Article of the week 45 – 2023

NPS, CSAT, CES… and why you shouldn’t rely on benchmarks

In my last articles I have shown the connection between corporate strategy and choosing the right CX KPI. I also emphasized the danger of focusing more on the number that expresses the result of the survey than on the usefulness of the measurement. One should not lose sight of the fact that the primary goal of any KPI measurement is to work with the result. In the CX environment, we want to constantly improve the result by working on the reasons for customer dissatisfaction. We typically achieve this through process improvements, designing new customer experiences or launching better products for the customer.

Nevertheless, there is something else that you will be confronted with again and again, especially if you have already established your program and, as a result, openly share results and data: and that is the question

 “What is the competition’s NPS/CSAT/FCR and how do we compare?”

In itself, this question is legitimate since we are used to working with KPIs that are well defined and established within established standards, especially when it comes to financial indicators. In our case, however, and although the formulas – i.e. the „HOW“ – for calculating NPS, FCR or CSAT are well defined, there are many other factors that are crucial to determine whether the published key figures of the competition are really comparable is:

1. Different survey design and methodology:

By design we mean not only the actual formulation of the question (which often differs from the classic one), but also, for example, in the case of an online survey, the presentation of it: the color coding of the scale already indicates a latent, often unconscious attempt to influence the question survey participants. Even more important is the indication of possible consequences for a bad review or the desire to achieve a maximum score and the possibility to contact the customer to resolve any problem before the vote takes place.

By methodology we not only mean the channel (does the survey take place via email, online, by telephone, via SMS, WhatsApp? ) but also the time. Does the survey take place after every interaction, after completing the sales journey or complaint, or even after using the product?

2. Different (survey) target group, existing market shares

Imagine you are a retailer who offers your products both stationary and online. They survey customers who have purchased both in their stores and online. You may also have launched a loyalty program; these customers will also be surveyed. However, they release a single number as the final result of their survey, without taking into account market shares in the two very different channels or whether the customer receives any benefits from the program. Your competitor acts in the same way. This may only survey customers from the loyalty program. And they only publish a total number or only take into account some of the respondents‘ results for a variety of reasons. As you can see, comparability can only serve as a guide and cannot be taken as proof of anything.

How can I still get orientation?

In addition to consulting various studies carried out by third parties or by platform manufacturers across brands (see reports from Temkin Group, Qualtrics, Medallia, Customergauge etc.), we recommend that you, at least at the beginning of your program, commission a study from a third-party provider of your choice for your markets and the top 5 competitors. In order to ensure statistical relevance and thus comparability, which forms the basis for any objective of setting the correct NPS value, the following criteria must be taken into account:

  • Representative sample: The sample should be representative of each company’s target group. Ensure demographics, purchasing behavior, and other relevant variables are adequately covered.
  • Single survey method and question format: Use the same survey method for all brands. This could include the type of questions, the order of the questions, and the scale for the ratings.
  • Same survey channel: Consistency is crucial. Make sure the survey is conducted through the same channel, be it online, over the phone or in person. Different channels can produce different results.
  • Consider market shares: When interpreting NPS results, it is important to consider brands‘ market shares. A brand with a smaller market share could have more variable results due to its smaller customer base. In addition, it may make sense to take the actual market shares into account when selecting the survey target group.
  • One survey time frame: Conduct surveys for all brands in a similar time frame. Different time periods can lead to distortions, especially if there are seasonal fluctuations.
  • Controlling “noise” factors: Identify possible confounding factors such as seasonal effects or external events and attempt to control them to improve comparability.
  • Statistical Analysis: Conduct detailed statistical analysis to ensure that the differences between NPS results are statistically significant. This could include the use of hypothesis testing or other statistical methods.

Summarizing:  In the business world, the search for comparability is a constant challenge. In this article, we have highlighted why it is not always advisable to rely exclusively on benchmarks or on results published by individual companies. Different survey designs, methodology and the diversity of survey target groups can significantly influence comparability.

If you decide to conduct your own benchmark study, it is important to recognize that these metrics should serve as a guide, not the sole basis for strategic decisions. The individual contexts in which companies operate must always be taken into account in order to gain relevant and meaningful insights.

However, the most important thing is to note that the goal of any CX program and how it measures success, should be to continually improve the customer experience. Benchmarking can help with this, but should be viewed as a tool, not a dogmatic rule. With a balanced approach and a clear focus on individual company goals, organizations can strengthen their customer relationships and achieve lasting success.

Carme Prats – Senior Consultant


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