Net Promoter Score, or NPS, is a widely-used customer satisfaction metric. Basically, a business calculates its NPS score by asking its customers one simple question: “How likely is it that you’d recommend this brand to a friend or colleague?” Then, the customer rates their likelihood of advocating for the brand on a scale of 0-10. Scores of 9 or 10 represent “Promotors,” 7 or 8 represent “Passives,” and 0 through 6 represent “Detractors.” Subtract the percentage of Detractors from the percentage of Promoters, and you get your Net Promoter Score.
One can certainly see the appeal of NPS as a measure of customer happiness. It’s a single number that is calculated the same way across industries. It’s easy to benchmark your past NPS performance against your current number, and NPS surveys are easy to deploy. There’s no need for lengthy customer interviews or in-depth focus group discussions.
However, NPS as a measure of customer satisfaction is not without its drawbacks. For example, some say its too focused on potential brand advocacy rather than actual loyalty. Others criticize the fact that it measures scores of 6 and 0 the same way (both Detractors). And while it remains an extremely popular metric, it’s not the only option out there. Let’s go through a few of the more well-known NPS alternatives and what they get right and wrong about quantifying customer satisfaction.
Customer Satisfaction (CSAT)
As the name implies, this metric is laser-focused on customer satisfaction. Like NPS, the CSAT score centers around a single question: “How satisfied were you with our service/product?” Customers then rank their level of satisfaction, usually on a scale from 1-5.
Pros
CSAT is easy to measure and only takes a few minutes of customers’ time. It’s also versatile. You can change the last part of the question to anything you want: “How satisfied were you with our service/response time/followup process,” and so on to get different measurements for different areas of the business.
Cons
On the other hand, CSAT doesn’t give you much insight into your customers’ overall relationship with your company. It doesn’t measure loyalty or advocacy and tends to be relevant only in the short-term.
Customer Effort Score (CES)
Customer effort score acts as a proxy for a key factor to customer satisfaction: ease of use. If a product or service is difficult to use, you tend to get frustrated and may take your business elsewhere. A CES survey asks, “How much effort did it take to deal with us?” and has respondents rank that level of effort on a 1-5 scale.
Pros
Like NPS and CSAT, CES is a single number that’s simple to calculate. It requires only a brief survey and encompasses a wide variety of potential sources of customer annoyance (not just service interactions).
Cons
“Effort” is a subjective term. What’s easy for one person may well be difficult for another. Also, the single CES number doesn’t give any additional information on where customers are getting stuck and experiencing friction. You’d need to follow up with survey-takers to get that degree of insight.
Customer churn
Churn is the opposite of retention. It measures how many customers do not renew their business with a particular company. Usually, churn calculated in two main categories. One is revenue churn, which measures the dollar value of contracts not renewed. The other is customer churn, which is commonly expressed as the percentage of companies up for renewal that don’t extend their contract.
Pros
Churn is directly tied to a company’s bottom line. That means everyone, including top executives, cares about it.
Cons
Unlike NPS, there’s no “one-size-fit-alls” method for calculating either customer churn or revenue churn. Probably the most commonly used for revenue churn is Net Revenue Retention, which looks at a set period and takes into account changes in account value (i.e. upsells and downsells) during that period. Calculating customer churn is even more complicated. Should it include free trial users? Month-to-month contracts? Also, customers can churn for a wide range of reasons unrelated to customer satisfaction, including budget cuts, seasonality, technical limitations, etc.
Customer health score
A customer health score measures which customers are satisfied (“healthy”) and which are struggling. If a particular customer is unhealthy, the customer success team can help get them back on track.
Pros
Since you decide what should go into your customer health score, you can customize it based on your company’s particular needs. You can also weight certain factors according to your organization’s specific priorities.
Cons
As with churn, there’s no single way to calculate a customer health score. Just about every company does it differently, and that means it’s difficult to benchmark across industries. In addition, building an accurate and actionable customer health score takes time, effort, and a lot of iteration.
Product engagement score (PES)
On average, more engaged customers tend to be more satisfied. Otherwise, they wouldn’t spend so much time using your product. Product engagement score (PES) is the average of stickiness (DAU/MAU), feature adoption, and retention. It can be expressed mathematically as: [(Feature Adoption + App Retention + Stickiness) / 3] * 100.
Pros
Like NPS, PES is a single metric that’s easy to track over time. Plus, it isn’t subjective and doesn’t require you to ask customers potentially leading questions about their feelings. In fact, you don’t need to ask your customers anything at all.
Cons
While engaged customers are often more satisfied than disengaged ones, that isn’t always the case. Maybe one customer hates your tool but doesn’t have access to an alternative. Perhaps they find your tool helpful but don’t need to use it that much. Also, PES is a relatively new metric, so benchmarking data might be somewhat limited.
NPS variations
Another option used by many companies is just to take the traditional NPS method and tweak it a little. For example, you might adjust the scale to be 0-5 rather than 0-10. You could change the Detractor/Passive/Promoter criteria or even reword the initial survey question.
Pros
By creating what is essentially your own version of the NPS, you can tailor it to your specific needs and priorities. And unlike with a customer health score, you don’t have to start from scratch.
Cons
Once you move away from the standard NPS methodology, some of the strengths of this metric go away. You’re no longer comparing apples to apples when you examine your NPS in relation to that of another company.
What customer satisfaction is right for you depends on your company, your priorities, your strategy, and much more. It’s up to you to weight the various strengths and weaknesses of each metric and make a choice (or choices) you feel confident in.
