Blog Customer Experience

6 Important Customer Experience Metrics to Level up Your Game

Mathew Maniyamkott

Mathew Maniyamkott

10 min read

There has never been another time when customer experience had been as important as now. Providing exceptional customer service with no matter the kind of obstacles that you face is imperative. It is impossible to survive without having a customer experience strategy in place. If you cannot keep them happy, satisfied and delighted, they will go to someone who plans to keep them that way.

You will be familiar with Customer Experience Metrics like CSAT, NPS, CES, etc. These metrics can influence your actions based on your goals and you can use it to improve your customer experience.

Customer Experience Metrics can influence your actions based on your goals and you can use it to improve your game.

6 Effective Customer Experience Metrics

Its time to know your customer experience metrics and play alongside it. We have listed out down the 6 important customer experience metrics that you should know.

Customer Experience Metric #1  Net Promoter Score (NPS)

It is one of the most important customer experience metrics because it shows the probability of a customer recommending your product to their friends and family. It is a simple metric to judge for both the customer and the company.

Here is how the NPS question looks like:

“How likely are you to recommend our product to a friend or a family?”

The answers are given based on a scale of 0 to 10 with 10 being the highest. The higher the number, the more likely they are to recommend the business to others.

The respondents are divided into three groups:

Promoters– They respond with a score of 9 or 10. These customers are not only your most loyal customers but also the ones who will promote your brand to everyone with great enthusiasm.

Passives– They respond with a score of 7 or 8. These customers stay with you because you meet their minimum expectations and will churn as soon as they see a better option.

Detractors– Respondents who give you a score between 0 and 6. These customers have had negative experiences with your brand, which is why they say they will not recommend it to anyone else. They will go out of their way to discourage others from buying from you.

One of the biggest advantages of using NPS to measure customer satisfaction is that it is simple. It can be used at all stages of a customer’s journey. It is also an indicator of the company’s overall experience and helps you to segment your customers who will be churning and the ones who are on the verge of leaving you. Even finding out your loyal customers is a huge advantage as you can get them to be a part of your loyalty program to reap greater rewards.

Net Promoter Score = % of Promoters – % of Detractors

Your NPS score can range anywhere from -100 to +100.

Any score above 0 is considered good. But there’s a catch though, your score and its relevance totally depends on the industry that you are in.

Since NPS is a leading indicator of growth, it is a great metric that you can use to learn about customer experience. Use NPS with other metrics to gain insights across various points in the customer journey.

Customer Experience Metric #2  Customer Satisfaction (CSAT)

Customer Satisfaction Score is the most popular transactional metric out there. How? Because it asks a customer who had just completed a transaction of how satisfied they are with it. Since the interaction is fresh in the minds of the customer, they are more likely to give the most accurate representation of what they have in mind. CSAT is highly customizable and flexible according to the needs of the business.

While we would suggest you to keep a simple survey, you can also ask a series of questions and then take an average of the scores to get a final CSAT score. Giving an open-ended question allows your customers to tell you which part they were satisfied or dissatisfied with.

The CSAT question would be like this:

“How would you rate your satisfaction with the services you received?”

Respondents are given the following scale:

  • Very unsatisfied
  • Unsatisfied
  • Neutral
  • Satisfied
  • Very satisfied

The results from different respondents are then averaged to get a composite CSAT score. CSAT scores are expressed as a percentage scale.

CSAT is highly customizable and flexible according to the needs of the business.

CSATs are often used after a customer has an interaction with a live agent. It helps measure the latest interaction your customer had with one of your agents. You can also use it to see if there are employees who need more training on how to handle customers, based on the survey score. CSAT is also great to use especially when you are making incremental changes to your product. Track results using the CSAT score. Ask your customers how they felt before the change and how they feel now. If they feel there is a difference, then send them a question where you ask them an open-ended question.

CSAT, like NPS, is a measure of customer satisfaction. Its effectiveness depends on what you do with the score in your hand. The scores should be used with other research so that you can take effective action to improve the various areas in your business pertaining to customer satisfaction.

