Customer loyalty metrics: NPS, CES or CSAT

NPS, CES, and CSAT are customer loyalty metrics and are used to measure the level of loyalty a customer has towards your brand. Customers are considered loyal when they consistently buy your products over an extended period.

How can you get loyal customers? Well, with a great customer experience, of course. An indisputable key component of a customer experience strategy is the VoC program, also known as the voice of the customer. Capture, analyze, and report on all customer feedback (expectations, likes, and dislikes) associated with your business.

In a VoC program, two types of customer data can be collected: structured data and unstructured data. Today, we'll take a look at the three most popular customer engagement metrics that fall under the structured category (NPS, CES, and CSAT) and the role each should play in your CX strategy.

An introduction to NPS, CES, and CSAT

Before diving into the value of each metric, it's important to review the basics.

Net Promoter Score (NPS): NPS is based on the question "How likely are you to recommend this company/product/service to a friend or family member?" using a scale of 0 (not at all likely) to 10 (extremely likely).

The NPS score is calculated by subtracting the percentage of Detractors from Promoters. Such as: % Promoters - % Detractors = NPS

This is a great metric for measuring long-term customer satisfaction and loyalty. It is the general metric of the customer experience.

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Customer Effort Score (CES): The Customer Effort Score question asks customers to agree with the statement, "The company made it easy to handle my problem," using a seven-point scale of 1 = strongly disagree to 7 = strongly agree.

The score is calculated in various ways. A popular approach is to divide the sum of all individual customer effort scores by the number of customers who responded. Such as: (total sum of answers) / (number of answers) = CES score.

CES is used to measure the level of effort in customer experiences when interacting with your company. It is a short-term transactional metric for customer experience.

Customer Satisfaction Score (CSAT): The customer Satisfaction Score is assessed by asking customers, "How would you rate your overall satisfaction?" This question is asked both about the company and the products, services, and interactions.

The five-point scale is most commonly used, with options very dissatisfied, dissatisfied, neutral, satisfied, and very satisfied.

There are two ways companies calculate CSATs: an average of 1-5 or by focusing on responses from 4-5. GetFeedback recommends using this formula: (Number of responses 4 and 5) / (Number of total responses) x 100 = % of satisfied customers.

Although CSAT can be used as an average, that is not as useful as calculating the percentage of those customers who are considered satisfied. If you stop and think about it, it makes sense: the metric is looking specifically at the percentage of satisfied customers.

CSAT is used to measure customer satisfaction with a specific interaction or event. It is a measure of short-term satisfaction with the customer experience.

Which metric is the best?

The truth is that no one metric is better than another. All three add different value to customer experience analytics, you just need to use them strategically.

As we saw before, there are different ways to apply these three metrics, here is one way, but keep in mind that these are general guidelines, it is important to understand that each industry and company has a unique set of characteristics that must be considered.

The popularity of each metric.

NPS has some challenges because it is calculated by subtracting two percentages. This means that two companies can have the same NPS score, but different compositions of Promoters and Detractors.

Still, NPS is quite popular in executive circles because it is easy to understand and communicate the concept of growing defense. As a practical matter, technical issues don't seem to matter much to brands using NPS as a measure of high-level brand loyalty.

CES has gained popularity as a metric intended to reduce effort on customer service or other routine interactions. If your company's core value proposition is quick and easy experiences, then CES could work well as an indicator of brand loyalty.

In general, CES has not been established as the best general-purpose metric for all situations. The main concern is that while ease is a widely desirable CX attribute, it is generally not the only driver of customer loyalty.

CSAT is a statistically sound metric. Most people are used to answering the satisfaction question of rating a brand on a scale of 1-5, so it's easy to understand and implement.

However, CSAT question wording is not standardized, making it difficult to compare scores from different organizations. And, simply satisfied customers is a pretty low bar that can give organizations a false sense of security because it doesn't necessarily lead to loyalty.

Finally, we can say that in general, the NPS metric is the most used, although CSAT is not far behind. But on average, companies use three different metrics, while only 19% report using just one.

Customer experience leaders suggest that you shouldn't just implement any metric for the sake of “doing it” but do proper research to select the metrics that will give you the business results you need to know.