When it comes to business success, perhaps no metric is more important than the happiness of customers. In fact, customer experience now ranks higher than price and product as a key brand differentiator. About 73% of consumers rely on experience first when making purchase decisions (PwC). Research also shows that more than two-thirds of customers will pay more for a better experience (Salesforce).
The data illustrates a key point: a customer experience strategy is not a “nice-to-have,” but a “must-have” for company success.
We’ve all heard the business phrase, “What gets measured, gets managed.” But how do you measure customer experience across an entire population? Far too many companies think a simple customer satisfaction questionnaire does the job. It doesn’t. Customer experience (CX) is not about one touchpoint. CX comprises the entire customer journey with a brand. That requires a series of important customer experience metrics working together to help companies understand their customers and how to serve them better.
Why Does Customer Experience Measurement Matter?
When a company measures customer experience effectively, it produces valuable insights to drive decision-making. The data can improve products and services, direct marketing messaging, and identify operational challenges. Consider three primary ways businesses benefit from customer experience measurement:
Defines company priorities
Every company has limits on time, money, and resources. Customer experience metrics provide guidance on which opportunities are important. By prioritizing what matters most to customers, companies can align their resources with the initiatives able to drive the greatest return on investment. Will customers like a digital self-service option? What features should a new product offer? Why aren’t customers making repeat purchases? Answering questions like these helps a business allocate its resources correctly to benefit the bottom line. Reliable customer metrics take the guesswork out of deciding what is best for the business.
Drives sales initiatives
Customer experience measurement plays a key role in sales strategy. In fact, satisfied customers become extensions of the sales team. Customer experience impacts customer acquisition. Companies that develop strong customer relationships drive loyalty and customer satisfaction. In turn, these customers amplify the brand. They share their experiences with friends and family. They talk about the brand on social media. They provide product and service references. Research shows that 92% of the population trusts peer recommendations over advertising. That makes customer experience a valuable sales investment.
Customer experience metrics also provide valuable competitive intelligence. Gathering customer thoughts on product performance versus a competitor’s or gauging reputation translates into compelling sales solutions. Ultimately, measuring customer experience and acting on the metrics can lead to shorter sales cycles and higher close rates.
A focus on customer experience helps engage a company’s workforce. A goal of improving customer satisfaction and loyalty is one every employee can rally around. People want to work on purpose-driven, feel-good objectives. Few things in business feel better than making people happy. Companies are more likely to attract and retain talent when the company has a positive customer reputation. Plus, satisfied customers make an employee’s job more enjoyable. In turn, happy and engaged employees are more successful in creating positive customer experiences. Therefore, measuring customer experience not only drives the employee experience, but also serves as a key retention indicator.
How Do You Make Customer Experience Measurement Meaningful?
Customer-centric companies welcome customer feedback in all forms because the data holds the potential to inform every aspect of the business. However, not all data is created equal—and neither are the methods for collecting it. Sending too many surveys, asking bad questions, and tracking the wrong metrics can undermine even the best customer relationships. Driving impact and value through customer experience measurement stems from three core elements:
Focusing on the Full Customer Experience Journey
Customer experience represents a collection of touchpoints across the customer journey with a company or brand. Businesses often make the mistake of isolating individual transactions or touchpoints to assess a customer’s satisfaction. How easily did the sales team close the deal? How happy is the customer with the product? Did our service team resolve the customer’s problem to their satisfaction? These represent valuable questions but lose sight of the forest for the trees. A transactional focus creates siloes that fail to answer the most important question: What is our customer’s end-to-end experience?
Only by looking at every touchpoint across a customer journey can a company identify and make meaningful improvements.
Consider a company experiencing a high customer churn rate. To combat poor customer retention, the company tried expensive strategies like discounts and free service plan extensions. Yet the company kept losing customers to the competition. Finally, leaders looked inward to their customer experience. Despite having strong satisfaction scores across their call centers and website, they found customers were leaving because of multiple poor service touchpoints. The metrics measured individual touchpoints rather than the customer’s collective interactions with the company over time. The data was accurate but applied incorrectly. By looking at the entire customer journey, leaders found a new path forward.
