By Nadine Leber, Expedition PR
It’s not a secret. Creating an excellent customer experience helps companies build loyalty and maximize profits. Customer experience can be created through a number of initiatives and across all customer touch points from marketing to sales, billings, and service. The question is how can companies measure their overall customer experience management performance to focus on the initiatives that create the biggest impact on the bottom line?
The trick is to identify and measure the core activities that drive customer satisfaction and customer value. A classic approach is to use financial metrics for the measurement, including revenues, return on assets and return on investments. But these metrics give little information about a customer’s perception or satisfaction. They need to be supplemented with customer-centric metrics.
Finding and measuring the right criteria and indicators for a customer-centric rating is crucial to sustain a company’s growth and success. The criteria should include leading indicators for customer satisfaction and reflect a cause-and-effect relationship between profits and customer value/satisfaction.
The Net Promoter Score (NPS), developed by Fred Reichheld, Bain & Company and Satmetrix, is a popular tool for measuring customer experience. It can be used in particularly to measure the customers´ loyalty. The NPS is obtained by asking customers a single question on a 0 to 10 rating scale, where 10 is „extremely likely“ and 0 is „not at all likely“.
The percentage of detractors is then subtracted from the percentage of promoters to obtain the NPS. The NPS indicates the willingness of recommending the company to others. It is a definitive indicator for customer satisfaction. The NPS is a great tool to understand the customers’ needs and to set goals for optimizing the customer experience management system.
The Forrester Customer Experience Index (CXi), published annually by the analyst house Forrester, Inc., provides benchmarks of the quality of customer experience for 154 large U.S. companies across 14 industries including retail, hospitality, travel, technology and finance . The index is compiled by evaluating customer opinions and then rank the participating companies based on their score.
This benchmark – based on customers’ perceptions and opinions – allows companies to compare their performance with their competitors. It helps companies understand how they currently meet the needs of their customers and how their customers think about the brand.
Both methods, the NPS and CXi, show in which areas they need to improve their customer experience management. Companies have a measurement system to monitor how their interactions with the customers translate into customer engagement, satisfaction and loyalty.
Regardless of the industry sector the business operates in, a company´s success is based on its understanding of the customers´ needs. Establishing and maintaining excellent customer relationships is a central element of a company´s positioning strategy. Measuring the experience customers have with the company and tying it to financial metrics, is a good approach to keep company’s on the path to sustainable growth.
“Net Promoter” is a registered trademark of Fred Reichheld, Bain & Company and Satmetrix.