Measure for Measure – NPS or Customer Effort?

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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.

Experience - Rollercoaster - Blue Sky Performance Improvement

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…

Simon@Bluesky

Simon Daisley - Blue Sky Performance Improvement

www.blue-sky.co.uk

Blue Sky Performance Improvement

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3 Responses to “Measure for Measure – NPS or Customer Effort?”

  1. marcatbluesky Says:

    Simon, this is eloquently put; I would also like to reinforce the undeniable value of building free marketing resource through NPS. Advocates market your business for you at no charge and have greater credibility because they have no agenda. As you say this cannot always be tracked, particularly in a D2C context, however, in a B2B context referral is typically one of the biggest and lowest cost channels to market.

    One of my concerns with CES and NPS is how to get the balance right between the level of investment required to reduce effort and increase advocacy versus the return. What has proved to be really exciting in the context of a customer experience transformation we are implementing at one the UK’s biggest employers is the fact that in many cases reducing customer effort and increasing advocacy actually costs nothing. So much of the change required is at a human level and doesn’t require massive investment in process re-engineering or systems implementation. I look forward to being able to link our fees to the return delivered through an improvement in CES or NPS!

  2. seanatblueskyan Says:

    I recently had to make seven contacts to a large mobile provider to resolve a relatively simple issue…not easy at all. The frustrating thing is they sent me a survey around the service I received…feeling naughty I replied. “I am not happy…bet you will now read this and call me”

    Guess what no reply. For me if companies are going to use NPS or CES it is imperative they are geared to deal with detractors / customer feedback …and have a spectacular recovery plan ready in my case. What I am finding more and more is companies will send surveys, use it as a measure internally, but not actually harness the information they get back and act on it. I agree with Marc, many changes can be made for free and are often at the human level…particularly in my case with the mobile provider.

    Regards …frustrated mobile phone customer

  3. Lindsay Terris Says:

    Great point Sean I totally agree, my recent house move has highlighted to me a question I often ask when frustrated by poor service “can anyone do their job right?” it seems many organisations ‘process’ their customers not ‘serve’ them – let alone ‘delight’ them!

    The challenge I have really had is that often the dialogue has been pleasant and the perception exists that the person has listened and promised to resolve my enquiry with genuine re-assurance – so on a post call survey I’d say ‘yes’ this person treated me well – yet they do not deliver on those promises. So how valuable is this post call data anyway? Shouldn’t they be surveying the end to end experience and not just the call?

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