Operationalizing Customer Experience Data
What customers think and feel means far more when applied to the operations of a business. Companies new to customer experience measurement often gather customer feedback first and then apply it to business operations. A more effective method is starting with the operational metrics a company values and then collecting experience data that can guide improvements. Starting with operational data makes determining the most valuable experience data easier. The exercise helps companies gain a better understanding of the customer experience as it applies to how a business operates. Combining both sides brings context and clarity to the data for better decision-making.
Let’s say an e-commerce company is experiencing low widget sales. The operational data shows two concerning issues: 1) declining repeat sales, and 2) increasing customer returns. By applying experience data, the company learns that a change in its website makes ordering more difficult. Online review and survey feedback analytics show customers are returning the widget with the reason “product not as described.” A deeper dive unveils marketing department language does not match the product’s current features. By aligning the operational and experience data, the company generated action items for quickly resolving its poor sales metrics.
Building a Customer-Centric Corporate Culture
Customer experience metrics offer countless meaningful insights. Once companies have the right customer experience data, they must determine what to do with it. Prioritizing the most valuable information and acting on it is essential. That takes buy-in from every level of the company.
- Executive Level – This group of leaders set the tone for the company. It is here that a company becomes dedicated to customer success through its values and priorities. An organization-wide focus on customer experience metrics starts at the top. This group particularly values experience data connected to high-level business metrics like reputation, revenue, and share price.
- Middle-Management Level – The middle leadership levels set the strategy. This group addresses systemic problems, improves internal quality, and modifies processes using a customer-centric mindset. CX metrics that resonate with this group help identify operational inefficiencies, process improvements, and training opportunities.
- Frontline Level – Frontline employees serve as the face of the company. They execute on a company’s customer-centric strategy through real-time customer interactions. This level also provides valuable information for ongoing customer experience improvements. Frontline employees value experience metrics regarding adherence to service-level agreements, resolution times, net promoter score (NPS), customer satisfaction, and loyalty.
What Are the Most Important Customer Experience Metrics?
A wealth of customer experience measurements exist. Every measurement provides different insights across the customer journey. But just because you can measure something does not mean you should. Limit customer satisfaction metrics to those most relevant to your business goals. Do not waste time gathering feedback without an intended purpose. Customers are busy and so are you. Keep in mind that a surefire way to frustrate customers is asking for feedback and not acting on it.
Following are common tools to measure customer experience. Find the ones that work best for you—and your customer.
Net Promoter Score
Most companies consider Net Promoter Score (NPS) the king of CX metrics. About two-thirds of the world’s biggest brands from Apple to IBM use the measurement. NPS measures customer loyalty to an organization. Businesses gravitate to NPS for its simplicity. Net Promoter Score is easy for a customer to answer and an organization to track. NPS generally comes from one straightforward question: “On a scale of zero to 10, how likely are you to recommend our [product/service/company] to a friend?”
Organizations measure NPS by subtracting the percentage of detractors from the percentage of promoters among the entire survey group.
Novice and advanced businesses alike use NPS as a valuable customer experience measurement. The metric has become an industry standard. NPS offers an easy way to get a big-picture view of the success of the customer experience, correlates to future revenue performance, and gauges the power of word-of-mouth marketing strategies.
Organizations use customer satisfaction (CSAT) scores to understand how satisfied customers are following key touchpoints along the customer journey. Like NPS, the metric is a company favorite for its simplicity and speed. A common CSAT question is: “How would you rate your overall satisfaction with the [goods/service] you received?” Respondents typically use a five-point scale with answers ranging from “very unsatisfied” to “very satisfied.” Another example comes from review websites like Google and Yelp that use the five-star method to measure CSAT scores.
Companies calculate CSAT scores in percentages. The higher the percentage, the more satisfied the customer. Most CSAT questions immediately follow a customer interaction. Think of CSAT as a “right away” metric to gauge the success of a specific interaction rather than an ongoing customer relationship. CSAT questions often appear following a call to a contact center, a visit to a website, or a few days after a purchase. Each business unit may track a different satisfaction score as it applies to their function within the company.
