There are several key performance indicators (KPIs) that can be easily measured with a market research study. Luckily, as we explain in our ultimate guide to market research methodologies, you are never short of options.
After determining your approach, the next step is to identify your objectives. Our market research clients typically determine their objectives based on the KPIs or metrics they most want to measure.
There are several key performance indicators (KPIs) that can be easily measured with market research. Depending on what your business wants to track, the choice metric will vary. Here are 7 common KPIs to consider.
Common metrics include:
- Net Promoter Score (NPS)
- Customer Satisfaction (CSAT)
- Customer Effort Score (CES)
- Employee Net Promoter Score (eNPS)
Make sure the right metrics and KPIs are on your market research dashboard.
Here are 7 KPIs, our market research company in New York suggests integrating into your efforts.
KPI #1: Awareness
To accurately gather this metric, you'll need to survey a general population by collecting responses from both customers and non-customers.
This has become more and more difficult without truly randomized samples and probabilistic samples becoming non-existent.
With cell phone samples taking over and area codes spanning across geographies, it's challenging to get a true market assessment on awareness.
Specific segments of demographics do not own cell phones; certain segments are not on social media; certain segments join market research online panels. Each incurs a non-randomized bias.
Is measuring awareness still necessary?
In a digital world, "awareness" needs to be taken with a grain of salt. Is it still necessary? Yes.
As an organization, you need to know how many individuals in your target market are aware of your brand.
Lower levels of awareness (less than 10%) will create different marketing strategies and channels than a campaign where your awareness stands at 90% or better.
These numbers create two very different kinds of marketing strategies.
When measuring awareness, it's always important to note the survey sponsor needs to be blinded.
Sending an online survey with your brand in the header or making a phone call and introducing your firm as the sponsor and then asking about awareness will bias the numbers.
How to measure awareness?
1. Unaided Awareness
This is your top-of-mind recognition. It's the percentage of people who mention your brand without being prompted. Strong unaided awareness means you have extremely high recognition in your market.
Example question: When you think of market research companies in Syracuse, which one(s) come to mind?
2. Aided Awareness
This is the percentage of your market who are familiar with your brand after prompting. Although you may not be remembered top-of-mind, aided awareness still indicates some level of familiarity with your brand.
Aided awareness is not as good as unaided, but still important none-the-less. This type of awareness comes into play a lot with Google search.
Example: When you go on Google and search dry cleaners in Syracuse, it will show you a list of dry cleaners in the area.
As you scan the top 3, you notice ABC Dry Cleaners, and you suddenly realize you pass by them every time you go grocery shopping.
This is still meaningful for you but not as powerful as a consumer going directly to Google and typing in ABC Dry Cleaners.
3. Total Awareness
This metric is calculated by combining unaided and aided awareness into one number.
Example: If 30% of your population mentioned your brand top-of-mind, and another 45% remembered your brand when aided from a list, your total awareness stands at 75%.
Interested in reading about the difference between aided and unaided awareness? Read more here.
KPI #2: Customer Satisfaction (CSAT)
This KPI comes in many forms. There are benefits to a 5-point customer satisfaction scale and an 11-point scale.
There is no right or wrong way to scale this question as it is dependent on your needs.
CSAT measures how satisfied your customers are with your product or service. Obviously, this metric is customized to customers of your business.
CSAT uses 1 to 5, 1 to 7, 1 to 10, and 0 to 10 scales, which range from "very poor" to "very good" or "very unsatisfied" to "very satisfied." Your scaling anchors need to represent both a negative and positive extreme.
Of all of the KPI metrics, this is probably the most commonly used across surveys. Customer satisfaction measurements are synonymous with market research.
What are the dos and don’ts for designing a CSAT survey?
- First, ask for the overall rating of the company.
- Make the survey accessible on mobile devices.
- Keep the survey brief and focused.
- Ask open-ended questions for detailed feedback and discover new insights from the customers.
- Utilize the results from the survey and make improvements, if needed.
- Ask too many questions. Limit your survey’s length to at least 10 questions.
- Ask double-barrel questions in your survey.
- Ask leading questions in the CSAT survey.
- Use industry jargon in your survey. This can confuse the respondents and discourage them from completing the survey.
KPI #3: Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) can be defined as the overall cost of obtaining a customer, such as creative cost, technical cost, production cost, and ad spend.
This metric can help your company evaluate the cost-effectiveness of its sales and marketing campaigns. Lastly, customer acquisition costs can vary across different industries, but the CAC formula remains the same.
CAC= (Cost of Sales + Cost of Marketing)/ New Customers Acquired
To calculate customer acquisition cost you must determine the time frame you’re assessing.
After you determine the time element, add your total sales and marketing expenses then divide that number by the total number of new customers acquired during that period of time. The result should amount to the cost of obtaining a new customer for your company.
KPI #4: Net Promoter Score (NPS)
Our market research company, Drive Research is a big fan of the net promoter score (NPS). This is a metric we came across years ago in its infancy at an industry conference and have been implementing it ever since in client surveys.
