With Customer Experience (CX) fast becoming the best way to stand out in a crowded marketplace and build trust, increasing numbers of businesses are focussing on their customer strategy. So where should you start when it comes to either building a customer experience strategy from scratch, or improving an existing one?
Well – that’s a tough question and it won’t yield the same answer for all businesses. Where to start depends on factors such as your current company culture, the brand you’ve built, your team morale, and what your wider business objectives are.
What doesn’t vary, however, is the need to measure your progress and ensure your CX strategy achieves a strong return on investment. No matter where you chose to begin you’ll need to have clear customer experience metrics to help keep you on track.
Customer experience metrics are a way of measuring the progress of your customer experience projects. They can be made up of customer feedback metrics such as Customer satisfaction (CSAT), Customer Effort Score (CES) or Net Promoter Score (NPS), or they can be the more strategic measures such as revenue growth, customer retention or spend per customer.
Defining clear CX metrics early on in your project enables you to gather any benchmark data you’ll need to compare once the project is underway.
Whilst it’s not critical to have a before and after score for all metrics, it’s definitely useful for highlighting where most progress has been made, and which activities created that progress. It helps you track your efficiency, create business cases for further investment in CX and eradicate any wasted effort on areas that don’t help contribute to the wider business objectives.
So what are some key metrics to consider when creating your CX strategy?
Key metrics in customer experience
Which metrics are right for you depend entirely on what you’re trying to achieve. It’s a good idea to start here; by looking at the objectives of the business and what the customer experience strategy needs to bring to the table to support the business in achieving its goals.
Once you know what good looks like, you can consider which areas to focus on and how you’ll need to measure improvements to the customer experience. Setting the right customer experience metrics early on can help ensure everyone knows the priorities.
Customer experience metrics can be broken down into two main types:
- score-based metrics derived from consumer sentiment
- feedback from an automated survey, and more strategic metrics derived from internal business data.
Due to the ‘hit-and-miss’ nature of surveys, low response rates, and the business driven timing of most surveys, we’d usually recommend focusing on a blend of the two types to help build a more consistent and accurate picture of loyalty.
We’d also recommend at least three customer experience metrics are measured at any one time to again build a clear and consistent picture of exactly how your customers feel. We’ll break down some of the most useful CX metrics in this blog.
Metric 1 – Customer Effort Score (CES)
Your customer effort score is calculated based on customer feedback about how easy or hard they have found certain elements of the customer journey, or how much effort it took to accomplish their goal. It can be interpreted to gauge customer loyalty and their level of satisfaction based on the elements of the journey that have been reviewed.
Customers who have to spend very low effort or very high effort on achieving their goals are more likely to feel a strong emotion about your business.
Their overall satisfaction is likely to suffer if, for example, if it took them ten attempts to log into their online account or they were unable to speak to a real person when calling into your contact center. The amount of effort expended is one of the key drivers behind first contact resolution as a measurement in any omni-channel experience.
Metric 2 – Customer Satisfaction score (CSAT)
A customer satisfaction score (CSAT) is typically calculated by using a scoring system from 1-5, but some companies have also had success with a 1-10 scale. You ask ‘How satisfied were you with…’ and then let them score you for whatever it is you want to know about.
To calculate the CSAT score you simply add up all your positive survey responses (4 or 5 out of 5, or 8, 9, 10 out of 10), divide them by the total responses collected, then multiply by 100%. The outcome leaves you with your overall percentage of satisfied respondents.
Measuring customer experience with CSAT is a very common approach and the question can be asked at multiple stages in the customer lifecycle to help you improve the customer experience.
Metric 3 – Net Promoter Score (NPS)
The net promoter score is generated based on one question which asks customers – “How likely are you to recommend our business or service based on your experience?”. Customers are invited to score from 0-10, with their score indicating how satisfied they feel.
It’s more of a marketing insight tool than a customer satisfaction measurement, but the related behavioural metric of how likely a person is to be either a promoter of your brand or a detractor, is regularly also applied to customer experience. It’s generally viewed as a long-term snapshot of customer loyalty and shouldn’t be used to drive regular tactical changes.
The idea behind NPS is that satisfied customers are more likely to recommend you, and if they scores you an 8, 9 ,or 10 then they are likely to be passionate about their experience with you to be out there actively shouting about how amazing your business is – they are a promoter.
