any questions or misunderstandings. Minus: resent studies suggest that satisfaction has limited connection with the future behaviour.
- Customer Effort Score (CES) – This metric measures the effort a customer must put forth to complete a transaction to the desired state. You can measure this KPI with the question: How much effort did you personally have to put forth to buy our product?
A relatively new metric, but already gaining popularity. Effortless, seamless service is the new commodity. This is why CES is great as a touchpoint metrics: measuring effort which a customer has to put forward to go through a particular step in your relationship makes sense. Plus: very targeted, let’s-sort-out-basics-first approach to CX. Minus: not a minus as such, but CES it is concentrated on bad things not happening rather than good things happening (you will not measure positive emotions with it). In other words, you’d have to use some other metric together with it. Another peculiarity of it is that it uses and inverted scale – the higher the number, the worse the situation. You would have to do some explanation to get through why a high CSAT is good but a high CES is not.
- Customer Expectations (CExp) – it measures the balance between a customer expectation from a transaction and the actual performance. It is tracked with the question: To which extent have we met your expectations this time?
Another old and respected metrics that takes an angle to the loyalty topic: those customers whose expectations have been greatly exceeded, tend to be generally happier and tell more stories. Plus: it quite uniquely addresses the aspect of initial image of product or service, created by early stages of customer journey (often strongly influenced by advertisement), and the actual product or service. It therefore allows you to both manage expectations and improve experience. Minus: it still does not tell you whether you are communicating the expectations wrong, or are simply are not performing well. You’d need another metric to go with it.
- Repurchase / Retention forecast – With this metric customers claim their likelihood to repurchase, expand, or renew with your company for products or services in the future. Use the question: How likely are you to purchase from us again in the future? and the likes of it to track Repurchase.
Originally a marketing metric, this is an old time favourite of all loyalty specialists. You may or may not need to get this piece of data from a questionnaire: if you store transaction data, then you know whether a customer is a repeat or not. Plus: “showing the money” has never been easier, because happy clients buy again. Minus: it actually does not tell you explicitly whether the client is indeed happy with you. Repurchase can be influenced by a multitude of factors: convenience, proximity, legal issues, price, etc. So, while you are using it to show the money, don’t forget to use another metrics to make sure that they come back not because of the locking contract, but because they love you.
- Net Promoter Score ® (NPS) – This is one of the most important and popular metrics. It measures a customer's willingness to refer your business to a friend. The main question for measuring this metric is: How likely are you to recommend our company to a friend or colleague? should be always accompanied by an open text - Why did you give this score?, and it is also advisable to set another open question after it: What should we do to improve?
“The Ultimate Question”, as it was baptised by its inventors a decade ago, has received a lot of bad rap for that name in the past, but is by now one of the most established and highly reputed available. Encompassing a whole transformation system that starts with it, NPS is by far the most extensive voice of customer AND customer management tools existing in the market now.
Plus: short, sharp and to the point, NPS gives you the whole thing. You measure both happiness and unhappiness. There are benchmarks available for most industries and products. The system can scale exactly to your needs, whether you are a small shop asking clients to rate their experience by answering 3 questions on a tablet at the exit; or a multinational corporation with hundreds of transactions per second to be evaluated. NPS usually shows good connection to both repurchase and loyalty, but making your own business case always proves it best. Minus: YOU HAVE TO DO IT RIGHT. It won’t nearly bring you to the promised land of customer happiness if you do not implement the system correctly. According to Fred Reicheld himself, about 72% of all Net Promoter systems are not implemented right. If in doubt, talk to a specialist.
- Compound loyalty indices – any index combining several various loyalty / retention metrics, which may include satisfaction, repurchase, recommendation, share of wallet, brand preference, etc. Examples: TNS TRIM, Ipsos Loyalty Index, etc.
As you can see above, compound indices are liked by big research companies. They find extra percentages of precision in correlation of an index to some other data a good enough excuse to expand a questionnaire. As you can see from this comment, we are not too excited about those indices. An obvious minus comes first therefore: you have to invest money into collecting extra data, and more into the time that a company will spend compiling all data into an artificial construct. Apart from that, “compound” by definition means you will need to take it apart to see what is really going wrong: satisfaction, effort, or something else. Obvious plus here is that due to all this time and effort it is probably a bit more scientific, if science is what you are looking for. If however change and action is a higher priority – choose something else.
Want to have a bit more insight into what should a metrics really measure? Learn more by downloading the free presentation with some extra guidance.
Disclaimer: Net Promoter, NPS and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld