Businesses strive to leave a lasting impression on their customers. But why is there a strong focus on this?
According to HubSpot, 93% of customers are likely to make repeat purchases from companies that provide excellent customer service. Additionally, almost 60% of consumers believe that exceptional service is crucial for brand loyalty.
This is why tracking customer experience metrics is essential—without them, how would a company gauge its performance? This article explores customer experience (CX) metrics you need to know.
What Are Customer Experience Metrics?
Customer experience metrics are quantifiable indicators that reflect a customer’s interaction with a product, service, or brand. These metrics are crucial as they reveal customer satisfaction, loyalty, and areas needing improvement.
Poor customer experiences have led 49% of consumers to abandon a brand in the past year, highlighting the importance of CX. Companies that prioritize customer service often see a 3.5-fold increase in revenue.
To improve, companies must track key metrics to understand if customers have positive or negative experiences.
Key Customer Experience Metrics/KPIs
Here are the essential metrics to provide a comprehensive view of customer experience:
Customer Satisfaction Score (CSAT)
CSAT measures user satisfaction with products, websites, or services. A typical CSAT survey asks, "How satisfied were you with [product/website] today?" Ratings range from 1 (very dissatisfied) to 5 (very satisfied).
How to Calculate CSAT:
Add the number of 4 and 5 ratings.
Divide by the total responses.
Multiply by 100.
Customer Effort Score (CES)
CES assesses how much effort a customer expends to complete an action, such as making a purchase or finding information. The scale ranges from 1 (very difficult) to 5 or 7 (very easy).
How to Calculate CES:
Ask, "How easy was it for you to [insert action]?" after key actions like purchases or support interactions.
A high CES indicates ease, while a low score suggests difficulty.
Net Promoter Score (NPS)
NPS measures customer loyalty and satisfaction, asking customers how likely they are to recommend your product or service on a scale of 0 to 10.
How to Calculate NPS:
Subtract the percentage of detractors (0–6) from promoters (9–10).
Scores can range from -100 to +100, with higher scores indicating higher loyalty.
Customer Churn and Retention
Customer churn rate tracks the percentage of customers who stop using your product, while retention measures your ability to keep customers. Lower churn and higher retention are crucial as acquiring new customers is costly.
How to Calculate Churn and Retention:
For SaaS/subscriptions: Divide cancellations by the starting number of customers.
For e-commerce: Use cohort analysis to track repeat purchases over time.
First Response Time (FRT)
FRT measures the average time it takes for customer service to respond to an issue, expressed in days or hours.
How to Calculate FRT:
Sum all initial response times.
Divide by the total number of customer complaints.
Average Resolution Time (ART)
ART calculates the time taken to resolve support requests, expressed in days or hours.
How to Calculate ART:
Add the duration of all customer interactions.
Divide by the total number of tickets or interactions.
Customer Lifetime Value (LTV)
LTV estimates the average revenue a customer generates over time.
How to Calculate LTV:
For SaaS: Divide monthly recurring revenue by the number of accounts, then divide by the churn rate.
For e-commerce: Multiply the average order value by purchase frequency and customer lifespan.
LTV is not only a revenue metric but also reflects customer loyalty and satisfaction. Happier customers contribute to higher LTV and revenue.
Managing Customer Experience Metrics
Effective management of customer experience metrics involves selecting relevant metrics that align with business goals and building a dashboard to monitor them. Best practices include ensuring data accuracy, setting benchmarks, and linking metrics to actionable insights.
Utilize a variety of metrics to gain a holistic view of the customer experience and continuously monitor and improve based on the data.
Enhancing Customer Experience
The focus should not only be on selecting the right metrics but also on implementing changes based on customer feedback. Studies show that 86% of customers leave a brand after two negative experiences. Therefore, prioritize actionable insights to improve the customer experience.
Select metrics that provide actionable data and drive improvements to ensure a strong, positive customer experience.
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