Customer Effort Score
Customer Effort Score (CES) rounds out the “big three” most popular customer experience metrics. CES measures how much effort a customer must exert to achieve a goal such as making a purchase or getting a question answered. The premise behind CES is that customers become more loyal to easy-to-use products and services. Research shows customers with a poor experience are less likely to buy and more likely to share their negative review. That makes CES a good indicator of customer churn. Like NPS and CSAT, the typical CES survey question is straightforward: “On a scale of ‘very easy’ to ‘very difficult,’ how easy was it to interact with our company today?”
CES offers a simple way to collect customer feedback, easily applies to multiple channels, and is trackable over time. Customer effort score is best used in tandem with NPS to gain a more complete picture of a customer’s loyalty.
Customer churn rate measures how many customers stop doing business with a company over time. The metric calculates the number of lost clients as a percentage of a customer population during a defined period. Cable and telecommunication providers notoriously experience a high churn rate. For most companies, retaining a customer is significantly cheaper than attracting a new one. That makes customer churn rate an important metric for tracking profits and projecting growth.
The twin customer experience metric to churn rate is customer retention rate. This metric tracks the percentage of customers who stay active with a company after a given time period (not including new customers acquired). If churn rate is 10%, then retention rate should be 90%. Customer retention helps a company track how well it does in getting customers to stick around. Strong retention rates correlate to more repurchases, referrals, and opportunities for cross-sells and upsells.
Customer Lifetime Value
Customer lifetime value (CLV) measures the worth of a customer across their entire relationship with a company. Unlike NPS and CSAT, which serve as indirect revenue predictors, CLV has a direct link to financial performance. CLV offers a powerful tool for monitoring multi-year customer relationships. The metric measures the revenue at each touchpoint in the customer journey and adds the numbers together over the predicted lifetime of the customer. Companies use CLV as an early indicator of customer attrition.
Customer engagement score looks at how actively customers use a company’s products and services. The metric takes various usage data to calculate a comprehensive engagement number. The higher the score, the more likely a customer is to renew, upgrade, or purchase additional products. Engagement scores also are great for businesses offering free trials because they estimate likelihood of earning the sale.
Customer Loyalty Index
NPS helps determine if a customer is loyal. The customer loyalty index (CLI) looks at how loyal the customer is. The metric goes beyond NPS by asking related questions that account for repeat and multiple purchases. CLI does a good job of gauging what a customer will do in the future. CLI pairs well with CLV for a forward-looking customer picture.
First Contact Resolution
Common in call centers, first contact resolution measures the number of customer support requests resolved during the first interaction. Remember, customers become more loyal when their experience is easy. Churn rate increases when the customer journey requires multiple attempts to resolve an issue.
Average Resolution Time
Average resolution time often pairs with first contact resolution. In addition to wanting to address customer requests during the first contact, average resolution time calculates how long it takes for an agent to resolve the issue. Between the two metrics, companies should strive for quick and complete.
Visitor intent looks at why a customer performed a certain action along the journey. Informational intent occurs when a visitor wants to learn something. Transactional intent happens when a visitor wants to accomplish something. Visitor intent is a more subjective metric with the goal of gaining a window into the visitor’s mind. Many visitor intent surveys begin with “Which option best describes your reason for visiting today?”
Task completion examines how easy it is for a visitor or customer to complete their goal on the first attempt. As an example, let’s say a customer wanted to book an appointment through a company’s website. Task completion looks at how many customers successfully completed that transaction.
Referral rate calculates the number of referred purchases as a percentage of the total purchases. High NPS scores should correlate to strong referral rates. Good referral rates are great for companies because they indicate that their customers are taking on some of the work of sales and marketing.
Cart Abandonment Rate
Cart abandonment rate tracks how many online shoppers leave their digital shopping carts without making a purchase. According to Shopify, nearly 70% of shoppers abandon their carts. High abandonment rates can be indicators of price problems, superior competitor products, or a poor buying experience.
Social listening works to understand online conversations surrounding a company or brand, as well as its products and services. Social listening helps businesses learn what their customers are feeling, thinking, and wanting from the organization in real time through social media.
Measure What Matters
At Walker, we empower companies with customer experience data that drives decision-making. We are a Qualtrics-certified full-service Experience Management (XM) firm. Our team of experts provides technology implementation, end-to-end managed services, and expert strategic consulting so you can deliver best-in-class experiences to your customers.
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