The core benefit of NPS is it is easy to understand and now, easy to benchmark. Tons of secondary research exists on average NPS ratings by industry.
It's also a great metric to utilize for brand tracking, month-over-month, quarter-over-quarter, or year-over-year.
It uses a 0 to 10 scale of likelihood to recommend, with "0" being not at all likely to recommend and "10" being very likely to recommend.
Those rating you a 9 or 10 are grouped into promoters, while those rating you 0 to 6 are grouped into detractors. Those rating you a 7 or 8 are called passives.
The education behind NPS teaches us to find out what makes the 9 and 10 respondents so loyal and communicate that passion to the 7 and 8 respondents in hopes to build their loyalty and likelihood to recommend.
NPS ratings range from -100 to +100. Any scores in the 4th quartile of +50 are considered strong. The Apple's and Amazon's of the world compete for NPS ratings in the high +70s and +80s.
To learn more about net promoter score, watch this 60-second video.
KPI#5: Customer Effort Score (CES)
This is probably the newest and fastest-growing metric in market research. It's essentially designed for a growing digital world in which customer relationships are short and transactional.
- Amazon is judged by how easy their online ordering and return process is.
- Apple is judged by how intuitive and easy to use their devices are.
- Banking apps are judged by how quickly customers can check their balances or make an account transfer.
Customer effort score or CES measures how easy it is for a customer to do business with you.
In transactional business models, a low likelihood to frustrate equals higher customer satisfaction and higher loyalty.
Something as simple as a user experience (UX) design flaw on your website’s e-commerce portion can cause customers to run, particularly if they incur the same frustration time and time again when they order each day or each week.
Customer effort score is typically measured using a 1 to 5 scale, with "5" being the positive extreme or "very easy."
Our market research firm recommends including this question in your next customer survey, as it can prove very telling to your overall customer experience.
KPI#6: Likelihood to Switch (LTS)
This metric ties in nicely with NPS and CES, and they typically correlate to one another. The typically is italicized for a reason.
High likelihood to recommend and positive CES will naturally result in a low likelihood to switch right? So why even ask it? Here's why.
Some of the NPS and CES data carries no context.
You may score a +64 on NPS and have an average CES score of 4.2, but how do your competitors perform?
Maybe those scores are low compared to some of the other vendors your customers deal with.
Perhaps your main competitor scores a +70 NPS and has an average CEO of 4.5? Therefore, it's critical to ask the likelihood to switch in your customer survey.
Another dynamic at play here is the influence and decision-making prowess the survey respondent has. The survey respondent may be highly satisfied with your product, but it is very costly.
As a mid-manager, he or she may be getting pressure from management to lower costs. As a result, the survey respondent knows there is a strong likelihood to switch to a competitor next year even though they are extremely satisfied with the quality and the product or service.
If you only ask NPS, CES, or CSAT, you will likely lose this context without LTS.
Much like other metrics, pick and choose where you ask follow-up open-ended questions. Don't ask respondents to write-in an open-end on all of these KPIs but pick one or two you might find most valuable for your needs.
KPI#7: Employee Satisfaction (ESAT) or Employee Experience (EX)
We often forget about measuring happiness and satisfaction with our own employees, don't we? Businesses get so caught up with pleasing their customers and measuring CSAT, they forget about the most important stakeholder of all: the employee.
Many claim employee satisfaction = customer satisfaction, and at face value, it seems to make sense, right? Happy employees feel more empowered, more fulfilled, and involved. In turn, they pass those positive attitudes to their work and dealings with their customers.
This is why it is critical to creating EX KPIs for your organization. Understanding the pulse of your own workforce will help you identify problems and opportunity areas to improve.
The great thing about measuring employee satisfaction as a KPI is you can pick your scale of choice. Whether it is CSAT (which becomes ESAT) or NPS (likelihood to recommend the company to a friend or family member), the measurement tool can be customized.
The key takeaway of this blog post is doing the market research is equally as important as choosing a metric. Don't get stuck choosing which metric is best. This prevents the research from getting started.
Customer experience (CX) research creates a well-aligned business strategy where customer feedback is integrated into the strategy. It constantly evolves. So new feedback is garnered on the new strategy and so on. It's a continuous cycle of improvement guided by KPIs.
All great companies find ways to measure and benchmark success, particularly when it comes to customer satisfaction and customer relationships. In the words of Peter Drucker, "what gets measured, gets managed."
Drive Research is a national market research company in New York. We custom-design surveys for our clients in all industries.
From understanding your needs to formulating market research projects to getting the answers you need, Drive Research manages all aspects of the work.
Interested in conducting a market research study? Contact our team today.
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George is the Owner & President of Drive Research. He has consulted for hundreds of regional, national, and global organizations over the past 15 years. He is a CX certified VoC professional with a focus on innovation and new product management.
Learn more about George, here.