Did you know that 73 percent of companies with an enhanced customer experience outperform their competitors financially? Yes. It’s that important!
Customer experience is a crucial aspect of every business. Your product, your store experience (whether online or physical), your customer service, every factor of your sales process contributes to customer experience. If the customer does not find the process hassle-free, your customer experience might decline along with your sales.
So, how do you avoid such instances? Well, the answer is measuring customer experience and improving it.
Why Should you Measure Customer Experience?
Whether you’re a multinational or a local startup, customer experience is crucial to the success of your company. Be it a large retail store like AliExpress or a company like Research Prospect that sells a specific service or fast food joint like McDonald’s; measuring customer experience is essential for every company.
Customer experience contributes to your revenue. There are no two ways about it. Customer experience helps build customer loyalty, retention, and satisfaction – all of which are crucial to a company’s sales. Here are some more important reasons to measures customer experience.
Helps Define Priorities
General customer feedback should not be the sole reason for your business decisions. You must make sure that your business decisions are data-driven and that you have a solid reason for them. Customer experience metrics will help you make the right decisions that will be beneficial for your company.
Produces Engaged Employees
Measuring customer experience will help you identify which aspects need to be improved so that you can enhance your sales process. Thus, customer satisfaction will increase, which will ultimately lead to happy, engaged employees. Undoubtedly, none of your employees would like to deal with an unhappy customer.
Gives a Competitive Edge
Even today, many companies do not give importance to customer experience. Thus, you can stay ahead of your competition by measuring your customer experience and work towards improving it.
Important Metrics to Track
Now that we know why measuring customer experience is critical to your business, let’s get down to the main topic – customer experience metrics you should track.
Needless to say, this is not an exhaustive list. These are some of the most important metrics that you should track to understand where your customer experience stands at the moment and how you can improve it. I will also include the formula(e) of each one of these metrics to make it easier for you to track your business’ customer experience.
Net Promoter Score (NPS)
Net promoter score is one of the most widely used metrics when measuring customer experience. This metric is easy to calculate, gives a clear picture of the current customer experience situation, and the responses are easy to gather.
To collect responses, you may run a simple survey which asks, ‘how likely are you to recommend our company/product to your friend, family, or colleague?’ The more people recommend your company/product, the better. You can calculate NPS by subtracting the number of detractors from promoters. The higher the number, the better your customer experience.
Not likely Neutral Extremely likely
Customer Satisfaction (CSAT)
Customer satisfaction, along with NPS, is a widely used customer experience metric. Customer satisfaction is usually measured after customers complete a specific action, such as after receiving customer support, after purchasing a product, etc.
You can measure CSAT by sending your customer this easy survey question:
How would you rate your recent experience with our company?
|How would you rate your recent experience with our company?
From the responses, you can calculate a percentage score. The higher the percentage, the higher the customer satisfaction. Thus, you should always aim to keep CSAT high. In cases where it is low, dive deep into what is causing dissatisfaction and work towards eliminating it.
Customer Effort Score (CES)
Customer effort is a relatively new metric when compared with NPS and CSAT; however, it is easy to use and offers some great insight into brand loyalty. CES gauges how much effort customers have to put in to interact with the brand or purchase a product. The greater the effort, the lower the brand loyalty.
To measure CES, ask a question similar to:
|How was it to interact with our company today?
Based on the responses, you can average out a number and see where your customer experience is now. If a lot of customers responded with difficult or very difficult, this means that the customers had to put in a lot of effort, and you need to work on providing a better and a smooth experience next time.
Customer Lifetime Value (CLV)
Customer lifetime value shows the worth of a customer for your business. CLV is an essential metric to track as it helps you understand how your marketing and customer acquisition investments have paid off. This metric tells companies how much revenue they can expect from a customer to generate over the course of their business relationship. The longer the relationship, the greater the CLV.
You can calculate CLV by using this formula:
Annual Revenue per customer X Customer Relationship in years-Customer Acquisition Cost
Customer Churn Rate
Mostly avoided, churn rate is an essential metric to track when measuring customer experience. This metric represents the number of customers who have stopped using your product/service. Learn this metric as lost business. For instance, if five customers worth $100 business each dropped out this year, this means you lost $500 in sales.
You can use this simple formula to calculate churn rate:
Number of churned customers/Number of total customers
Customer retention helps in understanding how well you are retaining customers over a period of time. This metric is very closely related to the customer churn rate. For instance, if your churn rate is 20% for one year, this means that 80% of your customer stayed with you.
You should make sure to keep your retention rate as high as possible because loyal customers are five times more likely to make a purchase again as compared to new customers.
Average Resolution Time
This metric is beneficial to track the total time it takes for your company to resolve a complaint. As a business owner, your goal should be to keep the average resolution time as low as possible. Customers are happy and satisfied when their issue is resolved in the lowest possible time, which in turn enhances their customer experience.
To calculate the average resolution time:
Total time for resolving tickets/Number of resolved tickets
You’ve Got your CX Results… Now What?
Now that you’ve measured your customer experience and have results to all your desired metrics, what should be your next step? Analysis of your results!
Dive deep into your results and see what is working for your business and what is not. Based on your results, plan and devise a strategy that will help you improve your customer experience and will benefit you in the long term.
However, there is one thing that you should keep in mind. Never base your decisions on a single metric. Measuring CX only on NPS or CSAT or any other metric does not give you a complete picture of your customer experience level. Thus, make sure that you run your performance through all these metrics so that you have a full understanding of the customer experience your business offers.
Also, understand the right time to measure a metric. For instance, you cannot measure CSAT after a customer has visited your store. It is measured only when a customer completes a specific action. Understand when during the customer journey, you should measure the metric. NPS, CES, CSAT are all survey-like metrics and are measured towards the start of the customer journey.
However, CLV, churn rate, retention rate, etc. are long term metrics and are usually measured over a period of time. Not doing so will impact your results and, ultimately, your analysis and decision making.
So, now that you have a better understanding of how you should measure your customer experience and which metrics you should track, get to work, and start measuring!