Net Promoter Score (NPS) is a deceptively powerful and widely used metric for measuring customer loyalty and satisfaction. It works because it asks one simple question:
On a scale of 0 to 10, how likely are you to recommend our product to a friend or colleague?
From there, respondents are split into one of three groups, which are:
Promoters (9-10): Loyal, enthusiastic advocates for your product.
Passives (7-8): Users who are happy enough but could switch to a rival product under the right circumstances.
Detractors (0-6): Unsatisfied customers who are more likely to complain to friends or social media about your product.
Once you have counted your responses, you get your NPS score by subtracting the percentage of Detractors from the percentage of Promoters.
However, not everyone loves the NPS score. Here are a few of the weaknesses associated with the customer loyalty metric.
It’s too simple to capture the true complexity of customer sentiment.
People who respond to NPS surveys might not truly represent or speak for your overall customer base.
NPS tells you that customers are satisfied or dissatisfied but not why they are.
Your NPS score still has a place, but it’s just one of many customer satisfaction surveys that you should use to measure loyalty and happiness.
Here are a few key metrics that are better than NPS for tracking customer service and product management.
5 metrics that are better than NPS
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Customer Satisfaction Score (CSAT)
Customer Satisfaction Score (CSAT) does what it says on the tin. It’s a popular way to measure customer satisfaction for the same reasons as the NPS: it’s quick and easy.
You can get your CSAT by asking users how happy they are with your product on a scale of 1-3, 1-5, 1-10, and so on. Then, you take the responses and plug them into this formula.
CSAT (%) = (Number of Positive Responses / Total Number of Responses) x 100
The plus points of CSAT are that it’s:
Easy to implement.
A quick source of feedback.
You can use it across a variety of touchpoints.
On the downside, it’s not a great way to measure long-term loyalty.
Customer Effort Score (CES)
Customer Effort Score (CES) is a flexible way to get important feedback across a variety of customer interactions. You can use it to find out how much effort your users expend to:
Resolve issues with your product
Achieve their goals with your product
Make a purchase
Use customer self-service to seek help or guidance.
Again, it uses 1-3, 1-5, or 1-10, or a Likert Scale.
Calculating CES is simple with this formula:
CES = (Sum of all individual CES scores) / (Total number of responses)
The benefits of tracking CES are that it’s very customer-focused and that it’s a great way for teams to gain strong insights into what is working well within their business. What’s more, tracking CES can give you vital early insights into issues, allowing you to remedy them before they spiral out of control.
Of course, CES is better at tracking snapshots of customer loyalty rather than the overall picture. However, when combined with other measures or when tracking general trends, it provides a lot of useful information.
Value Enhancement Score (VES)
Gartner’s Value Enhancement Score (VES) measures the value customers get from a product interaction. It’s widely considered an excellent way to track customer loyalty thanks to its ability to predict user retention.
How each interaction affects the user’s ability to get value from the product.
How each interaction affects the user’s perception of whether buying a product was a sound decision.
As you can see, VES solves some of the issues that we’ve raised with CSAT and CES, namely, their susceptibility to recency bias. Instead, it blends short-term and long-term customer sentiment to give brands better insights into their customer relationships.
While there isn’t a fully agreed-upon formula to measure VES, you can calculate the score in the following manner:
Ask your user to rate the value of your product out of ten after a specific interaction.
Ask the user to rate their confidence in their purchase out of ten after the same interaction.
Add both scores and divide by two.
The idea here is that actions that drive perceived user value will predict, according to Gartner, “retention, increased wallet share, and positive word of mouth.” In other words, you can’t afford to neglect VES.
Source: Gartner
Customer Lifetime Value (CLTV)
Customer lifetime value (CLTV) measures the average revenue you can expect from each user during the course of your relationship.
Calculating CLTV is a bit more complex than other metrics. However, it’s worth doing if you want a good overview of the impact of customer loyalty on your bottom line.
As you can see, to get there, you need to find customer value and average customer lifespan.
You can calculate these metrics in the following way:
Customer value: The average revenue a user generates per year or per month).
Average Purchase Value * Average Purchase Frequency
Average customer lifespan: The average length of time that your users are regular customers.
Once you know your CLTV, it has a wide array of consequences. For example, when paired with Customer Acquisition Cost (CAC), the CLTV:CAC Ratio (i.e., CLTV / CAC) shows you how much revenue you should expect for each $1 you invest in customer acquisition.
Customer Retention Rate (CRR)
Customer retention rate measures the percentage of customers you keep over a specific timeframe, such as a week or a month.
The formula is:
Customer retention rate = ((# of customers at the end of the period - # of new customers acquired during the period) / # of customers at the start of the period) * 100
The customer churn rate is the inverse of CRR. If the churn rate drops, CRR increases. As such, you should keep an eye on both metrics to keep a finger on your product’s health.
CRR and churn rates are really important because they highlight the effect of your actions in stark terms. While diagnosing the cause of low customer retention isn’t always easy, with the right approach, you can stem the losses. For example, if you’re losing a lot of new customers quickly, it’s likely a customer onboarding issue.
Choosing the right metrics
As you can see, there are lots of different metrics out there. So, how do you choose the right one for your product? The short answer is that it depends. But let’s take a look at some of the factors that should influence your thinking on the subject.
What are your business goals?
The metrics that you choose should tightly align with your overall business strategy. Obviously, every business's goal is to increase revenue. However, you need to dig a bit deeper and look at what is blocking your path to more earnings. So, for example, if you’re hemorrhaging users each month, you need to focus on revenue, which means tracking CRR, CSAT, and VES.
What does your typical customer journey look like?
Map out your customer journey and look out for critical touchpoints, especially those where your brand could do better. Connecting a metric to these touchpoints means you can make focused improvements. For example, if your customer onboarding is lacking, a quick CES survey could reveal roadblocks that you need to eliminate.
Measure what you can
Another factor in deciding which metrics to track involves being pragmatic and acknowledging which metrics you can track with your current setup. For example, if you don’t have software tools that allow you to send in-app surveys after particular user events, then your options will be limited.
Rethinking NPS
OK, so we’ve spent a whole article undermining NPS, but we’re not ready to say that it’s over. In fact, there could be other ways to use the power and simplicity of NPS, such as slightly modulating the question.
Here are a few ways you can go a bit deeper using the NPS format.
Ask questions that are targeted at happiness with particular product features.
Pose questions around future purchase intent.
Segment your audience and see if you can find interesting patterns.
Add open-ended questions such as “Why did you give us that score?”
Alternatively, as Shep Hyken wrote in Forbes, we could try the Time Well Spent (TWS) metric and ask customers:
Do you consider your experience with us to be time well spent?
In ways, those questions could be a game changer because the answers could guide you towards points of friction with your product or customer service.
Final thoughts
Usetiful is not just a customer onboarding self-service tool. It comes with a range of additional features, such as contextual in-app surveys. You can trigger these surveys at the right time, and thanks to Usetiful’s easy customization options, you can use a wide variety of metrics, like CES, VES, and even TWS.
If you need to gather user feedback to take your product to the next level, try Usetiful today.