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How to Predict Customer Loyalty Using Customer Service Metrics

Posted by Randy Clapp on Jul 24, 2020

Customer service metrics and customer loyalty

How does your business define and measure customer loyalty? Do you try to gauge a customer’s intention to keep doing business with you, look at how much they increase spend, or try evaluate a customer’s potential for advocacy?

Loyalty can be mean different things to different organizations, as customer lifecycle goals vary widely across a myriad of products and services.

Just as the definition of customer loyalty varies, so do the customer service metrics associated with prediction and management.

The popular customer service metrics

CSAT

A traditional way to predict loyalty is to generate a customer satisfaction score (CSAT), using post-sale and post-service survey / poll questions.

A CSAT score puts a number to how a customer feels about a recent transaction with your brand or organization. How did we do today? How would you rate your experience with your recent support call? – are typical questions.

A CSAT score is a useful measure of customer satisfaction, and allows for a wide range of questions to evaluate specific areas of a transaction. It may not be the best predictor of customer loyalty because it is narrowly focused on single experiences.

NPS

Another metric, increasing popular over the last decade, is the Net Promoter Score (NPS).

You’ve probably come across articles saying, ‘you only need to ask one question to measure customer satisfaction - would you recommend us to a friend?’ The idea with NPS is that the willingness to give a word-of-mouth recommendation is a good predictor of customer loyalty.

While a CSAT survey could provide a comprehensive evaluation of a process (and help identify opportunities for improvement), the NPS is designed to quickly evaluate the potential for positive or negative feedback. Low scores give an organization a chance to get detractors back on board, or to encourage higher NPS customers to share their experience.

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CES

More recently, organizations are looking at a Customer Effort Score (CES), a measure of how easy the customer found the transaction to be. The advantage of the CES metric is that it brings together the focused evaluation of a transaction, but also gauges the positive and negative reaction to the experience.

In an HBR article, Stop Trying to Delight Your Customers’, the authors conclude customer effort can be a transformative idea in customer service.

“When it comes to service, companies create loyal customers primarily by helping them solve their problems quickly and easily. Armed with this understanding, we can fundamentally change the emphasis of customer service interactions.

Framing the service challenge in terms of making it easy for the customer can be highly illuminating, even liberating, especially for companies that have been struggling to delight. Telling frontline reps to exceed customers’ expectations is apt to yield confusion, wasted time and effort, and costly giveaways. Telling them to “make it easy” gives them a solid foundation for action.” - HBR

Studies that have compared CSAT, NPS and CES have found that CES is a stronger predictor of customer loyalty.

“We found the predictive power of CES to be strong indeed. Of the customers who reported low effort, 94 percent expressed an intention to repurchase, and 88 percent said they would increase their spending. Only 1 percent said they would speak negatively about the company. Conversely, 81percent of the customers who had a hard time solving their problems reported an intention to spread negative word of mouth.” - HBR

What customer service metrics should your company use?

Most customer service organizations use a combination of metrics to manage how they are doing, and arrive at a prediction of customer loyalty.

Are you including a measure of customer effort in your customer service score card?

The Customer Contact Council, a division of the Corporate Executive Board, conducted a study of more than 75,000 people who had interacted over the phone with outsourced call center representatives or through self-service channels such as the web, voice prompts, contact center artificial intelligence, chat, and email.

Results showed that customers resent having to contact the company repeatedly (or be transferred) to get an issue resolved, having to repeat information, and having to switch from one service channel to another.

A Customer Effort Audit is helpful in establishing a baseline, as well as pin-pointing problem areas. Following the audit, organizations logically look at ways to improve the CES scores.

Are you looking for more information on how you can create loyal customers through better customer service offerings and superior customer experiences? Contact Advantage Communications today. We would love to help. 

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Topics: Customer Service Trends




Randy Clapp

Written by Randy Clapp

Randy Clapp has sold over $1 billion in the services industry working with leaders such as Hewlett-Packard, Electronic Data Systems, CompuCom and Avis Rental Car. He received EDS’ Inner Circle Award as one of the company’s top 100 performers, as well as the Top Leader Award with CompuCom. He earned his Bachelor Degree in Business Management and Economics from Northwood University. Randy Clapp attributes his success to: “…showing clients how to make or save money in ways they never thought possible”.

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