Continuously Innovating and Upping CX
The Acronym Soup Series—Making sense of:
NPS, EGR or NPS 3.0 (NPS, Realtime Referrals, Tracking Referral NRR), CES, OSAT, CSAT, PSAT, PMF, and PE𝛿4
4—Comparing CX with Product Efficiency Delta4 (PE𝛿4)

In the rapidly modernizing B2B landscape, continuously enhancing customer experience (CX) is becoming increasingly crucial.

  • Beyond Conventional Metrics: Companies increasingly recognize that conventional and standard metrics alone are no longer sufficient.
  • Attitudinal and Behavioral data: You cannot just choose between either attitudinal or behavioral data; combining the two becomes essential.
  • Multi-segmentation Models: Companies further demand a move beyond singular and conventional segmentation methods to fully grasp user diversity and needs. We will cover that in another article.

To provide a more comprehensive view of CX and drive strategic decision-making, this article explores the integration of conventional lagging metrics with newer advanced metrics

Conventional lagging metrics

  • Net Promoter Score (NPS),
  • Customer Health (CH),
  • Net Revenue Retention (NRR),
  • Customer satisfaction (CSAT),
  • Partner satisfaction (PSAT), and
  • Customer Effort Score (CES)

Newer advanced metrics

  • Product Market Fit (PMF),
  • Product Efficiency Delta 4 (PE𝛿4 or 𝛿4),
  • NPS Promoter Referrals
  • Referral NRR Tracking
  • Earned Growth Rate (EGR) or NPS 3.0

What is Product Efficiency Delta 4?

Product Efficiency Delta 4 (PE𝛿4, 𝛿4) — or more accurately Customer Experience Delta 4 (CX𝛿4) — is a new and modern measure that assesses how much a new product, feature, or service improves the customer experience (CX) compared to an alternative, like a previous version or a competing product. It has been popular amongst investors to determine, how a new experience from a startup compares with the incumbent's experience.

𝛿4 is easily applied to companies with similar mindset and helps quantify how much better the new product, feature, or service is and how significant this improvement is.

PE𝛿4, 𝛿4, or CX𝛿4 = Difference between Customer Experiences of a product, feature, or service and an alternative.

CX of buying a product at a store versus online

What was your experience buying the 85-inch Sony TV online versus in a store?

Online: 9

In-store: 3

𝛿4 = 9-3 = 6.

6 > 4, so the efficiency and experience of buying a large electronic item online and getting it delivered at home is higher than the experience of buying it online.

A new experience is only sometimes better than an existing experience.

CX of buying a fitted wedding dress online versus in-store

For example, when comparing the experience of buying a fitted dress online versus in-store, a bride shopping at a store can try on multiple dresses, get personalized help from staff, and quickly check the quality, texture, fit, and color of the dress. The store may also offers a luxurious ambiance and excellent customer service. In contrast, buying a fitted dress online means relying on size charts and images, which can lead to fitting issues and the hassle of returns.

Product Efficiency Delta 4 quantifies this concept. An improvement score of four or more will significantly change consumer behavior.

What was the experience of buying your fitted dress online versus in a store?

Online: 3

In-store: 10

𝛿4 = 3-10 = -7.

The efficiency and experience of buying a fitted dress online is lower than the experience of buying it in-store.

How is Product Efficiency Delta 4 Measured?

Attitudinal Two Questions Approach

Delta 4 is determined by asking two specific questions about the customer experience with the new product compared to an alternative:

    • Question 1: Focuses on the experience with a product or feature.
    • Question 2: Focuses on the experience with an alternative.

Delta 4 Score Calculation

Both questions are answered using the same Likert scale, either:

    • An 11-point scale ranging from 0 to 10.
    • A 10-point scale ranging from 1 to 10 (peferred).

The difference between the scores of these two questions gives us the Delta 4 score.

What Makes a High Delta 4 Score?

According to the Delta-4 Theory by Kunal Shah, a Delta 4 score of 4 or higher indicates a significant improvement in efficiency. Such a score makes the new product:

  • Irreversible: Customers find it hard to go back to the previous version.
  • Bragworthy: Customers are more likely to share their positive experiences with others.

This high level of improvement increases customer loyalty and preference for the new product.

Back to the dress example, you can change customer behavior when the online experience is 4 points better than that of buying at a store.

Key Takeaways:

  • A Delta 4 score of 4 or higher indicates a significant improvement in efficiency, often leading to irreversible changes in shopping behavior.
  • Understanding the Delta 4 concept helps businesses assess the suitability of different shopping channels for various products.
Leveraging Cast.app's AI-driven customer success managers, Igloo achieved an impressive 86.8% reach, robust 68.4% engagement, a record 18% actions, and positive feedback.

Jonna Pederson
Igloo Software

ready to automate your success too?