Customer experience metrics are techniques you can use to monitor and evaluate customer interaction with your company. These interactions may not lead to a final purchase, but are still important for creating a positive brand image for the company. In order to create an optimal customer experience, its interdependence with the company’s operations must be understood. Generally speaking, customer experience depends on the following: market research, integrated sales & marketing, CRM, employees skills, innovation, and corporate culture & leadership.
In order to assess the state of the business areas listed above and to conclude its impact on the customer experience, several techniques must be taken into account. We offer five metrics that provide consumer experience insights and a rounded picture when evaluated together.
The 5 Customer Experience Metrics
1. NET Promoter Score (NPS)
Net Promoter Score (NPS) is the first of customer experience metrics. It is measured through challenging customers to rate how likely they are to recommend your product or service to others on a scale of 0-10. This technique works as a predictor for business growth.
Your customers will only recommend your product or service provider to their households, friends or colleagues if they are confident that the customer experience is right. On the other hand, your customers will also send you terrible experiences, which are likely to be more important than high-quality ones. The higher the NPS measure, the healthier the relationship is with customers who feed word of mouth and create a positive cycle of growth.
The final NPS value is obtained by the following calculation:
NPS = promoters (%) – detractors (%)
- Promoters are customers who recommend the product with a rating of 9-10. These are the company’s most loyal customers.
- Detractors are those who recommend the product with a rating of 0-6. These customers are unlikely to make subsequent purchases with the company, so they cannot be its ambassadors.
- Passives are customers who recommend the product with points 6–9. These customers don’t make or break a business. This customer group is excluded from the NPS calculation.
2. Customer Retention Rate
Customer retention rate is the percentage of current customers who continue interacting with your company after certain period of time. This metric can show you the need for improvements in your company.
The final customer retention rate consists of three measures:
- Customer count at the beginning of the time period
- Customer count at the end of the time period
- New customer count acquired during the time period
The counts above should be then inserted to the following calculation:
Customer Retention Rate = ((ending customer count – new customer count) / beginning customer count) x 100%
3. Customer Satisfaction Score (CSAT)
Customer experience metrics include one more simple but effective metric – customer satisfaction score (CSAT). It means that customers are given the opportunity to rate their satisfaction on a scale of 1-5.
- Very unsatisfied
- Very satisfied
The actual CSAT value is obtained by calculating the percentage of customers who rate their satisfaction with a rating of 4-5.
CSAT = ((customer count with scores 4 and 5 / total customer count) x 100%
Measuring customer satisfaction helps to analyze the results of the customer retention rate.
4. Customer Effort Score (CES)
Customer effort score (CES) is a measure that analyzes how much effort a customer puts into interacting with a company. This interaction may be making requests, resolving issues, purchasing products, or returning products. Generally ,this metric answers the question: “how easy it is to interact with a company?”. The easier is the interaction, the more loyal customers become.
Usually CES is approached on a 7-point scale. The value of CES is calculated taking into account customers who have evaluated the dexterity to interact with the company with a grade of 5-7. The calculation is the following:
CES = ((Customer count with 5-7 grades / total customer count) x 100%
The ways to improve CES include: providing various communication channels for interaction, utilizing self-service tools, and reducing wait times.
5. Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) is one more of customer experience metrics that evaluates the total net profit a company can expect to receive from a customer throughout their interaction. It takes customer’s initial purchases, repeat purchases and the average length of interaction into consideration. A higher CLV level ultimately makes companies more profitable.
CLV is a good representation of customer loyalty. It shows you how long your customers are typically interacting with your company. Knowing the results of CLV is beneficial for the following decision-making areas:
- How much is it optimal to spend on new customer acquisition?
- What are the most wanted and hence profitable products purchased by the high-value customers?
- Which customer segments are the most profitable?
The higher the value of CLV, the more capital can be invested in acquiring new customers, developing new products, and optimizing communications. A high CLV means that the strategies currently in use, including the marketing strategy, are working. The company can only continue to implement them. CLV level can be improved through:
- Making it easier to return items.
- Making the most loyal customers exceptional with a help of discounts etc.
- Creating a loyalty program.
- Implementing upselling practices
Responding to Customer Experience Metrics
As we stated at the beginning, each of the customer experience metrics above provides a unique view. Although the parameter captures the ride given by the customer in a certain time, it inevitably also reflects previous experiences.
Customer Experience Metrics And Profitability
The best way to use consumer devices is to constantly sift through a few gauges for a while. These can be tracking the consumer journey from more than one perspective. In the long run, this process can help the company get a complete picture.