For many organisations, customer satisfaction has been the key measure of loyalty. Satisfied customers were equated with loyal customers. No longer.
Traditional measures of customer satisfaction have little to do with customer experience measurement or financial performance, for that matter. According to smith+co research, 80% of customers who switch suppliers express satisfaction with their previous supplier.
In his classic HBR article‘The one number you need to grow’, Frederick Reichheld suggested that ‘advocacy’ rather than satisfaction, was the key driver of revenue growth. This is the extent to which customers prefer a supplier and then refer friends and colleagues to them. This advocacy, says Reichheld, can be measured through his loyalty metric, the Net Promoter Score (NPS) which subtracts those customers who are dissatisfied from those who are highly satisfied.
However, advocacy, like satisfaction and indeed profitability are lagging indicators –the RESULT of differentiation and customer preference. Customer experience measurement is all about measuring the leading indicators of customer experience and your performance on the key drivers of customer loyalty and advocacy as well.
The best way of doing this is to build a customer experience measurement scorecard which is a process wherein metrics are causally linked to one another, and together form a coherent system that can predict future results. It is a strategic tool that focuses the organisation on customer value creation and provides a succinct and powerful way to communicate the essence of customer focus strategy to all employees. It helps everyone understand what is critical to the company and its customers, and ultimately drives employee behaviour.
It also provides a means to measure the Return on Investment (ROI) of customer experience improvement efforts.
We’ve outlined a framework on our guide to Customer Experience Measurement to show you how you might approach this.
For more on customer experience measurement and evaluating the ROI, see out toolkit
What is Customer Experience?
Customer Experience Strategy