To figure out where you’re going, you first need to know where you are. For businesses that aspire to be more customer-centric, that means customer experience metrics are taking on a bigger role.
More companies are investing increasing resources into their customer experience. A great customer experience drives customer loyalty, which in turn brings a lower sensitivity to price and higher revenues for your business. According to data from PwC, companies with a strong customer experience can charge a premium of up to 16% on their products and services.
That’s why getting a clear view of your customer experience is essential. But there are so many CX metrics to choose from, and just as many opinions on which is the best topline metric to organize your efforts around—to say nothing of which metrics you have the capacity to track.
So, how do you know which customer experience metric makes the most sense for your business?
Choosing customer experience metrics.
Deciding to measure customer experience is just the first step in a much more involved process. A wide variety of metrics exist, each of which measures one particular aspect related to the complex idea of “customer experience.”
Choosing a topline metric, or a few, and deciding on the right mix of data to track requires forethought, testing, and a clear understanding of your goals. Which metrics will help you achieve them? Which are feasible for you to measure, and which can you actually act on?
Align your metrics with business goals.
It’s easy to jump at implementing Net Promoter Score, for example, as your topline metric, because other businesses rely on it. But it’s important to assess whether NPS aligns with your business goals, and whether the drivers of improved NPS are desirable for your business.
NPS asks customers the question, “How likely are you to recommend us to someone?” This question rests on a lot of assumptions about the customer: that they discuss your industry with friends or colleagues; that they make a habit of recommending businesses; that they recommend based on the quality of their experience.
Maxie Schmidt at Forrester points out the experience of one firm, which found that their promoters—customers who responded that they were likely to recommend the business—usually had received steep discounts on the product.
If your goal is to increase brand awareness, that might work for you! But if your company’s goal is to grow revenue, then another metric might be a better match.
Identify your drivers, and make sure they’re actionable.
It’s no use holding up a particular metric as a yardstick for your organization without connecting it to the daily choices you make. Vague efforts at “change,” without any sense of control or ownership over the results, just produces discouragement and burnout.
For example, let’s say you’ve identified a metric, one that corresponds to the business outcomes you want to achieve. Your business’s data shows that as your customer satisfaction (CSAT) score increases—for example—your revenue goes up.
Now, the task is to identify the drivers of CSAT within your business. Get granular—which behaviors or policies cause a change in CSAT? It could be the responsiveness of the customer service team, or a branding choice to be more vocal about inclusion, or any combination of factors.
When you’ve identified your drivers, you can plan for how to monitor and incentivize them. The best customer experience metrics are the ones you can act on. If you don’t have the infrastructure to monitor your service team’s first response time (FTR), then knowing its effect on your CSAT doesn’t help you in the short run. However, it can certainly help define your longer-term CX strategy.
Embrace multiple metrics for a more complete picture.
A single overarching metric is useful for communicating—with customers, with leadership, with the company as a whole. If it’s a metric that your employees can feel connected to, it provides a motivator and a rallying point.
But any customer experience measurement will have its advantages—and its limitations. Relying too heavily on a single topline metric puts you at risk of missing the forest for the trees.
Tracking a variety of CX metrics helps you keep an eye on the bigger picture. Customer experience outcomes depend on many different but interconnected factors. Monitoring a range of metrics lets you visualize what you’re doing well, and where you might need work.
That way, you can apply resources where they’ll do the most good—whether that’s hiring additional service representatives, or enhancing the employee experience.
Where to find your customer experience metrics.
Customer experience metrics are a summary of what your customers say or do in response to their interactions with your business. Depending on the scale of your business, that could be a huge amount of data, and it comes from several different sources.
A metric is only valuable to you if you can actually track it, and then act on the results. Different sources of customer information require different types of infrastructure to tap into. The metrics that make the most sense for your business will be the ones that you have the data to support.
