The use and limits of an overall KPI

- Many organizations establish an overall metric of customer satisfaction to gauge the effectiveness of customer service and I concur that's beneficial. But it's important to do so with a big caution in mind. Let's turn to that topic here. The rationale behind establishing a key performance indicator, or KPI, is to have an easy way for anyone to see how the organization's doing. The three most common metrics used for this are customer satisfaction, net promoter score, and customer effort score. KPIs that reflect customer satisfaction, or C-Sat it's often called, are based on the survey question: How would you rate your experience? An advantage is that your organization's probably using this approach now. It's by far the most common. Some organizations have years-worth of data that serves as a baseline to see relative trends. The biggest disadvantage is that the methodology is usually different from one organization to the next, so it's not so practical for apples to apples benchmarking with others. Net Promoter Score, or NPS, is a specific methodology based on the survey question: How likely is it that you'll recommend us to others? It's based on a 10-point scale that distinguishes promoters, nines and tens, from detractors, sixes and below. The overall Net Promoter Score is then express as an absolute number between -100 and +100, which is the difference between the percentage of promoters and detractors. So if you have 75% promoters and 20% detractors, then Net Promoter Score will be 55. Net Promoter Scores above zero are considered good, and I love to see scores about 50, which are excellent. Nordstrom, Apple, and USAA all had scores higher than 60 in one recent comparison. Some critics question whether a Net Promoter Score is proscriptive enough in identifying improvement opportunities. But it is used by over 2/3 of Fortune 500 companies, so it could be very helpful for comparison. Customer Effort Score is emerging as another good alternative. It's based on the question: How easy was it to resolve the issue? Responses are captured on a seven-point scale, seven being very easy, one being very hard. Studies by the research firm Corporate Executive Board shows customer effort to be a good predictor, and strong predictor of customer loyalty. The disadvantages are that it's limited in measuring overall perceptions of an organization, and it's not yet widely adopted for benchmarking purposes. If you'd like to explore these metrics more, the guide to additional resources in the exercise files directs you to further information. Now here's my caution. Be sure that overall scores are not the only thing senior executives look at. These surveys are great for getting customer feedback, which you need, but they don't by themselves tell you enough about the value of customer service. That's determined by actual behavior. Do they continue to buy? Do they try new products? Do they refer you to others? What are they saying about you? Remember, you're not trying to produce scores. You want results. You want a real understanding of the value of customer service, and these survey scores, they're just part of the picture.