Did you know that it costs more to attract a new customer than to keep an existing one? Any new business aims to retain customers and establish a loyal relationship with them – so should yours. Gauging your relationship with your customers is the key to understanding how your customers perceive you. Also, this serves a guide on whether your team has hit the “Gold Standard” that we discussed earlier.
There are three important metrics that you’d want to consider:
1. Customer Satisfaction Score (CSAT) – this is perhaps the most direct approach to customer satisfaction surveys. Measuring this can start by asking a question, such as “How satisfied were you with your experience?” There’s a corresponding survey scale, which can be 1 – 3, 1 – 5, or 1 – 10.
2. Customer Effort Score (CES) – is a type of customer satisfaction metric that measures how easy it was for a customer to deal with your company; usually on a five-point scale of “Very Difficult” to “Very Easy.” This measures how much effort was required on the part of the customer to use the product or service to evaluate how likely they are to continue using and paying for it.
3. Net Promoter Score (NPS) – is a customer satisfaction benchmark that measures how likely your customers are to recommend you to a friend. Compared to the other two metrics (CSAT and CES), NPS is different as it measures a customer’s overall sentiment about a brand, versus their perception of a singular interaction or purchase. It is also not to be taken lightly because as mentioned, it involves your customers’ overall perception about your brand.
Just like the other two metrics, you can start collecting data for your NPS by surveying your customers. NPS is the usual answer to the question “On a scale of 0 to 10, how likely are you to recommend to a friend?” The responses to this question can be categorized into three groups:
Promoters: Customers who answer the question with 9-10 (enthusiastic, loyal customers who will tell their friends about your business and bring in new customers)
Passives: Customers who answer the question with 7-8 (indifferent and could become promoters — or they could switch to your competition.)
Detractors: Customers who answer the question with 0-6 (unhappy customers, and not only are you at risk of losing them, they could do damage to your brand by sharing their bad experiences with other people.)
Calculating your Net Promoter Score is to subtract the percentage of detractors (customers who wouldn’t recommend you) from the percentage of promoters (customers who would recommend you). Or simply put:
FORMULA: % Promoters – % Detractors = NPS Score
The key to achieving a high NPS is having a greater number of promoters than detractors (your promoters must vastly outnumber your detractors).
For example, imagine you surveyed 200 customers. If 40% were detractors and only 50% were promoters, your NPS would be 10 (50% – 40% = 10).
But if you surveyed your 200 customers and only 20% were detractors, your NPS score would jump up to 30 — representing a 20% greater chance your customers will recommend you to a friend.
Like what was mentioned earlier, NPS is important. Not only does it help you get your customers’ overall “feel” for your brand but also:
- Identifies ways to improve
- Measures Customer Loyalty
- Helps prioritize reaching out to detractors
- Enhances referral marketing
Remember that when making significant purchase decisions, consumers usually do their research: consult the internet, look for reviews, or ask their family and friends for recommendations and advice. These recommendations from family and friends are considered highly valuable by your customers. According to Nielsen’s Global Trust in Advertising Report, 83% of respondents said they trust recommendations from family and friends more than any other form of advertising.
Think about this statistic for a second: this means that no matter how much you polish everything, one customer’s negative experience with your brand could sink your business. A harsh reality is customers are more likely to talk about a bad experience with your brand than a good one – and they tell almost 3X as many people when it happens.
Knowing about the different customer service metrics and measuring your scores is only a small part of the grand scheme of things. Your brand and your business’ survival depends on what you do about the data you’ve collected.
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