Customer Satisfaction Metrics Aren’t Enough

Author: Michelle Despres

“How do we earn customers? How do we keep them?”

Every organization struggles with these questions. To be successful means ensuring customer longevity, and to do that an organization needs to provide a quality customer experience. It starts with understanding your customer’s needs and how your products and services fit their goals. But it doesn’t end there.

Many organizations start their customer experience (CX) journey with customer satisfaction metrics and net promoter scores (NPS). While these are important tools, to have a comprehensive view, we need to also understand customer behavior.

Customer Behavior Metrics: The Missing CX Link

Customer satisfaction metrics are an indication of how customers feel about their experience – usually from a historical perspective. Sometimes, they will also tell us what shaped that rating, which can serve as a guide for any customer satisfaction improvement project.

However, what’s missing from the story is the action. We need to understand what customers actually do.

For example, are highly satisfied customers staying with your brand, buying more products and services, and telling others about your organization? Or is their satisfaction high, but they haven’t made a purchase in years? Or worse, did you lose customers to a competitor?

To fully understand our customers, we need to connect how customers feel to how they behave.

Predicting the Future: Understanding the Link Between Customer Satisfaction and Customer Behavior

For years, customer satisfaction metrics and NPS have been used as the primary, and often the only, measurement of customer sentiment. Companies hoped that if they used these metrics to drive company actions and decisions, they could make the customer experience better over time.

While these metrics are valuable, they’re also limited. As companies mature and become more sophisticated about tying sentiment to behavior and financials, it becomes important to expand the analytics toolkit. Customer retention, expansion, including upselling and cross-selling, and customer lifetime value (CLV) all provide valuable information. These mature metrics can be more directly tied to increases or decreases in an organization’s revenue.

Every company can benefit from understanding the reasons for and impacts on customer retention, expansion, and lifetime value metrics. These metrics are critical to helping an organization drive growth.

Retaining customers preserves revenue. Attaching a dollar amount to each percentage of customer churn allows us to see the value lost with each percentage point of churn. In many industries, 1% of churn is equal to 1% of gross revenue. Seeing the financial impact of lost customers creates a compelling case to find and fix the underlying reasons for customers buying fewer products or services, leaving sooner than expected, or just leaving altogether.

Fixing the root cause. Behavior CX metrics give us something tangible to work with. In other words, there’s a direct correlation between a decline in these metrics and a decline in revenue. They also help us focus our action items.

For example, if customers are leaving, these metrics help us find out who left and why. This allows us to focus on any barriers to satisfaction and prevent others from leaving for that same reason.

Or, if customers aren’t buying via upselling and cross-selling efforts, mature CX metrics help us learn why not. It could be a signal of dissatisfaction and then we can focus on addressing the issue before customers start leaving.

If we trend CLV, we can also locate and resolve satisfaction issues along their journey to increase a customer’s length of stay.

Thriving with Sentiment and Behavior CX Metrics

Trending, combining, and acting on both sentiment and behavior CX metrics creates a proactive and results-driven approach to understanding the customer experience. From there, you can move toward creating experiences that inspire customers to stay longer, buy more, and tell others about your company.

If you need help getting started on your CX journey, or if you’re ready to learn more about implementing mature CX metrics, contact us.

Michelle Despres is a Senior Consultant who specializes in CX program creation, implementation, and management.