The killer customer service or loyalty metric does not exist

metricsHappy with your Customer Satisfaction score? Don’t be! Here’s why:

Cash is King – Profit an Opinion

Even the one metric (profit) that we all acknowledge gets challenged. This quote reached me through Twitter, from a person following a Financial Management for Non Financials-course at that time. It is as much a true statement as a false one. Having a bundle of cash but no activities to work with it does not make business sense. On the other hand Profit actually is an opinion, since the annual profit-statement depends on a few rules that we set to calculate profits. If we change the rules (or go to another country) with the same revenue and costs you can have different Profit. Hence my opinion that the quote above is as much true as it is not true.

The same goes for metrics that try capture Customer Satisfaction or Loyalty. Any metric you choose can be true or false. And one thing is for sure: The killer metric does not exist! Let me explain:

CSAT nor NPS are exclusively “right”

In my experience lots of companies have very decent to even good Customer Satisfaction (CSAT) scores (in The Netherlands for example scoring 7,8 , on a scale of 10, is considered a good score). Nevertheless also companies with little to no growth or even little to no profit score as high as this or higher. The conclusion can be that these CSAT-scores do not provide any insights to improve your business performance. I am inclined to go with that conclusion. Are you?

A similar discussion is still going on in respect of the NetPromoterScore (NPS) that tries to capture Customer Loyalty. I will not dive into that discussion here. If you are interested just hit this link.

Changing the rules of the game

Back to CSAT: I experienced in my carreer great improvements through measurement (and acting upon) CSAT:

When I was working for Center Parcs as a Management Trainee, almost 15 years ago, this company had a long history of great CSAT scores. Even for the Dutch the scores were high: high eighties where no exception. Still “we” experienced a decline in bookings and (F&B) spend during that time (and it where the growing years), so something had to happen.

Center Parcs introduced a new CSAT metric that focussed on Top Box scores. They spend some time investigating what customers really cared about and came up with a new CSAT form on which customers where no longer asked to score on a scale of ten. Per question the customer only got 4 options: “-/-” or “-” or “+” or “+/+” and they told “us” they would be measuring on percentage of Top Box (the “+/+”).

Without changing your play

As nobody in the company really thought improving service was possible, little changed in the beginning. Of course management started a program to explain and drive what they where looking for (I’ll get back to that later), but most people where convinced that service was already at the highest possible level. Until the first results came in: week after week a dramatic under-performance compared to target (I really do not know the exact scores anymore, but I remember the turmoil).

Now it became clear to everyone that something needed to happen, that “management” was not just saying somethings about creating great and new experiences (Center Parcs did not invent experience management, but the became quite good at it already sometime ago), they actually meant it. And then it happened: sparked by the Leadership-team and local management, all employees got involved in the process of creating new experiences. Simple low-cost experiences as well as high-value investments, throughout the company. Experiences that did not only surprise the customer, but also generated increase in bookings, on-site revenues and profits.

What gets measured gets done

My conclusion: CSAT (or any other metric you choose) will not work as a killer metric if you remain satisfied with mediocre or even good scores compared to competition (or common understanding). When you’re stuck at that ceiling, be creative, challenge everything you already know and take it from a different angle. Re-invent the metric that works best for the situation you’re in.

It may well be (and it is likely to be so) that Center Parcs at any time has hit the ceiling of this new “killer metric” too. And this will happen to you too, or has happened to you already. Don’t just sit around and wait untill you are hit by revenue declining and/or customers leaving or staying away. Dive in and create a follow-up metric that will work for you there and then.

Killer metrics do not exist, they are company specific and should evolve with it!

Where are you at?

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9 thoughts on “The killer customer service or loyalty metric does not exist

  1. Pingback: We Don’t Need An NPS-[fill in the blanks] | Wim Rampen's Blog

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  5. I will try to be succinct.

    Any system can prove a causal relationship with the expected outcome. Then again, a broken watch is always right twice a day.

    Just because there is a cause-effect relationship does not mean that there is something that we can use to grow our business.

    CSAT, NPS, and the others have found examples where implementing them led to higher of a certain metric. Alas, since we don’t run scientific tests, we usually ignore all the other changes that accompanied those implementations (usually NPS is accompanied of a change in surveying techniques and questions, for example, and CSAT is either a new metric or comes i the heels of a BPM implementation).

    It is always easy to show a cause-effect in the short term. It is the long-term that would impress me and cement the ability of any method to do it.

    Forget one-time improvements, they can happen without doing anything.

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    • Esteban,

      I think that what you’re telling us is that there can be correlation without actual measures/actions causing the effect.. and that in many cases there is no real insight in what (actions/experiences) caused or contributed most to the effect.

      My take:
      1. Discover what experiences really matter to your customers (and that make them loyal and/or spend more)
      2. Develop experiences/measures (not measurements) that have a clear relation with that customer demand and sustainable growth of your customer base and spend.
      3. Develop metrics to track how well you are executing the measures.
      4. Keep track of the correlation too: customer demand/expectations shift over time

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  6. Thx for participating in the discussion. I don’t think proving the relation between CSAT and profits is at stake here. That relation has been established clearly as you rightfully comment.

    The thing with pure CSAT (asking how satisfied customers are with your service or product) does not tell you what you need to improve.

    If you want to improve you need insight in where you need to improve. It is about discovering what experiences matter, what your customers expect, and how you are performing on those experiences compared to expectations.

    One example from my perspective: If customers expect that, in the experience of Customer Services, they get a knowledgeable person on the phone that can answer their question and that they do not need to call in a 2nd time to solve their issue, you need to measure just that. When you ask for feedback (in a survey) you should direct your questions as directly as possible:
    – Did you need to contact Customer Services more than once to answer your question or resolve your issue?

    The real challenge from my perspective is to discover what your customers really want (to experience) and expect to get (as value) in/out of that experience.

    A lot of companies think they know what their customers want or (should) expect. I.e. in Customer Services we always thought (and some still think) that an average speed of answer of around 30 seconds when customers call is important for them. So everybody was focusing on that metric instead of what really mattered: getting the answer right and solve the issue in one call.

    A lot of money has been wasted on the first (not so important) part of the experience as a result of that “misunderstanding” customers needs.

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  7. Wim, what about ACSI scores? I understand that there has been some research that has demonstrated a strong correlation in ACSI scores and companies who outperform the S&P index over decades. This may be the exception to a cust sat metric that can be tied to profit….

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  8. interesting take. the message i get is that not only the metric – but the way to measure it is critical. it is about the scale, the granularity of the same, and knowing what to do with the results.

    i like that approach. nice job telling the story.

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