Anyone scoring a 5 or under is someone who is upset enough to be actively talking about their negative experience with you, and therefore they are a detractor. Those in between are passives. They just aren’t talking about you at all.
NPS is calculated by subtracting the % of detractors from the % of promoters (and ignoring the neutral) BUT is not expressed as a % itself. NPS is a number and can be anywhere between -100 and +100.
Creating a positive experience that your customers want to experience again is crucial to attracting potential customers and keeping existing ones, and this metric can be useful to keep in the mix. Just be aware that as a standalone metric you might miss key insights and could end up focusing your attention on the wrong customer issues.
Metric 1 – Revenue Growth
Whilst it is lovely to imagine a world where every business puts their customer first because it’s just the right thing to do – it’s more realistic to acknowledge that businesses exist to make a profit. It’s for that reason that customer experience has historically been overlooked as a crucial spend, pushed to one side in favour of spend on marketing or sales – areas that directly win the business more revenue.
This doesn’t have to be the case…
With statistics indicating that 9 out of 10 businesses actively working on their CX report an increase in revenue, that on average loyal customers spend 67% more than new ones, and that around 90% of unhappy customers will leave a brand without ever telling them why or raising a complaint; it’s clear that a poor customer experience will negatively impact revenue, and a positive one can drastically increase it.
Measuring your revenue growth alongside customer experience projects is a great way to be able to demonstrate the ROI of customer experience, and the success of any activity that’s directly contributed to that revenue growth such as a reduction in refunds due to a reduction in unhappy customers and complaint %.
Metric 2 – Customer Retention Rate / Churn Rate
With an average of 91% of unhappy customers leaving a brand without telling them, raising a complaint, or sharing why they are leaving, retention rates matter and should be measured as standard.
You won’t always recognise when you’ve lost customers to a competitor and you are even less likely to notice if they don’t order from you on a regular basis or use your product in a way that can be tracked (such as the use of debit cards in banking or gym memberships in health and fitness).
It’s advisable to look at consumer spending habits and ensure a red flag is raised if your customer hasn’t spent with you as often or at as high a value as normal. If you can identify that a customer is not just quiet, but has actually left you, then you can find out why and start to fix the issue.
Not only can that lead to you winning them back as a loyal customer, but it can help ensure that any one else who feels the same way but is silently thinking of leaving; doesn’t.
It’s also useful to segment when looking at customer churn rate. For example, if new customers have a higher churn rate than existing, it could indicate an issue with your client onboarding process.
Metric 3 – Average Spend Per Customer
Satisfied customers spend more often and spend more when they do.
It’s a fair assumption that if your average spend per customer is increasing that your customer experience strategy is working. It’s a powerful metric to track, and one that can tell you quickly if customers are starting to cool towards you before they reach the point of getting their coat and leaving.
You can also track your customer lifetime value alongside this if your customer doesn’t need to spend regularly, as long as you understand what ‘normal’ spending looks like for them.
Why would you implement customer metrics?
Without clear metrics (and ideally three complimentary metrics running in tandem) you won’t have a way to measure customer experience or of assessing the impact of any changes you implement.
You’d be left going on gut feeling or assumptions, and a lot of what customer experience as a concept is trying to do, is to remove that element of guesswork.
Removing the assumptions can reduce wasted effort, lead to greater customer loyalty, and ensure your employees are engaged in what you’re doing – because they understand exactly why they need to do it.
Historically, getting budget for customer experience initiatives was a little like pulling teeth – very painful! This doesn’t have to be the case…
You can use metrics like average spend per customer, customer retention, and revenue growth driven by your CX projects to calculate customer lifetime value, prove the return on investment of your CX strategy, and ensure you are allocated the right resources to be able to make a difference with your department and even to drive increased employee engagement.
There is no right or wrong way to measure the success of your CX program and there is no ‘perfect’ customer experience metric.
What’s most important is that you know what good looks like and have a corresponding way to capture customer interactions to give you the data you need to measure your progress.
Setting clear CX metrics for your customer strategy and communicating those to the rest of the business helps to drive engagement, set clear expectations in your team, and enables you to drive change in any areas you identified as potential causes of customer churn.
Whether you are aiming for world class experiences, reducing average resolution time, increasing retention, or you want to increase customer lifetime value – having the metrics in place to ensure you keep up momentum is a must!
Still stuck on where to start with your CX strategy or what CX metrics to use?
Check out our customer impact scorecard to see how your strategy is helping you achieve your goals, and what could be missing!