Article of the week 29 – 2023

CX series: NPS, CSAT, CES… and the Highlander principle.
How to choose the right KPI for your business.

When companies decide to develop or re-evaluate their established CX strategy it is extremely important to think about how to measure the success of the CX strategy.

This is the right time, to think about numbers. 

„You can’t manage what you can’t measure“ – Peter Drucker.

Choosing the right KPI for your CX program from the multitude of KPIs available is one of the most important fundamentals. Based on this KPI, action plans are drawn up, projects are implemented, and results communicated e.g. with your investors. Finally, by choosing the right KPI, you will be able to calculate the ROI of your program and thereby get your management on board.

The question of which KPI for you to choose can be answered with its: It should cover the areas that are most important for the customer and make a direct contribution to the declared strategic goals of the company.

That is, the KPI should be directly related to overall customer satisfaction and measure the most important aspect of customer interaction or customer experience identified in line with the business and strategy objective.

That means: If expansion, cost optimization or even operational excellence are the stated goals of your company, you should set the corresponding CX KPI as your main metric.

There can only be one: that’s the Highlander Rule. Especially at the beginning of the CeX when setting up a strategy, we tend to get bogged down in implementing all sorts of known KPI’s , countless side calculations or thresholds that represent „standard“ values.

First of all: Please don’t use so-called benchmarks if you do not know how they came about or how the measuring system behind them is structured. That means, what do you exactly know about the implementation of the benchmark?

  • Who are the customers surveyed (loyalty program customers/ transactional customers/ online or offline)?
  • At what point in time are they surveyed: after purchase, after usage, during the journey?
  • Is the survey question formulated in a biased way or presented, e.g. with a colored scale?
  • How many questions includes the baseline survey? 
  • Is the market share the same as yours? 
  • Does the competition have the same customer target and customer base as you?

(Stay tuned : I will soon publish another article on this aspect.)

Of course, you can implement all sorts of CX metrics and try to understand every single interaction from the customer’s point of view. But your customers probably don’t want to spend too much time answering lots of questions.

Furthermore, you shouldn’t ask those questions that you already should know the answer for or that some of your goals have gotten mixed up and are going in opposite directions. 

„Not everything that counts can be counted, and not everything that can be counted counts.“ – Albert Einstein

There are three main metrics that are commonly implemented and typically recognized by both your senior leadership and your peers. We strongly recommend choosing one of these for your main KPI, again depending on your strategic goals

Net Promoter Score (NPS):

Possibly the most used and mentioned CX metric since Fred Reichelt as a partner at Bain & Company in the 2003 HBR article „A Number You Need to Grow“. NPS is measured by asking:

„How likely are you to recommend Company/Brand X to a friend or colleague?“

Customers rate this on a scale of 0 to 10. Based on their responses, they are placed into three categories: Advocate (9-10), Passive (7-8), and Detractor (0-6). NPS is calculated by subtracting the percentage of dissenters from the percentage of supporters.

Overall, we can assume that the Net Promoter Score (NPS) aims to maximize profits by increasing the recommendation rate. Suitable for you if the company’s strategic goal is to generate growth . This is a metric that tries to calculate long-term loyalty by not focusing on the exact interaction, but on the relationship with the company and its impact on more customers (referrals).

Customer Effort Score (CES):

The Customer Effort Score (CES), coined by Matt Dixon -CEB Consulting- in 2008, assesses the effort that customers make when interacting with a company. The question is usually:

„How easy or complicated was it for you to solve your problem with the help of our customer center/contact center (…)?“

CES is typically calculated as an average score on a scale of 1 to 7, with lower scores indicating less effort. By identifying areas where customers may need high effort, targeted improvements can be made to make processes more efficient and user-friendly. As you can see, the focus here is on the immediate process, not the brand or the product. It is a key figure that is used more for sub-processes (namely those in the contact center).

Customer Satisfaction Score (CSAT):

Customer Satisfaction Score (CSAT) measures satisfaction with a product, service, or customer support/product interaction based on a single question:

„How satisfied were you with our company/our product/our interaction?“

A 5-point scale is available, with 5 being the highest rating. To calculate the CSAT score, divide the number of satisfied customers (those who rated 4 or 5) by the total number of responses. For example, if 48 out of 100 answers received a rating of 4 or 5, your score is 48.

The CSAT targets a “here and now,” the specific action for the specific moment, service, or product to which the survey relates.

Your customers don’t care how much you know until they know how much you care. – Damon Richards

Customers have as little time to lose as you do: work with the information you receive. Your customers have invested their time and you should be careful with this gift.

Let the customer know how their feedback impacted improvements or new products.

 This not only shows appreciation, but also increases the likelihood that the customer will continue to reward you with honest feedback. If possible, share this feedback directly. 

Now that you have decided what KPI will be yours, need to clarify that the most important thing is not chasing a predefined score... but THAT you measure, spend energy to map the processes behind it, to connect the operational KPIs with it and ensure that management and affected colleagues listen to the information, so that an action plan designed by the affected teams becomes a reality.

Carme Prats – Senior Consultant


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