What’s more difficult than making your first sale? Selling 100. But what’s more difficult than reaching hundreds of different prospects? Selling to the same person twice. You have one shot at convincing a customer to repurchase and remain loyal to your products or services. If they don’t see value in your products after the first purchase, they won’t likely buy from you again.
Customer loyalty shows credibility in your products, encourages people to share, and has a greater cost efficiency for you. So, how do you create loyal customers? You can use many methods, some being:
- Exceptional Customer Service
- Creating a Loyalty Program
- Engaging with Customers on Social Media
- Having Strong Brand Values and Marketing
- Listening to Customer Feedback
Use these and other strategies to improve your customer loyalty. You can choose a surplus of routes to take your business, which is why you need to find what works best for you. No one-size-fits-all when it comes to business, meaning the best strategy for your competitors may not be the best for you.
One way to measure whether or not your strategy works is to use NPS, CES, or CSAT. Each of these tools measure the metric of your customer satisfaction. While similar in nature, each one targets a different area of customer satisfaction.
What is NPS?
NPS, or your Net Promoter Score, is a simple method used to measure loyalty. First presented by loyalty consultant Fred Reichheld in 2003, NPS is based on the question, “How likely is it that you would recommend this company/product/service to a friend or colleague?”
Consumers rate from a scale of 0 (not likely at all) to 10 (extremely likely). The score is calculated by subtracting the percentage of Detractors from Promoters. (% Promoters – % Detractors = NPS) This metric works great to determine long-term customer satisfaction and loyalty.
What is CES?
CES, or Customer Effort Score, asks customers for their agreement with the statement, “The company made it easy to handle my issue.” A scale ranges from 1 (strongly disagree) to 7 (strongly agree).
You can calculate the score in various ways. One popular method is to divide the sum of all the individual results from customers by the number of customers who provided a response: (Total Sum of Response)/(Number of Responses)= CES Score.
CES measures the level of effort users experience when interacting with your brand. It’s a transactional, short-term measurement of customer experience.
What is CSAT?
CSAT, or Customer Satisfaction Score, is assessed by asking customers, “How would you rate your overall satisfaction?” with the customer service, company, product, service, etc. A five-point-scale is typically used: very unsatisfied, unsatisfied, neutral, satisfied, very satisfied.
You can calculate CSAT in two ways: Take an average of the 1-5, or just focus on how many 4-5 responses you receive. You can also use this formula: (Number of 4 and 5 Responses) / (Number of Total Responses) x 100 = % of satisfied customers.
While you can use the CSAT average, it isn’t as useful as calculating the percentage of those customers who consider themselves satisfied. Overall, CSAT measures customer satisfaction of a specific interaction or event.
Is NPS, CES, or CSAT Better?
The truth is that one metric doesn’t give you better information than the others. All three add value to your research; you just need to use them strategically. Below, I’ll share how to use each one to optimize your results. Every industry and company has a unique set of goals, so consider that as you plan.
NPS has challenges from the start because it’s calculated by subtracting two percentages. This means two companies can have the same NPS score, but different Promoters and Detractors, making it hard to differentiate the “better” company.
However, this one still holds popularity because of its ease for customers to follow. It’s used by 83% of CX initiatives—so it’s simple to communicate and introduce to your customers.
CES has gained popularity because it aims to reduce the effort in customer service and other routines of interactions. If your primary value is a fast and easy experience, CES works as a great brand loyalty indicator.
In general, CES doesn’t function as the best all-purpose metric to use. It has a great function in customer service situations, meaning it doesn’t necessarily indicate customer loyalty.
CSAT is typically a sound metric. Most people have familiarity with rating things on a scale of 1-5, so you can easily understand and implement it. However, the non-standard verbiage makes it harder to compare to other companies. Also, being merely “satisfied” sets a low bar that doesn’t equate to customer loyalty.
Overall, each metric serves different purposes and measures various situations. They all provide useful information as tools to apply to your systematization. On average, most companies use all three metrics, and only 19% report only using one.
Don’t pin your hope on one strategy. Do your research, and find what works best for your business.