As customer experience management (CEM) continues to gain importance in the minds of today’s CEO’s, more and more companies are taking on customer experience management projects to improve customer satisfaction, develop better customer insights, nurture customer loyalty and advocacy, and improve customer lifetime value. The rapid rise to the top echelons of strategic priority has brought an unfortunate side affect; numerous customer experience management myths have begun to form due to a flood of conflicting definitions, perspectives and over-hyped promises.
For any company seeking to establish or improve its customer experience management capabilities, it’s important to dispel these myths once and for all.
Myth #1: Net Promoter Score (NPS) is the only metric you need
The customer experience can be broad, long running, it can span channels, and is influenced by any combination of internal and external factors. Attempting to measure it effectively with a single metric such as customer satisfaction or net promoter score is overly simplistic and risky. Effectively managing the customer experience requires effective measurement and management of a portfolio of metrics that will provide a true measure of what is – or is not – working.
The Net Promoter Score (NPS) is a measure of customer advocacy that was the centerpiece of Fred Reichheld’s 2006 book titled ‘The Ultimate Question.’ The net promoter score is calculated by taking the percent of customers who are promoters less the percent of customer who are detractors. Obviously, the higher the resulting number – the better.
While the net promoter score is an effective measure of overall customer advocacy, it will not address all of your potential customer experience management questions. Here’s why:
- Customer advocacy – or net promoter score – measures only one dimension of the customer experience. Focusing only on a single metric such as net promoter score means ignoring equally important dimensions such as customer satisfaction and customer loyalty. An effective and comprehensive customer experience program must take all of these dimensions into consideration.
- The net promoter score is only an aggregated measure of the total customer experience. However, the number of factors and touch points that contribute to the overall customer experience can be numerous. Focusing only on an aggregate metric without understanding or managing the contributing factors can yield unpredictable results. Companies seeking to improve their overall customer experience must focus on managing and measuring the underlying events that contribute to an exceptional customer experience.
- The net promoter score does not necessarily equate to customer action. For example, for every customer that says they would ‘definitely recommend’ the company in a customer survey may not make any actual recommendations. Companies seeking to realize tangible results will need to correlate their NPS ratings with other key business metrics such as new customer additions, increase in profitability, or changes in market share.
While NPS is an important customer experience metric, companies that are looking to establish or improve their customer experience capabilities will need to identify a more robust set of metrics that will measure all dimensions of the customer experience lifecycle.
