I wouldn’t say it was a full argument, but voices were raised. You see, I have had the pleasure of working with Frederick Reichheld, the creator of Net Promoter Scoring. I have used it for many years, conducted original research to benchmark NPS across different industries in Europe, run events on the subject and used it operationally in both public and private sectors. Add to that, the fact that Fred is a genuinely nice guy and you can understand why I am fiercely loyal to the concept of NPS.
However, apparently there is a new kid on the customer experience block.
In the Harvard Business Review last August, Matthew Dixon, Karen Freeman and Nicholas Toman published an article entitled “Stop Trying to Delight your Customers”. In the article they claimed that they had identified a customer metric that was even more powerful than NPS; the Customer Effort Score.
“Sacrilege!” I thought, and “what a ridiculous concept – not trying to delight customers”. My boss on the other hand, is easily drawn in by something ‘shiny and new’ and has become an overnight advocate of customer effort. I managed to suppress my initial outrage at this fickleness for long enough to enter into a mature conversation about the relative benefits of each measure.
NPS was based around ‘the ultimate question’ – the extent to which your customers recommend you to their family and friends. This was proved as the most accurate predictor of profitable growth in a three year research programme that Reichheld carried out in North America in 2005. Those behind Customer Effort now say that “the amount of effort a customer expends in his or her interaction with your company correlates directly with their propensity to purchase and repurchase.”
Fortunately, Marc, our CEO was on hand to mediate, and help us to realise that we were both right. Repeat purchase is not the same as loyalty. NPS measures the emotional attachment customers have to your organisation, and tracks intention to recommend. This is invaluable for helping to build momentum in your business through customer advocacy and word-of-mouth testimonials, however, it does not necessarily track the extent to which intention becomes reality. This is where Customer Effort comes into its own.
Reichheld mentioned some time ago that “loyalty is a matter of self-sacrifice.” He added: “If I’m loyal to something I tend to go out of my way for it.” That is very different to buying something because it’s easy. It’s true that in some cases making it easy does build emotional loyalty – just look at Amazon’s success as evidence of this – but it’s not true in all cases. Making it easy to buy is a practical way of improving the effectiveness of transactional relationships, but there remains a place for managing and measuring the effectiveness of emotional relationships with customers. After all, 90% of all our decisions are based on emotional stimuli rather than rational ones.
In an ideal world, companies should look to track both customer effort and customer advocacy. The two are inextricably linked. One is a predictor of the other and both are critical in understanding different aspects of how to build a more sustainable and profitable business.
There. Hopefully that wasn’t too career limiting and we can all still be friends. It’s been an interesting debate though, and no doubt will continue to be so…