Net Promoter Score (NPS) vs. Customer Effort Score (CES)

As a business owner, you know that happy customers are the lifeblood of your success. But how do you measure customer satisfaction and identify areas where you can improve? This is where metrics like Net Promoter Score (NPS) and Customer Effort Score (CES) come in. In this article, we’ll dive into the differences between these two metrics, their benefits and limitations, and how you can use them to turn customer feedback into actionable insights.

Understanding Net Promoter Score (NPS)

Net Promoter Score (NPS) is a metric used to gauge customer loyalty and satisfaction by asking a simple question: “On a scale of 0-10, how likely are you to recommend our company to a friend or colleague?” Based on their response, customers fall into one of three categories:

1. Promoters (score 9-10) – These are your most loyal and enthusiastic customers. They’re likely to recommend your business to others and continue doing business with you in the future.
2. Passives (score 7-8) – These customers are satisfied with your business, but not overly enthusiastic. They’re unlikely to recommend your business to others, but they’re also not likely to actively discourage others from doing business with you.
3. Detractors (score 0-6) – These customers are unhappy and likely to spread negative word-of-mouth about your business. They may also actively discourage others from doing business with you.

Knowing your company's NPS score is important because it provides a clear indication of how your customers perceive your business. It's a valuable tool for identifying areas of improvement and for measuring the effectiveness of customer service initiatives. By understanding your NPS score, you can develop strategies to improve customer satisfaction and loyalty.

What is Net Promoter Score?

To calculate your Net Promoter Score, you take the percentage of customers who are Promoters, subtract the percentage of customers who are Detractors, and you’re left with your NPS score.

NPS = % Promoters – % Detractors

For example, if 50% of your customers are Promoters and 20% are Detractors, your NPS score would be 30 (50-20).

It's important to note that while NPS is a useful metric, it should not be the only metric used to measure customer satisfaction. Other metrics, such as customer retention rates and customer lifetime value, should also be taken into consideration.

Benefits of using NPS

NPS is a straightforward metric that allows you to measure customer satisfaction and loyalty quickly and easily. It's also easy to understand and communicate to others, making it an ideal metric for measuring your business’s overall health. Additionally, NPS has been shown to correlate strongly with business growth, meaning that improving your NPS can lead to increased revenue and profitability.

By regularly measuring your NPS score, you can identify trends and patterns in customer satisfaction and loyalty. This can help you to make informed decisions about how to allocate resources and improve customer service initiatives.

Limitations of NPS

While NPS has its advantages, it’s important to keep in mind that it’s a relatively simple metric that doesn’t necessarily capture the full range of customer experience. Some customers may have had a positive experience with your business but may not be willing to recommend it to others for various reasons.

Additionally, some argue that the 0-10 scale used in NPS surveys may not be precise enough and that more nuanced surveys may provide deeper insights into customer experiences and emotions. It's important to use NPS in conjunction with other metrics to get a more comprehensive understanding of customer satisfaction and loyalty.

Despite these limitations, NPS remains a valuable tool for measuring customer satisfaction and loyalty. By using NPS in conjunction with other metrics and customer feedback, you can gain a more comprehensive understanding of how your business is perceived by your customers and develop strategies to improve customer satisfaction and loyalty.

Understanding Customer Effort Score (CES)

Customer Effort Score (CES) is a metric used to measure the amount of effort a customer has to put in to achieve a desired outcome, such as resolving a problem or making a purchase. The thinking behind CES is that customers are more likely to be loyal to businesses that make their experience easy and seamless, rather than those that make them jump through hoops to get what they need.

What is Customer Effort Score?

To calculate CES, you typically ask customers a question like “How easy was it to resolve your issue today?” or “How easy was it to complete your purchase?” Customers then rate their experience on a scale of 1-5 (with 1 being “Very difficult” and 5 being “Very easy”).

CES = (Total number of respondents who rated their experience as 'Very easy' or 'Easy' / Total number of respondents) * 100

For example, if 75 out of 100 customers rate their experience as “Very easy” or “Easy,” your CES score would be 75.

Benefits of using CES

One of the biggest benefits of CES is that it’s a metric that focuses on improving the customer experience. By reducing customer effort, businesses can increase customer loyalty and reduce the likelihood of negative word-of-mouth. Additionally, research has shown that CES is strongly correlated with customer loyalty and revenue growth, making it a valuable metric for businesses to track.

Limitations of CES

Similar to NPS, CES is a relatively simple metric that may not capture the full range of customer emotions and experiences. Additionally, some argue that CES is more focused on transactional interactions (like making a purchase or resolving an issue) and may not be as useful for measuring customer satisfaction with ongoing relationships with businesses.

Comparing NPS and CES

While NPS and CES are both metrics focused on measuring customer satisfaction and loyalty, they approach this goal in different ways. NPS is focused on measuring the likelihood of customers to recommend a business to others, while CES is focused on reducing customer effort and making their experience with a business as seamless and easy as possible.

Key differences between NPS and CES

The key differences between NPS and CES come down to the questions being asked and the focus of the metric. NPS asks customers to rate the likelihood of recommending a business to others, while CES asks customers to rate the ease of their interactions with a business. NPS is more focused on measuring overall satisfaction and loyalty, while CES is more focused on improving the customer experience.

When to use NPS vs. CES

Deciding whether to use NPS or CES (or both) largely depends on your business goals and what you’re trying to measure. If you’re looking to measure overall customer satisfaction and loyalty, NPS may be the better metric to use. If you’re looking to improve specific interactions with customers (like purchasing or problem resolution), CES may be more useful.

Can NPS and CES be used together?

Yes, in fact, many businesses use both NPS and CES to gain a more complete picture of customer satisfaction and loyalty. By using both metrics, businesses can measure overall satisfaction and loyalty while also pinpointing specific areas where customer effort can be reduced.

Implementing NPS and CES in Your Business

If you’re interested in using NPS and/or CES in your business, there are a few steps you’ll need to take to get started:

How to collect NPS and CES data

To collect NPS and CES data, you’ll need to conduct surveys with your customers. These surveys can be conducted through various channels, such as email, social media, or in-store. When designing your survey, make sure to keep the questions clear and straightforward, and be sure to follow up with customers who leave feedback to show that you value their input.

Analyzing and interpreting NPS and CES results

Once you’ve collected NPS and CES data, it’s important to analyze and interpret the results. Look for trends and patterns in the data, and identify areas where you can make improvements to reduce customer effort and increase satisfaction and loyalty. Additionally, be sure to communicate the results of your surveys with your team and stakeholders to ensure that everyone is on the same page and working towards the same goals.

Improving customer experience based on NPS and CES insights

Using NPS and CES data to improve the customer experience is an ongoing process that requires continual effort and attention. Look for areas where you can reduce customer effort, such as simplifying the checkout process or streamlining your customer service channels. Additionally, be sure to show customers that you value their feedback by communicating changes and updates based on their input.

Conclusion

Net Promoter Score (NPS) and Customer Effort Score (CES) are two important metrics that can help businesses measure customer satisfaction and identify areas for improvement. While they approach this goal in different ways, both metrics have been shown to correlate strongly with customer loyalty and revenue growth. By using NPS and/or CES in your business, you can gain a better understanding of your customers’ needs and make improvements that can help you grow and succeed.

‍