Customer Experience Metric #3 Customer Effort Score

It is a purely transactional metric used to measure customer experience and it only assesses the effectiveness of a single solution. In simpler words, it measures how much effort a customer has to exert when they are trying to get an issue solved, get a product purchased, get a reply from a customer service executive, etc. The idea of CES is that customers are more loyal to a business where the service or product is easier to use.

Finding an answer for this metric is pretty simple as it asks a straightforward question and the answer is also simple. Instead of asking a customer how satisfied they are, you ask them to rate the ease of their experience during a particular transaction. You can ask the CES question for different circumstances and across all channels.

Here’s how a CES question will be like:

How easy was it to solve your problem with your company today?

The question is either asked on a 5 or 7 point scale.

CES can be used to track over a period of time and is best for measuring customer loyalty. It is advisable that it be used with NPS as CES alone doesn’t give the full idea of what is happening. Why? CES is based on a single interaction while NPS is all about the overall feeling of your customer towards your brand. If you were to concentrate only on the CES score where someone had one bad incident but is usually fond of the company, then it gives you the wrong picture.

CSAT is highly customizable and flexible according to the needs of the business.

When to use Customer Effort Score?

After an interaction with a customer service agent: Using a CES after an interaction with your support staff is one of the most common places at which it is used.

  • To understand their experience with the product on the whole: Since the question implies an isolated experience, CES is often used to measure issues on the product or level of service.
  • Immediately after taking an action: One of the most common use cases is to send CES surveys immediately after an interaction at a customer touchpoint. It is great at collecting real-time feedback. While CSATs can be used at any point in time and at any given circumstance, it is not the case with CES. It is only used when a customer initiates a specific event.

It is best to send CES surveys only at specific touchpoints. There is no specific score for CES, but a higher score is an indication that you don’t let your customers go through a lot of trouble. A positive CES score means that your customers find the product or service extremely user-friendly.

Customer Experience Metric #4 Customer Churn Rate & Revenue Churn Rate

It is the percentage of customers who stop being your customers or cancel their subscription (if it is a recurring service). It is a measure of how happy and satisfied you keep your customers because the ones who are happy will not leave you while the ones whose expectations are not met will surely leave you. It is the opposite of retention rate.

Churn rate is an important metric for companies that have customers who pay on a recurring basis.

Churn Rate= Number of customers lost in the last quarter/Total number of customers that you started within the last quarter.

Let’s calculate the churn rate for a SaaS company that acquired 1000 customers in the first quarter. The company lost 100 customers because of poor customer experience policies or they found better products that are more suited to their budget. So the churn rate can be calculated by dividing the number of customers lost (100) divided by the 1000 customers who were acquired in the quarter.

So, 100 divided by 1000 is 0.10.

Customer Churn Rate= 10%

You can calculate your churn at different time frames- monthly, quarterly, bi-annually and annually. Calculate churn rate even during specific promotions to measure the success of it. You can also measure churn rate by customer type, subscription plan and the specific stage at which the customer was in the customer journey.

Customer Churn Rate is the percentage of customers who you lost in a period of time. Revenue churn is the percentage of revenue you have lost in a month.

Revenue Churn Rate= (MRR beginning of the month- MRR end of the month)/ MRR beginning of the month.

If your Revenue Churn Rate is negative, it means that you are gaining revenue that month.

Here’s another thing that we would like you to know, Customer Churn is not equal to Revenue Churn. Why? Because there are different lines of products whose prices are not the same. With revenue churn, you will be able to gauge the financial performance of your company while customer churn will help you figure out why customers are leaving.

Customer Experience Metric #5 Customer Lifetime Value

Customer Lifetime Value is the worth of a customer to the business over their entire lifetime. This metric helps brands understand how much money they should invest in marketing, acquisition and customer experience. Each customer’s value is linked to the ROI of the investment in customer experience activities as well as the revenue of the company. While CSAT, NPS and CES are great customer experience metrics to track, if there is one thing that tells the brutal truth, it is the revenue at the end of the day which you get only from calculating CLV. If you spend truckloads of money on customer experience, but you have nothing to show in the revenue front, then you are not helping yourself.

