Determining the best measurement of company growth is an essential task. While indicators like revenue, gross profit, and EBITDA are reliable, they only provide a partial picture. Today, customer longevity is more critical than ever for long-term growth and success.
Customer retention is a significant undertaking for businesses of all sizes. According to HubSpot research, acquiring new customers costs five times more than retaining them. Additionally, 74% of customers report customer loyalty “is about feeling appreciated and understood” rather than being pandered to with promotions or sales gimmicks.
Measuring client satisfaction and loyalty are core business objectives, especially in IT services and SaaS, where client retention rates rarely climb above 40%.
Various customer experience metrics help guide businesses of all sizes in elevating their CX and analyzing friction points in the customer journey.
At Pomeroy, we use two key metrics, NPS and C-SAT, to monitor customer experience (CX) and satisfaction and to assist us in building lasting customer relationships. Pomeroy has outstanding scores in both metrics: +70 in NPS and 4.8/5.0 in C-SAT.
But what do those numbers mean? This post will examine these two metrics and how they help us better understand our relationships with our clients.
NPS vs. C-SAT
If you shop online, you are already familiar with NPS. The net promoter score (NPS) is a tried-and-true customer experience metric that measures customer loyalty. NPS is based on one question:
How likely are you to recommend this [Organization/Product/Service] to a friend or colleague?
Often, this question is supplemented with a simple text box to allow customers to write in other feedback. Or, at most, a handful of follow-up questions about a related service or product.
Many companies utilize this metric, and for good reason. Bain and Company, the creator of NPS, have found in their decades of research that NPS correlates to growth, with 20% – 60% of growth variation linked to NPS score. In other words, the higher the score, the better the chance of company growth. In fact, industry leaders in NPS outgrow competitors by a factor of two or more.
While NPS measures customer loyalty, customer satisfaction (C-SAT) is a measure of just that–how satisfied a customer is with the service or product. C-SAT is the oldest and most widely used customer experience metric. Like NPS, C-SAT relies on variations of a single question:
On a scale from 1 to 5, how satisfied were you with [company/interaction]?
C-SAT is often more valuable in the short term, i.e., if the customer is happy with their newly managed network service, while NPS measures overall client satisfaction.
Pomeroy uses both metrics to check in with our clients for both short-term projects and services and over the longer term of the relationship.
How customer experience metrics work
NPS
With a net promoter score, customers rate the likelihood of recommending the service or organization to another person on a scale from 0 to 10.
- Promoters are respondents who score 9 or 10.
- Passives rank service at 7 or 8.
- Detractors are displeased with service and rate accordingly, between 0 and 6.
NPS is calculated by subtracting the percentage of Detractors from Promoters. Promoters (loyal customers) minus Detractors (unhappy customers) = NPS.
For example, if an organization received 40% Promoter ratings (9-10) and 50% Detractor ratings (0-6), their NPS would be -10 (40 – 50 = -10)
The NPS scale runs from negative 100 to positive 100. A good NPS score depends on the scoring method. In the absolute method:
- Above 0 is considered good.
- Above 20 is positive.
- Above 50 is excellent.
- Above 70 is outstanding.
- A perfect 100 is unachievable.
However, NPS averages vary wildly between industries, so the relative method compares organizations with their closest competitors. In IT industries, the average NPS is around +36 points. Results near or above that number are considered very good.
C-SAT
C-SAT scoring is more straightforward. The scores are typically averaged on a scale of 1 to 5. While there is variation between industries, 70% – 90% (3.5 – 4.5) is the benchmark for good to excellent customer satisfaction.
How Pomeroy leverages these metrics to improve overall customer experience
At Pomeroy, we survey all clients who report incidents through our service desk and have done so for many years. Although we are proud of our consistent 4.8/5.0 rating, we wanted to better understand the value of our partnership with our clients, so we partnered with Qualtrics to launch our first NPS survey. Combining both sets of scores helps us better understand what is working and where we need to improve. It also allows us to resolve issues we weren’t aware of before they lead to dissatisfaction.
Our company culture centers around putting our clients first. We deeply value our clients and listen carefully to their challenges, concerns, and feedback on how we can improve. Although we achieved positive results, we still identified areas where we have work to do, and we found this feedback extremely valuable. The voice of the customer is critical in shaping our future and will play a significant role in developing new initiatives and processes. Click here to enter text.
Customer experience metrics are valuable in managing client relationships and measuring satisfaction. When combined with revenue, gross profit, and EBITDA, these metrics help organizations gain a complete picture of growth and pinpoint areas that need improvement. Pomeroy will continue to survey and monitor our NPS and C-SAT scores to ensure we are providing a consistent and exceptional experience for our clients.
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