Some information is simpler than others to collect. Your existing financial records can already tell you a lot about the behavior of your customers. Solicited feedback, like surveys, adds even more information. And if you have the resources to analyze the less-formal conversations happening on social media and in product reviews, you can gather some really nuanced insights.
With all the data available to businesses these days, there are myriad ways to slice and dice it. We don’t have the space to go into every possible CX metric here. But whether you’re just beginning your dive into customer experience strategy, or you’re looking to level up, these are some of the metrics you should experiment with.
Information you already have.
You can learn a lot about your customers’ relationship with your business using the information you already have about their purchasing history. And in fact, several commonly-used CX metrics are based on exactly that.
These metrics largely focus on customer tenure, repeat purchasing, and lifetime value. That is, they focus on the amount and consistency of the customer’s financial investment in your business:
- Customer churn rate: Churn rate and its counterpart, retention rate, are the measure of how many customers stop doing business with you over a given period. Whether they fail to renew a subscription to your service or stop buying your product regularly, a jump in churn rate can indicate dissatisfaction with some element of the customer experience.
- Customer lifetime value: The total value of a customer to your business, over the length of the relationship. Lifetime value captures expressions of customer loyalty like repeat or frequent purchases, and larger or higher-volume purchases. It can also indirectly measure the opposite. Depending on the formula your business uses, expensive customer acquisition or retention, high return rates, and other costs can lower your CLV.
What your customers tell you.
Surveys may be the first thing that comes to mind when you consider customer experience metrics. That’s true for many businesses. What better way to gather information on the customer experience than by asking customers outright?
Many of the best-known CX metrics are survey-based:
- Customer satisfaction (CSAT): This is one of the most straightforward and frequently-used CX metrics. It’s rooted in a single question, usually a variation on: “How satisfied were you with your experience?” Customers give responses on a scale from 1-3, 1-5, or something similar. It’s a direct, no-nonsense way to gauge whether you are meeting customer expectations.
- Net Promoter Score (NPS): Like CSAT, NPS asks your customers one straightforward question: “How likely are you to recommend us to a friend or colleague?” This not only gives you a measure of the customer’s experience with your business. It also gives you a sense of how inspired your customers are to advocate on your behalf.
- Customer effort score (CES): The key prompt for this metric is along the lines of: “How easy was it to resolve your question with [Company] today?” Friction in interacting with a business is one of the biggest obstacles to customer retention. When the process is smooth and the business is responsive, customers are far more likely to return. And that makes other CX metrics go up accordingly.
What your customers are saying elsewhere.
Your customers can speak directly to you, via their dollars and your surveys. But they also talk about you, to each other and to their networks, online. Social media and product reviews contain tons of valuable customer experience insights for businesses who know how to extract them. The best way to do that is with a strong social listening strategy.
There are a variety of platforms available that can form the foundation for a company’s social listening strategy. They are usually purpose-built to manage and track social media across multiple channels, and may incorporate AI to collect and analyze the sheer volume of data available.
Purchasing history and surveys tell you what customers do and what they say. These less formal, less structured channels can give you a better picture of how your customers feel:
- Customer sentiment: Can be calculated manually, but at larger scales, might be a better job for AI. Customer sentiment is the sum of all of the mentions of your company on social media, weighted by whether they are positive, negative, or neutral. With it, you can get a sense for how the conversation about your business is trending.
- Customer engagement: Measured in a variety of ways, customer engagement tells you how invested in your content customers are. Likes, replies, comments, and scroll depth all capture the energy that customers are putting into your online presence, and can be a good gauge of customer loyalty.
Measuring the customer experience is an investment.
Customer experience metrics provide the greatest value to your business when you can approach them with a plan.
Knowing your goals and current capabilities, and tailoring your metrics to match them, will give you insights that you’re in a good position to act on. And as with any strategy, you can reassess what’s right for you as your business grows.
You may also like:
- The most important product-market fit metrics
- Product-market fit best practices
- Product-market fit research: Getting started
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