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4 Criteria for Evaluating Your Customer Feedback Metrics 

Bob Hayes, PhD | Oct 18, 2016 598 views No Comments

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Both Customer Experience Management (CXM) and Customer Success Management (CSM) programs necessarily require the collection, synthesis, analysis and dissemination of customer metrics. The quality of customer metrics necessarily impacts your understanding of how to best manage customer relationships to improve the customer experience, increase perceived value and customer loyalty and grow your business. How do you know if you are using the right customer metrics in your customer program? This blog will help formalize a set of standards you can use to evaluate your customer metrics.

For a more complete discussion on customer metrics, download the free white paper, “The 4 Pillars of Customer Feedback Metrics.”

Customer Metrics

Customer feedback metrics are numerical scores or indices that summarize data about your customers. Customer metrics represent the health of the customer relationship and can be based on a variety of data sources including surveys, social media or logs from interactions with the company (e.g., call center).

Customer metrics could be based on either customer ratings (e.g., average satisfaction rating with product quality) or open-ended customer comments (via sentiment analysis). Additionally, customer ratings can be based on a single item or an aggregated set of items (combining a set of items to get a single score/metric).

The 4 Pillars of Customer Metrics

As companies’ customer-centric programs mature, they will rely more and more on the use of customer metrics to help them manage customer relationships. Whether you are developing your own in-house customer metric or using a proprietary customer metric, you need to be able to critically evaluate them to ensure they are meeting the needs of your program and company. I use these four criteria when evaluating customer metrics.

1. Customer metric is defined in unambiguous terms.

Customer metrics need to be supported by a clear description of what they are measuring. Basically, the customer metric is defined the way that words are defined in the dictionary. They are unambiguous and straightforward. The definition, referred to as the constitutive definition, not only tells you what the customer metric is measuring, it also tells you what the customer metric is not measuring.

2. Customer metric’s scoring algorithm is clear, precise.

Closely related to question 1, you need to convey precisely how the customer metric is calculated. Understanding how the customer metric is calculated requires understanding two things: 1) the specific items/questions in the customer metric; 2) how items/questions were combined to get to the final score. Knowing the specific items and how they are combined help define what the customer metric is measuring (operational definition). Any survey instructions and information about the rating scale (numerical and verbal anchors) need to be included. If natural language processing (NLP) is used to gauge sentiment from a body of text, indicate how sentiment was derived.

3. Customer metric has good measurement properties.

Measurement properties refer to a scientifically-derived index that describes the quality of a customer metric. We evaluate customer metrics along two criteria: 1) Reliability and 2) Validity. Reliability refers to measurement precision/consistency. Validity is concerned with what is being measured. Providing evidence of reliability and validity of your customer metrics is essential towards establishing a solid set of customer metrics for your CXM program.

4. The customer metric provides new, useful insights.

While customer metrics can be used for many types of analyses (e.g., driver, segmentation), their usefulness is demonstrated by the number and types of insights they provide. Your validation efforts to understand the quality of the customer metrics create a practical framework for making real organizational changes. Specifically, by understanding the causes and consequences of the customer metric, you can identify/create customer-centric operational metrics (See Figure 3) to help manage call center performance.

Summary

A customer metric is good when: 1) it is supported with a clear definition of what it measures and what is does not measure; 2) there is a clear method of how the metric is calculated, including any and all items and how they are combined; 3) there is good reliability and validity evidence regarding how well the customer metric measures what it is supposed to measure; 4) they are useful in helping drive real internal changes (e.g., improved marketing, sales, service) that lead to measurable business growth (e.g., increased revenue, decreased churn).

4PillarsGraph.pngFigure. 4 Pillars of Customer Metrics

Using customer metrics that meet these criteria will ensure your customer program is effective in improving how you manage the customer relationship. Clear definitions of the metrics and accompanying descriptions of how they are calculated help improve communications regarding customer feedback. Different employees, across job levels or roles, can now speak a common language about feedback results. Establishing the reliability and validity of the metrics gives senior executives the confidence they need to use customer feedback as part of their decision-making process. The bottom line: a good customer metric provides information that is reliable, valid and useful.

For a more complete discussion on customer metrics, download the free white paper, “The 4 Pillars of Customer Feedback Metrics.”

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Republished with author's permission from original post.


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