Customer cross company recently released the results of a customer loyalty KPI study with 265,000 companies. One remarkable conclusion is that customer satisfaction scores once considered a leading indicator of loyalty, has diminished in value.
Customer cross company conducted the study in 2022 and collected more than 3 million data points over a 10 years period on 265,000 companies in the usa, eu and uk. All companies were customers in a recurring revenue or subscription model including saas, telecom and data.
“Our main objective was to find what kpis correlate best with the customer success actions our clients take to improve customer loyalty,” says tom carnewal, founder and cco at customer cross company. “We wanted to find out what indicators help to predict customer churn risks, which is a hot topic in today’s challenged economy”.
“Traditionally, csat is considered a particularly useful metric to predict churn risk. The idea behind that is that a bad csat score means the customer is unsatisfied and unsatisfied customers are more likely to churn and look for an alternative” says carnewal. “But after analysing our data we noticed that there is no correlation between csat and churn risk, and no statistical evidence that customers with a high csat score will stay longer with you”.
Now, how can we explain that a generally accepted churn metric seems to have no churn prediction value? Firstly, most csat surveys have very low response rates. That makes the data sets statistically biased and not really suitable for general conclusions. Also, the few answers received tend to be either very good or very bad, which in reality is seldom the case. Moreover, the csat score given by a customer depends on who replied and on what moment in time he or she answered the survey. And last but not least, let’s not forget some of your most loyal customers are often your most demanding customers. Demanding users push your product or service to its limits and often have a lot of questions or remarks, hence a ‘no so good’ csat score. “Now, let me make one thing clear” says tom “we are not saying csat is not a real thing or that you should not satisfy your customer. All we are saying is that we found no statistical evidence that customers with a bad csat churn faster”.
Want to know more about this study? Contact tom at tom@customercross.Com