Ten years ago, I emerged from the intensely analytical digital agency world of clickthrough and conversion rates, funnels, and seasonality, and dove headfirst into the CX space. It took me a year of immersion to really understand the CX landscape and how to speak and think about it properly and confidently.
At first, my head was swimming with initialisms (different from acronyms, which are pronounced as words, such as “NASA”) like NPS, or Net Promoter Score. I noticed that people, particularly those on the client-side, got really excited about it without really knowing how to interpret the scores. My goal here is to provide you with a handy guide on how to think about CX metrics, and then dive into the different types commonly used in CX.
Choose a framework
Three types of metrics exist for thinking about measuring customer or employee experience: 1) operational, 2) experience, and 3) financial metrics.
- Operational metrics look at internal activities that impact customer experiences, such as wait time, first call resolution (FCR), on-time delivery rate, or on-time departure.
- Experience metrics consist of three subtypes: Relationship,Touchpoint, and Journey—which you can read more about here. They are based on customer or employee perceptions of interactions with the overall relationship or brand (e.g. USAA, Amazon), at a single touchpoint (e.g. contact center or web), or across a journey (e.g. getting a mortgage, taking a family vacation at Disneyland). As McKinsey aptly points out, firms should take care not to focus solely on touchpoints, but on broader journeys.
- Financial metrics are focused on measures that are important to a company, for example, improving Customer Lifetime Value (CLTV).
CX alphabet soup
Now let’s take a closer look at CX metrics and talk about what they are and how to use them.
NPS and LTR
Let’s start with NPS, one of our favorite metrics. NPS stands for Net Promoter Score or Net Promoter System, and it arrived in the early aughts from the mind of Fred Reichheld. The Net Promoter System starts with one simple question: How likely are you to recommend [brand/product/service] to a friend or colleague? also known as “LTR”, a straightforward, 11 point numeric scale where 0 equals Not At All Likely and 10 equals Extremely Likely, and it tells you a little story about your customer’s level of loyalty. The characters in this story are Promoters (those who answered 9 or 10), Passives (those who answered 7 or 8), and Detractors (those who answered 0 to 6). To get to the Net Promoter Score, you take the percentage of Promoters and subtract the percentage of Detractors, which results in a score between -100 and 100.
Using this approach, you can further segment NPS into more specific methodologies:
- rNPS stands for Relationship NPS. It measures customer loyalty at the relationship level.
- tNPS stands for Transactional NPS. It measures customer loyalty at the transactional—or touchpoint—level.
- eNPS stands for Employee NPS. It measures employee loyalty.
To learn more, we recommend visiting NetPromoterSystem.com.
OSAT and CSAT
Depending on what you want to know from survey respondents, you may want to measure their satisfaction with your brand, product, or service using OSAT, which stands for Overall Satisfaction, or CSAT, which stands for Customer Satisfaction. OSAT and CSAT start with the question, “How satisfied are you with [brand/product/service]?” and can be paired with a variety of scales, from 1 to 5, 1 to 7, 1 to 10, etc. To calculate OSAT and CSAT, you take the total number of responses and divide it by the number of positive responses (e.g. those who selected 4 or 5 on a 5 point scale) to get a percentage from 0 to 100.
CES
CES stands for Customer Effort Score and it starts with the question, “How easy was it to [action taken]?” and can use a variety of scales as well. It was originally formulated as a customer service or call center question. According to Paul, “CES is likely more applicable than NPS or LTR for many touchpoints and journeys.” The calculation for CES is the same as OSAT and CSAT: divide the total number of responses by the number of responses who gave a higher score, to arrive at a percentage from 0 to 100. In general, CES is used to measure the level of ease of using a particular product or service.
CXi
CXi stands for Customer Experience Index and it is a method developed by Forrester to measure CX quality and loyalty. It starts with six separate questions filed under CX Quality and Customer Loyalty:
- CX Quality
- Effectiveness: How effective was the brand at meeting customer needs?
- Ease: How easy was it to work with the brand?
- Emotion: How did interacting with the brand make the customer feel?
- Customer Loyalty
- Retention: How likely is the customer to stay with the brand?
- Enrichment: How likely is the customer to buy additional products and services?
- Advocacy: How likely is the customer to recommend the brand?
CXi is calculated by subtracting the bottom three box scores from the top two box scores, similar to the NPS calculation except the questions are based on a 7-point scale. The average is taken across all six questions to get a final CXi score.
Top and Bottom Boxes
Top and Bottom Boxes are other ways to look at your survey results. Top Box includes Top 2 Box or Top 3 Box, where the total number of responses is divided by the number of responses with the top 2 or 3 scores. The same approach applies to Bottom Box (Bottom 2 Box and Bottom 3 Box). The result is a percentage from 0 to 100.
FCR
First Call Resolution or First Contact Resolution is a common metric used in CX, and it’s calculated by dividing the total number of customers with a unique inquiry by the number of customer inquiries resolved on the first call or contact, resulting in a percentage from 0 to 100. In other words, it tells you the percentage of calls or contacts that don’t require further actions.
Sentiment
Sentiment scores are a relatively new way of quantifying qualitative feedback. Depending on the software used, text, video, or even voice or chat transcripts can be run through algorithms that label sentences or paragraphs with a particular sentiment level. These levels can be Very Positive, Positive, Neutral or Mixed, Negative, or Very Negative and when associated with a scale, you can calculate the Sentiment score of the feedback.
Earned Revenue Growth
The newest and shiniest metric is Effective Growth Rate, a recent concept from our friend Fred Reichheld. Effective Growth Rate is the ratio of earned growth to total growth, specifically measured with the revenue generated from returning customers and their referrals. Check out a helpful article by Brittany Hodak here. Brittany explains:
“To calculate your earned growth rate, you’ll need to begin by calculating your Net Revenue Retention (NRR) and Earned New Customers (ENC).
Your Net Revenue Retention (NRR) for 2021 is the revenue from customers in 2021 that were also with you in 2020, divided by total revenue in 2020. Convert this into a percentage.
Your Earned New Customers for 2021 is the percentage of revenue from new customers you earned through referrals only, not advertisements (this is why it’s super important to track where your customers came from!)
Add your NRR and ENC together. Next, subtract 100%. This is your earned growth rate.”
Guiding principles
Whichever metrics you select, we’ve found these guiding principles to be helpful:
- Focus first on the feedback that customers would want to give within their context
- Keep it simple
- Respect your customers' time
- Share back what you'll do (and what you did) with the feedback
Then ask if the feedback is associated with the overall brand or relationship, or with a specific touchpoint like a call center interaction, or a journey like a flight to Houston and back.
As you can tell, there is no easy way to create a CX framework for your organization. You have to think through a framework first, and then explore different CX metrics to see which ones are right for your use case. I hope this article provided you with some clarity!
Amy Ko is a Principal CX Consultant on the Professional Services team at Alida. She is responsible for thought leadership, best practices, and shaping the CX Practice.