CLV is the best metric that you can use for long-term planning for your business. It helps you identify high-value customers and gives you scope to increase the value of your other customers. Also, CLV is based on legacy data which means that it will help you with planning.  You will know where to invest your precious marketing budget and what are the things you need to boost margins.

When you judge your customer experience through CLV, it helps you find opportunities that can improve your current customer experience strategy. Think of CLV as a diagnostic tool. It provides financial health and the value that a product provides, which are things that can be used for making decisions.

CLV is dependent on the average customer lifespan and the estimate of future profits. Customer lifespan is the amount of time in which a customer purchases from your business. Measuring this will depend on your revenue model. As in, do you have recurring payments made by customers or do you have a one-time fee and yearly upgrades?

If you are a subscription business, then the average customer lifespan is calculated according to the churn rate.

Average customer lifespan= 1/Churn Rate

Next is finding out expected revenue profits. For a subscription-based business, your future revenue depends on how well you decrease the customer churn rate. If your business is in the retail sector where the purchasing decisions do not happen at regular intervals, then you need to approximate the value of your future transactions.

Customer Experience Metric #6  Customer Loyalty

Having loyal customers is incredibly alluring for brands. There is so much that you can do with the help of loyal customers. You can track this metric by measuring how often people return to make another purchase. Loyal customers are always known to come back and purchase from you again because they liked the experience of buying from you and they are also satisfied with the product. In this time and age when there are a million brands vying for the attention of the users, finding loyal customers can be a game-changer for your business.

Also, getting a new customer is 3-4x costlier than keeping an existing customer. Your old customers who are satisfied with you will be more than happy to pay a premium for your products. They will be easier to close when you try to upsell or cross-sell your products.

Having a customer loyalty plan in place will help your case too if you are bent on improving the existing relationship with your customer and not just to include them into something to make it look exclusive. Maybe there were times when you could buy the loyalty of your customers with freebies, discounts, incentives, and so on. While customers are not averse to the concept of getting incentives, it takes much more than that to get repeat purchases from them these days. Today’s customers are driven by what is relevant to them. They want highly personalized products and are not shy about asking it from you.

Getting a new customer is 3-4x costlier than keeping an existing customer.

The only way you can deliver personalized products is when you use data-driven technology to drive your loyalty platform. Some of the most powerful loyalty programs in the world today thrive because they offer extra value to their customers by finding data on an individual level, understanding motivations, behaviours, triggers, and so on.

Instead of having stand-alone loyalty programs, create ones that can be used to enhance the customer experience. Create loyalty programs within the context of the user journey. Include free consultation time, discounts, personalized offers, incentives at specific touchpoints, and so on. It is all about sending relevant messages to your customers based on the data that you have.

Conclusion

Do you have to measure all these metrics? Of course not. All you need to do is find out which ones are the most relevant to you. Lumoa’s State of Customer Experience Report says that companies measure 2.5 customer experience related KPIs on average. For your business, find out what are the most relevant business KPIs, based on this, you can find the customer experience KPIs. Here are some of the other customer experience metrics that you can take into consideration as well: Social Listening, Referral Rate, Cart Abandonment Rate, Stock Price, Task Completion, Churn Rate, First Contact Resolution, etc.

Strong customer experiences are driven by having a close relationship with your customers and understanding them after a series of deliberations. If you don’t take key customer experience metrics into contention, then you wouldn’t be able to get the full picture of the progress that you make in the game.

Remember that there is no single metric which will define your company’s customer experience success. There are a lot of variables involved which will help you draw actionable insights. Don’t rely just on these actionable customer experience metrics, make sure that you combine them with human insights that will give you a view of your customer journey and the steps that you can take to improve it.

Mathew Maniyamkott
Mathew Maniyamkott

Guest Blogger at SurveySparrow

Regular contributor to various magazines. Passionate about entrepreneurship, startups, marketing, and productivity.

Leave us your email.
We won't spam. Promise!

You Might Also Like:
Everything about delighting customers.
You’ll find them here.