“Know what your customer wants most and what your company does best. Focus on where those two meet.” — Kevin Stirtz
Customer success is the ongoing effort of an organization to continue delivering value to its customers. It entails proactive initiatives to boost customer happiness and retention. This in turn increases revenue and customer loyalty.
Focusing on key business metrics, revenue, and churn only tells a part of the story. That is why in today’s on-demand, subscription-service world, your focus should be on developing, maintaining, and strengthening relationships with current and prospective customers. After all, customer success is not a knee-jerk reaction — it’s a long-term initiative.
To truly understand your business and level of success, you need to understand your customer. To do so, you’ll need to pay attention to the voice of the customer i.e, customer metrics.
Voice of the Customer Metrics: Everything You Need to Know
Measuring your customer success efforts is crucial. It helps you tweak your strategies and improve customer retention. This begins with understanding why your customers need you, what you can do to help them, and what they’re looking for, as well as their specific interests and behavioral patterns.
Since it’s more expensive to acquire new customers, your focus should be on making existing customers happy to avert the high cost of acquisition. This is one of the most effective strategies for driving expansion in a highly competitive business environment. As reported by Harvard Business Review, depending on your industry, it is anywhere from five to 25 times more expensive to acquire a new customer than it is to retain an existing one. To put this into perspective, when you increase retention rates by just 5 percent, this will increase your profits by 25 to 95 percent.
This means that keeping the right customers is incredibly valuable to your business.
This leads us to Voice of the Customer (VoC), a research method used to better describe the needs of customers. This process highlights the things your customers say about your business, as well as the products and/services you offer. Based on the feedback provided, you will better understand your customers’ true needs and expectations, resulting in greater success.
As reported by Gartner, collecting customer feedback can increase both up-sell and cross-sell success rates by 15 to 20 percent. In addition, companies that actively engage in VoC programs spend 25 percent less on customer retention than those who did not. These stats are tough to ignore, which is why you need to invest in your own VoC program. Using numerous techniques, including everything from customer interviews and surveys to social media and website behavior, focus on the following metrics.
1. The Customer Effort Score (CES)
This metric relates to the amount of effort that’s required in order to conduct business. As you can imagine, the less effort required, the better the customer experience will be. This is particularly important in today’s digital world. If your app or website is too hard to navigate or makes the customer jump through hoops, you’ll lose business. In contrast, when sales transactions are seamless, it’s much more likely that customers will return. Take Amazon, for example. It’s so easy to find and purchase products, which has led to a community of 95 million loyal shoppers.
When it comes to your company’s CES, you’ll need to ask a simple, yet direct question.
“To what extent do you agree with the following statement — [Your company] made it easy for me to purchase [a specific product/what the customer needed].”
Use CES immediately after a customer’s interaction with a product, which led to purchase; or after an interaction with customer service. In that sense, CES is very resourceful in obtaining real-time feedback.
2. The Net Promoter Score (NPS)
Word-of-mouth is crucial for success in the business world, which is why it’s important to know how likely it is that a customer would recommend your product or service. To better understand this metric, simply ask something like, “Based on your recent experience, how likely is it that you would recommend us to a friend, using a scale of 0 to 10?”
While a low score will tell you that you need to improve the customer’s experience, any rating is telling. A rating of 9 or 10 lets you know that you’re doing something right and that you should continue to optimize your current strategy; whereas a rating of 0 or 1 is an indication that you need to make some drastic changes.
NPS gives your marketers both quantitative and qualitative data about your customers. Now that most customers believe referrals and recommendations over indirect forms of promotion, NPS should play a fundamental role in your customer satisfaction initiatives. For example, according to Nielsen’s Global Trust in Advertising Report, 83 percent of respondents said they trust recommendations from friends and family over any other form of advertising.
Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.”
This score is telling, as it provides insight on everything from customer loyalty to the power of referral marketing.
3. Customer Satisfaction Score (CSAT)
In a CSAT survey, you simply ask the customer to rate their experience with your company. The respondent gives their response on a 1-5 scale. For example, this metric can analyze the customer’s immediate reaction to an individual experience (not necessarily their overall perception of your brand). You can convert this score into a percentage to determine the percentage of customers happy or unhappy in relation to customer experience.
If the score you receive is anything less than a 3, this is a indicator that something needs to change — and fast. This metric will help you better understand where potential bottlenecks are in your business or website. That way, you can implement a more direct solution. Givent hat it is such a straightforward question, it is typically easy to gain insight.
4. Customer Loyalty Index (CLI)
The CLI tells you how loyal your customers are to your brand. Although it’s not a definitive indicator, your CLI gives you a fair idea of whether or not a customer will do business with you again. In that sense, the CPI ties into the NPS. To build on this, you’ll want to ask questions, such as “How likely are you to buy from us again” and “How likely are you to try/buy or other products or services?”
To calculate your CLI, simply add the values from the NPS and the answers to the two questions above. While you may want to take all feedback into consideration and aim for as many positive customer experiences as possible, it’s generally more beneficial to focus on loyal customers. After all, it’s much easier (and requires fewer resources) to turn a happy customer into a true brand advocate, then to turn an unhappy customer into a happy one.
This metric also relates to a customer’s repurchase ratio. Based on the question, how likely are you to buy from us again, you will better understand how likely it is that a customer will do business with you during their consumer lifecycle. You can also get this information by analyzing historical transaction data.
5. Qualitative Customer Feedback
Customer feedback is essential for your company’s growth. This is one of the most invaluable tools available to a customer success manager (CSM). It reveals what your customers think about your products or services. Feedback plays a critical role in developing a new product or a new product’s features. By collecting customer insight on your products, you understand underlying reasons, opinions, and motivations. Such insight plays an important role in building long-lasting and meaningful relationships.
Through customer feedback, CSMs can evaluate the input of customer support employees. The insight you get also helps review your customer on-boarding and other initiatives. To collect qualitative customer feedback, you should carry out a survey, in order to cover a broad range of issues, not specifically related to the products/services alone.
Understanding the Voice of the Customer metrics is integral to the success of your company in today’s business ecosystem. By tracking the above metrics, you can make more informed decisions moving forward, resulting in a more competitive edge. Whether your goal is to retool your business strategy or focus on expansion, if you closely listen to your customer, you will better understand your business.
If you want to jump-start your company’s growth, Strikedeck offers an efficient customer success platform that’s easy to activate.
Let us help you supercharge your customer engagement efforts. Contact us today to request a demo.
Shreesha Ramdas is SVP and GM at Medallia. Previously, he was CEO and co-founder of Strikedeck. Prior to Strikedeck, Shreesha was GM of the Marketing Cloud at CallidusCloud, Co-founder at LeadFormix (acquired by CallidusCloud) and OuterJoin, and GM at Yodlee. Shreesha has led teams in sales and marketing at Catalytic Software, MW2 Consulting, and Tata and also advises startups on marketing and growth hacking.