Defining CX Metrics: The Difference between NPS and TWS
Customer experience metrics are incredibly important to companies today. They are the first indicators of whether or not customers actually value what you are offering. The category giant, Net Promoter Score, has come under scrutiny by companies, academics, and especially customers. TWS metric is a new approach to CX metrics that can give you better indicators for how to improve your experience.
Why the right CX Metrics are important to companies
Companies need ways of measuring how well they are doing in producing experiences for their customers. The metrics they create should be focused on behavioral and attitudinal data, but attitudinal data is especially important because that’s how they find out what customers actually think about them. Customers don’t want to always be describing their experience to companies and so most companies employ some form of a rating system to gather feedback.
But note: what the company needs is to find out is how well they are doing. What they use to learn is a rating system. That rating system has to capture the wide variety of feelings and responses that make up ‘customer attitudes.’
Companies deploy a variety of metrics and questions to attempt to capture the actual attitudes of customers toward their offerings.
Types of CX Metrics Companies Deploy
The most common metrics used to measure customers’ experiences with company offerings are:
Customer Satisfaction (CSAT)
Churn rate
Retention rate
Customer lifetime value
Customer effort score
Net promoter score
Each score serves a specific purpose and has a business logic behind the metric.
Customer satisfaction (CSAT)
The oldest and most straightforward metric to understand is CSAT. The metric typically has a 5-point scale and asks you to rate the experience on a scale of Excellent to Very Bad. CSAT is considered a ‘transactional’ metric because it is administered immediately after an experience and is meant to only evaluate that experience. The business logic for CSAT is that if ratings are high, the company is providing a quality service.
Churn rate
Churn rate is the number of companies that have stopped using your offering during a fixed period of time. Churn rate is a behavioral metric that focuses on the loss of customers to determine if something is wrong with the offering. The business logic follows that since it is almost always more expensive to acquire a customer than to retain a customer, churn rate is effective at evaluating the value of the experience.
Retention rate
The flip side of churn rate is the retention rate. Instead of focusing on the negative score (churn) you focus on the positive score (or people who you have retained).
Neither score provides attitudinal data.
Customer lifetime value
Customer lifetime value is a calculation--not a rating--of the amount of money a customer is likely to bring to the company during the ‘life’ of the customer’s time engaging with the company. As a CX metric, the business logic for customer lifetime value is that a high value means the customer values the experience enough to pay for it over a long period of time.
Customer effort score (CES)
Customer effort score is a useful metric for understanding the ease of use that a customer experiences in an experience. CES is very much an attitudinal measure. The question typically asked is “how easy was it to solve your problem with our company today?” This is a smart question to ask because it focuses on an attribute of a customer's value (convenience) and ties that to a question that encourages the customer to think about the job the customer was trying to get done. The business logic for CES is that a high CES score means that there is less friction between the customer and the experience. Less friction means the customer can easily get the job done and is, therefore, more likely to remain a customer.
Net promoter score
Net promoter score is based around a single question: How likely are you to recommend [our company/product/experience] to friends?
Qualtrics gives an enthusiastic definition of NPS.
“NPS stands for Net Promoter Score which is a metric used in customer experience programs. NPS measures the loyalty of customers to a company. NPS scores are measured with a single-question survey and reported with a number from the range of -100 to +100, a higher score is desirable.
NPS® is often held up as the gold standard customer experience metric. First developed in 2003 by Bain and Company, it’s now used by millions of businesses to measure and track how they’re perceived by their customers. NPS scores determine segmenting between poor and positive feedback.”
But in their definition, we see some of the challenges associated with NPS. First, it’s not a CX metric, really. It measures loyalty. Second, the question can be applied to almost anything, which again means, the score itself is actually not a score of the experience. It’s a score of the number of people who are likely to promote your product minus the number of people who are likely to detract from your ability to promote your product. It was originally designed so that you could identify detractors and eliminate them as customers, or at least not waste time on them.
Because NPS is easily ‘gamed’ by people, it’s hard to know if the score is a true score. Because the one question being asked has to do with loyalty, you don’t actually learn from NPS what needs to be improved in the experience (or good or service). Consequently, companies will always include longer follow-up surveys to identify drivers of the score.
While Qualtrics clearly explains that NPS is not meant to be a benchmark/comparison score for companies, in practice many companies do use the score to compare companies.
The TWS Metric
The TWS Metric stands for Time Well Spent. The metric is based on five years of primary research into what people want from experiences, in life and at work. People want value for their time. Time is the key driver of experience value at work and in life. The TWS metric focuses on whether or not the time spent in an experience is valuable to the customer. The approach helps you think through the four types of time frameworks developed by Dave Norton and Joe Pine.
Time wasted. When a good, service, or experience is bad, people feel like their time is wasted. There is no time value being created for customers, which will negatively impact churn, loyalty, and satisfaction.
Time Well Saved. When a solution does the work for the customer in a way that is powerful and compelling, people feel like the solution is time well saved. Time Well Saved means that they actually value the savings. Sometimes conveniences are valued as Time Well Saved. But they are not the same.
Time Well Spent. When people enjoy the time they spend with your solution, then you’ve produced Time Well Spent. Time Well Spent is the best indicator that you are creating an experience that has value.
Time Well Invested. For certain types of aspirational experiences people value the outcomes so much that they are willing to invest time in order to get a higher return later. Transformative experiences are almost always measured for Time Well Invested.
How TWS Works
To understand whether or not people value the time they spend with your solution, TWS focuses on three fundamental questions:
Are you getting the job done for the customer?
How engaged are they with the experience?
Do they consider the experience to be worth the time they spend?
By asking three questions focused on jobs-to-be-done, engagement, and time value, companies can create a customized metric that gives them a true sense for the value of the experience.
TWS is focused on solution improvement first. Benchmarking and comparisons to other experiences are handled very differently than with NPS or C-Sat. To get the benchmark benefits of NPS, likelihood to recommend can be added as a fourth question.
The metric includes:
An index based on three unique questions that determine the time value of the experience.
An observable impact question that is tied to business goals.
Starting point questions that are ‘universal’ and can be used in most cases.
A framework for designing specific questions designed for your experiences.
Tools for helping you improve the experiences you provide.
Ability to integrate TWS with NPS or other metrics.