No business ever went wrong by focusing on making customers happy. Get that right and you have a strong foundation for everything that follows.
But how should you measure that happiness? There are dozens of metrics that businesses can focus on. If you’re starting from scratch it can be pretty alarming!
So today we’re going to focus on three customer satisfaction metrics that you really can’t live without.
#1 Customer Satisfaction (CSat)
Here’s our starting point, the grandfather of all satisfaction metrics; CSat.
CSat is super easy to understand. It measures how satisfied customers say they are, either with service in general, or a specific product.
How to measure CSat
You get CSat data by sending out surveys. In general, shorter surveys get more responses so a good starting point is to ask only about CSat.
A CSat survey is generally a simple question (e.g. ‘how satisfied are you with your purchase’) and a scale to respond with. The scale will usually be 1-3, 1-5, or 1-7.
The simpler the scale, the higher the participation rate of customers – but the detailed the results.
Once you have responses, divide the number of positive by the number of negative. The result is your CSat score.
What is ‘positive’ feedback?
This is something you’ll need to define. If you use a 1-3 scale, it’s pretty clear that 1 is bad and 3 is good.
Why CSat works
● These surveys are easy to understand
● They generally have a high response rate
● It can highlight specific areas where you can improve
Why Csat can fail
● There’s no set scale for CSat – so it’s impossible to standardize
● ‘Happy’ and ‘unhappy’ can be too broad
● Customers may want the option to go into more detail
It’s a neat metric but it can’t always reveal how customers really feel. It may be true that ‘satisfied’ is too low a bar to aim for.
#2 Customer Churn Rate (CCR)
Very few businesses consider this one to be a customer satisfaction metric. But in reality, a measure of how often customers leave you is just about the best measure there is!
Taking a close look at customer loyalty can show exactly how happy customers really are. It also tells you a lot about your bottom line.
How to measure CCR
You’ve already got all the data you need to calculate CCR – so no need to send out surveys!
You need to know:
● Your total customers at the start of the period you’re measuring (the starting point is up to you)
● Total new customers
● Total customers who left
Your churn rate is the total number of customers who left, divided by (customers at the start+new customers) X 100. Simple!
Most industries aim to keep the CCR below 8%. There are always going to be some customers on their way out the door, but it’s very useful to know if that number is going up or down .
Why CCR works
● It’s clearly linked to revenue
● A bad CCR is a real slap in the face! (i.e. a motivator)
● CCR is standardized: you can compare yourself with peers and rivals
Why CCR can fail
● Too much focus on CCR can cost more than it saves
● It doesn’t include the value of departing customers
● It’s particularly tough for certain businesses to track
When customers leave, they don’t just vanish into a void. Instead, they cross the street and start buying from your competitors. You need a focused customer retention strategy to stop your business from being the leaky bucket
#3 Customer Effort Score (CES)
CES measures something that we all intuitively know is bad for business; effort.
If customers have to work hard just to make a purchase or get service, why would they stick around? Therefore, it makes sense to find out whether they are struggling to buy from you.
After all – when you offer a company your money, you expect them to do the legwork, right?
How to measure CES
You’ll be glad to hear that measuring effort is easy!
Like CSat, it starts with a simple survey question along the lines of ‘How easy was it to get what you needed today?’
Customers can answer on a simple numbered scale (like CSat, there’s no universal scale).
Your CES score is just % of ‘easy’ minus % of ‘hard’.
Why CES works
● Effort has a strong influence on CSat
● It gives you a clear goal: making life easier
● You can measure effort for business process or product
WHy CES can fail
● This metric ignores how product and price factor into decision making
● An easy interaction can still be a bad one!
● Sometimes a process is unavoidably challenging
About babelforce
babelforce is a global cloud communications platform focused on No-Code integration and automation. It allows non-technical people to build even the most complex integrated processes for customer-facing teams, particularly in the call center.
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