Putting Together the Customer Loyalty Puzzle
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Putting Together the Customer Loyalty Puzzle

Loyalty, defined by Dictionary.com, is a faithful adherence to someone or a cause. When talking about customers, the ultimate act of loyalty is a renewal. Measuring loyalty as it happens is easy. The challenge, however, is predicting which customers will remain loyal to your business.

Predicting loyalty can be tricky because there is not one single metric that tells the whole story. Furthermore, your loyalty indicators may be somewhat individual based on your specific business needs. Many customer experience professionals believe Net Promoter Score (NPS), Customer Effort Score (CES), and Customer Satisfaction (CSAT) are among the best measures we have. To piece together the loyalty puzzle, look at these metrics together, but also consider individual customer feedback. Doing so will give you a more balanced view of the important renewal indicators.

Customer loyalty

Net Promoter Score measures the likelihood of customers recommending you to family or friends on a scale of 1-10. Promoters answer 9-10, passives respond with 7-8, and detractors answer 0-6. NPS is meant to help businesses understand how customers feel about your company and the overall product or service you provide. It's a general vote of "I like doing business with you and would recommend your product or service to people that I know and like." This is a question often asked of decision makers, and it is an easy question to ask and answer but a bit more involved to calculate. Unlike CES and CSAT, NPS is not tied to a specific transaction and can be built into your product at critical points throughout the customer lifecycle. Alternatively, you could survey your customers 1-2 times each year, perhaps ahead of their renewal. Although the score may not always yield actionable feedback, it will give insight into how customers feel about your company. For more about NPS, read The Ultimate Question 2.0.

Customer Effort Score is gaining popularity as a customer success metric. In fact, The Effortless Experience should be required reading. The book focuses on how to create an easy, low-effort customer experience. To measure this, companies ask "On a scale of 1 to 5, with 5 being the highest effort, what was the total effort that was required by you to resolve your issue?"  You will obtain actionable feedback with this metric, allowing you to identify problem areas and design a better experience for your customers. CES is transactional and is often assessed following a support interaction, meaning that input from an end-user may not accurately reflect your customer's overall relationship with your business.

Customer Satisfaction Surveys have their merits, but can be overused. Like CES, CSAT surveys are often sent to end users after an implementation or support interaction, so they also may not accurately represent the status of the relationship. Although these surveys are customizable and can be lengthy, you can keep them simple by asking the customer whether they were satisfied with the interaction and offer a "Yes" and "No" answer choice with the option to add comments. An alternative is to use an emoji survey with a tool like Morphii to help capture accurate customer data in a visually appealing way. Customers are bombarded with surveys from your company and many others, so they tend to respond only when they are extremely satisfied or extremely dissatisfied. This results in a segment of customers that may be under-represented in your CSAT data. CSAT itself is not a great loyalty indicator because, while a low CSAT score can lead to attrition, a high CSAT score does not necessarily mean you will have loyal customers.

While NPS, CES, and CSAT are good overall metrics, consider looking at individual customer metrics, such as the Customer Health Score (CHS). CHS is an extrapolation of many metrics you are probably already tracking, including product utilization data, number of support issues, input from quarterly business reviews, and advocacy, among other things. To develop a meaningful score, include the loyalty indicators specific to your business. CHS can be manual to calculate and tends to be subjective and therefore may not be entirely accurate.

Another piece of the loyalty puzzle is figuring out who will make the renewal decision. Your end users may love using your product and rate you highly on the transactional surveys like CES and CSAT, but decision makers could think otherwise. As you determine who, how, and when to survey customers, think strategically about how the survey fits into the overall customer experience. Chief Customer Officer 2.0 has some great tips about this.

Don't just survey customers - talk to them! You want to hear from customers at all levels of their organization. The survey data alone is not enough. Your most valuable insight and the best indicator of loyalty comes from your discussions with them. It is beneficial to ask the decision maker if there is a risk of your product being replaced within the next 12 months. Additionally, be sure to listen to the feedback your customer is giving in all channels, from support tickets to QBRs and social media. Look and listen for characteristics of loyal customers including advocacy, product adoption, and resolved support issues. These data points could be inputs to your customer's health score.

Until the puzzle comes to us pre-assembled so we can see the entire picture with one magical metric, it is important to put the pieces together to better view the whole picture. Continue looking at high-level metrics such as CES, CSAT, and NPS, along with CHS and individual customer feedback to become skilled at predicting customer loyalty.



Topics: Metrics, Customer Experience

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