I used to be very dismissive of customer satisfaction metrics. Perhaps this is my audit background and my desire to quantify and check everything. I was suspicious of the sample, the questions, the analysis and the conclusions. It was hard to prove or disprove, and a lot of the feedback was qualitative. All very uncomfortable for a CFO.
Yet, CFOs – and other senior business audiences – are supposed to use all of the data available to them to assess past performance AND predict future business performance, whilst also influencing and driving outcomes in a positive direction. Hence, I decided to challenge my own prejudices and see how measuring and acting on customer satisfaction might be able to help the CFO community.
Step 1: Choose a methodology
I considered a number of options, including the Customer Effort Score – explained in this Harvard Business Review article
. It is an interesting technique which ties well to promoting action to streamline the customer’s experience of dealing with your business.
However, in the interests of simplicity, adoption and proven results, I felt that the Net Promoter Score (NPS) was a clear winner.
It uses a simple premise to measure the health of your customer relationship. Customers are asked how likely they are, usually on a scale of one to ten, to recommend your service to others. Those who give a score of nine or ten are your promoters and those who score six or less are detractors. Scores seven and eight are neutral. Subtracting the percentage of promoters from the percentage of detractors gives your NPS.
NPS has become very popular and its promoters believe that it correlates well with revenue growth. For example, a study by Bain & Company
found that relative Net Promoter Scores explained “most of the differences in relative growth rates of retail deposits” in North American banks.
Here are a few other of my favourite examples:
Step 2: Spend less time debating, more time acting
Having made the decision to use NPS, the business should now stop the debate around methodologies and focus their effort on reporting results, analysing that information and using the insights to design and implement action plans to positively impact their customer experience. I am concerned that too many businesses are spending over 80% of their effort on collecting, auditing and analysing data but less than 20% of their time drawing insight and taking action.
I wonder if the old adage “the customer is always right” is something that should not be subject to an audit opinion.