Home > Customer Experience, Strategy > How should we measure results for our customer strategy?

How should we measure results for our customer strategy?

Let’s talk a little about customer measurements. 2 measures have gained traction in the last few years. One is Net Promoter Score and the other is the Customer Experience Index. We are beginning to experiment in using them. They give us a basis of comparison to public data that is common to many companies today. Please let me know if you have questions. I’ve also included links to additional resources for each one. There is a great book on the Net Promoter Score.

Net Promoter

Net Promoter Score

NetPromoter Question: How likely is it that you would recommend our company [or can be narrowed to a particular service] to a friend or colleague?

How to Calculate Your Score

NPS is based on the fundamental perspective that every company’s customers can be divided into three categories: Promoters, Passives, and Detractors. By asking one simple question — How likely is it that you would recommend [Company X] to a friend or colleague? — you can track these groups and get a clear measure of your company’s performance through its customers’ eyes. Customers respond on a 0-to-10 point rating scale and are categorized as follows:

  • Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
  • Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
  • Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

To calculate a company’s Net Promoter Score (NPS), take the percentage of customers who are Promoters and subtract the percentage who are Detractors.

Reference material:

http://www.theultimatequestion.com/theultimatequestion/measuring_netpromoter.asp

http://www.netpromoter.com/np/calculate.jsp

Book: The Ultimate Question: Driving Good Profits and True Growth

 Customer Experience Index

The Forrester Customer Experience Index (CxPi) is calculated as an average of the indexes that came from consumer responses to the following three questions from their online survey:

1. Thinking about your recent interactions with these firms, how effective were they at meeting your needs? (This question drives the “meets needs” index.)

2. Thinking about your recent interactions with these firms, how easy was it to work with these firms? (This question drives the “ease of working with” index.)

3. Thinking about your recent interactions with these firms, how enjoyable were the interactions?  (This question drives the “enjoyability” index.)

Consumers selected responses along a five-point scale — ranging from a very negative experience (1) to a very positive one (5). The individual indexes were calculated by taking the percentage of consumers who selected one of the top two boxes (4 or 5) and subtracting the percentage of consumers who selected one of the bottom two boxes (1 or 2). The correlations between CxPi and NPS were calculated using the sum of the consumer responses to the three above questions that make up the CxPi, yielding a range of 0 to 15, and the respective answers to the NPS question asked in the survey

Correlations above 0.8 are actually considered bad because they imply that you simply measured the same thing two different ways. This makes the second metric redundant — unless it is significantly cheaper or easier to collect than the original.

Forrester based this assertion on findings that for 11 industries recently studied, the correlation between CxPi scores and “likelihood to recommend to a friend of colleague” on a five-point scale ranged from a low of 0.61 (which is still quite high) for retailers to a high of 0.70 for TV service providers. See the July 7, 2011, “The Business Impact Of Customer Experience, 2011” report.

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