“The customer is still king, and in the tech-driven experiential age, Customer Experience—not service—is the king-maker.”
~ Richard Shapiro, Founder of The Center for Client Retention
Six Critical Customer Experience KPIs
The ultimate goal of most data-driven marketers is to continuously improve their customer experience (CX), which leads to increased sales, loyalty, profitability, growth, etc. To keep tabs on your progress to better and better CX, there are a few KPIs you will want to track via your marketing/data dashboard:
1. Net Promoter Score (NPS)
The NPS measures the loyalty of your customer relationships and general customer satisfaction by asking customers how likely they are to recommend your products/services to a colleague. Customers who rank your company as a nine or 10 are known as promoters. These are the people who will keep buying and recommend you to others. Customers that rank your company as a seven or eight are satisfied, but at risk for leaving you for a competitor’s offerings. Customers who rank your brand anywhere from zero to six are unhappy and have the potential to damage your reputation and growth potential through social media and word-of-mouth. Researchers at Bain & Company found that: “Companies that achieve long-term profitable growth have Net Promoter Scores (NPS) two times higher than the average company.”
2. Customer Satisfaction (CSAT)
A CSAT is obtained through customer satisfaction surveys and typically features a variety of custom questions specific to your product or service. It is ideal for gaining insights into the strengths and weaknesses of your CX. CSAT results are often skewed by the fact that surveys typically appeal to either highly satisfied or highly dissatisfied customers, so they are not a good indicator for loyalty or growth.
3. Churn Rate
This KPI measures the percent of customers that quit your products/services over a specific period of time. If your annual churn rate is 7 percent or higher, this is an indication that your customer service strategy needs an overhaul. Low customer churn percentages directly correlate with increased revenue, referrals, upsells and customer lifetime values.
4. Customer Retention Rate
This metric measures the percent of customers that remain with your products/services over a specific period of time. It can be used to measure customer loyalty, but is also a good indicator of a company’s future growth. Companies that pay attention to this KPI are aware that long-term customers have greater value and cost seven times less to retain than acquiring new customers.
5. Customer Lifetime Value (CLV)
The CLV measures the total revenue a company can expect from a customer and compares it to the typical span of time a customer remains with a company. CLVs are often used to measure a company’s growth and project future revenue. CLVs also help marketing departments to identify and target the customers most likely to deliver the greatest value. There are a variety of ways to measure CLV, but the most common is to subtract the cost per acquisition (CPA) and the Cost to Serve (CTS) customers from the revenue you earn from them.
6. Customer Effort Score (CES)
The CES measures how easy customers find it to do business with you. It is typically collected through short surveys in which customers rank the ease on a five-point scale. This metric has grown in popularity over the years due to a cultural shift in which people are not as wowed by attentive customer service as they are by a seamless, friction-free CX. Essentially, customers want to get what they want, now, and with as little effort on their part as possible. Research has shown that companies that focus on minimizing the efforts customers make in doing business with them can significantly increase the loyalty of their customers.
Benefits of Great CX
- Companies that prioritize CX generate 60% higher profits than competitors.
- A commitment to CX typically yields a 25% increase in customer retention.
- A 5% increase in customer retention can increase profits by 25% to 125%.
- By 2020, CX will overtake price and product as the key brand differentiator.
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