| Nov 12, 2020, 4:21pm EST

Why Board Members Should Be Paying Attention to These Critical Metrics

In order to successfully steer a company toward growth, using the right data is essential.

Sumit Aneja

Chief Executive Officer, Voxco

Monitoring specific metrics is common practice for executives and managers, since it gives a great picture of how well a business is doing. Your board of directors should be paying just as much attention to metrics as your everyday leaders do, as one of the main functions of the board — if not the most important one — is to approve or modify what management is recommending for the business’s future. To ensure your board can perform this function well, make sure they have access to and understand these four main data points.

Customer Effort Score

Your customer effort score (CES) is simply the amount of effort buyers or clients have to put in to accomplish their primary goal over one or more touchpoints. That goal can be anything from having a single question answered to ordering hundreds or thousands of dollars worth of product. Generally speaking, you can measure CES through a basic survey that asks how easy or difficult the interaction was for the customer.

Board members have a responsibility to keep a company efficient and on target for its goals or vision. This ties to ensuring customer loyalty. Loyalty creates stability for a business and typically means reliable sales, revenue, and referrals. Customer effort is the greatest predictor of loyalty or disloyalty. Understanding your CES score is important for understanding and adapting the customer experience in a way that not just reduces disloyalty but that prevents disloyalty from developing in the first place.

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Net Promoter Score

Your net promoter score (NPS) tells you how likely it is that people will recommend what you do or sell, either specifically (a single product) or more generally for your entire suite of offerings. It can give some insights into how well people are interacting with the people on your team. The higher your NPS, the more loyal your customers probably are.

Board members are highly concerned with the company’s finances. They approve financial statements/budgets and want to minimize costs while increasing output. This enables the company to make a profit and pass it along to shareholders. Maintaining loyal customers is often cheaper than acquiring new ones. In fact, increasing retention by just 5 percent can increase your profit by 25 to 95 percent, depending on your sector. Just a 1 point improvement in NPS score can lead to a $25 million dollar increase in revenue on average according to Forrester. Businesses can also save considerable money if customers advertise for them for free by word-of-mouth.

Because NPS connects to customer satisfaction, low net promoter scores can also give the board a clue that there is a larger problem with the company’s products, services, or way of interacting that needs immediate overhaul.

Overall Customer Satisfaction Score

Overall customer satisfaction score (CSAT) tells you the number of satisfied customers or clients you have. It’s easy to assess through surveys or star ratings, especially right after a buyer has gone through a transaction with you.

One of the most important questions board members have to ask is whether the company is doing what it said it would do, not only to keep the business on track with its budget and goals but also to protect the organization’s reputation and legal standing. If customers are not satisfied, board members have to look seriously at the company’s ability to meet the buyers’ needs and ask if leadership has the resources and integrity to deliver. Conversely, if your score is high, then that’s a good sign that the organization is supported properly and in tune with its base.

Churn

Churn usually refers to the rate at which customers stop buying or doing business with you. You simply divide the number of customers lost by the number you had at the start of your measurement period (e.g., the quarter, year, etc.). If you apply the churn concept to your workforce, you’re dealing with employee retention.

Just as with net promoter score, churn rates can signal that there’s a problem with your product/service or customer journey touchpoints or that there’s a bigger issue with company management or culture. It can also indicate that managers and those in the C-suite aren’t aligned with or adapting to market changes well. It’s the board’s job to smooth out those types of problems in cooperation with the company’s leadership.

Measuring metrics is enormously helpful to business leaders. But board members need to be equally involved in obtaining and analyzing data from customer journeys, particularly in the areas of customer effort, net promotion, overall customer satisfaction, and churn. Low scores in any of these areas can mean that the board should recommend changes to keep the business thriving and moving in the right direction — so make sure your board is monitoring these points regularly.

Sumit Aneja

Chief Executive Officer, Voxco

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