How to effectively measure customer experience

In a competitive marketplace, businesses know that delighting customers with excellent customer experience (CX) is invaluable. They know, too, that investing in customer experience delivers even greater returns. But, what are the measures for customer experience? How can a business quantify its efforts to understand what’s working, and even more importantly… what’s not?

In this article, we’ll explore strategies for measuring customer experience. As CX experts, we know that too many businesses assume their customers are satisfied and are missing out on the insights and feedback to provide continuous improvement.

Our Top 5 Customer Experience Metrics

1. Net Promoter Score or (NPS)

NPS is a customer satisfaction metric that measures how likely your customers are to recommend your business to others. It stands out as one of the most popular Customer Experience metrics because it gauges a customer’s overall sentiment towards a brand– rather than focusing on specific products or services.

To calculate NPS, you begin by asking your customers a straightforward question: “On a scale of 1 to 10, how likely are you to recommend the business to a friend, family member, or colleague?” Then, you categorise responses into three groups: Detractors (0-6), Passives (7-8), and Promoters (9-10).

Finally, the NPS result is determined by subtracting the percentage of detractors from the percentage of promoters. A high NPS score indicates customers are genuinely satisfied. A high “passive audience”, however, suggests customers may not be fully satisfied, but there are ways to convert them into enthusiastic promoters.

With NPS, timing is EVERYTHING. An NPS survey needs to happen after a customer journey is complete, to be most effective – to capture a customer’s experience, the entire experience has to be taken into account.

That said, because NPS is a more general measure, it certainly shouldn’t be the only one employed. There are several other metrics that provide deeper insights for adjusting and focusing CX efforts.

2. Customer Satisfaction (CSAT)

A vital CX metric that measures the level of… you guessed it… satisfaction a customer has with a business’s products and services. The CSAT score is, again, survey-based like NPS and poses the question of “How satisfied are you with our product/service?”

Unlike NPS, CSAT provides insight on a product and/or service, rather than an overall brand “experience”. A survey can be offered after any significant touchpoint in a customer journey, and different industries have different benchmarks for what constitutes a “good” score. In general, a customer satisfaction score of 75% and above serves as a positive indicator of overall customer satisfaction.

3. Customer Effort Score (CES)

A metric that focuses on the ease (or difficulty) a customer has when interacting with a brand, whether that be via a service or a product: How long did it take for you to set up your account? Did you find our services easy to use? Did you find our product easy to assemble? Or, any other industry-specific question that’s centred on customer ease.

Responses are typically: Very Difficult, Difficult, Neither, Easy, and Very Easy. Generally, each response is given a numerical value, and the CES score is then calculated as the total score divided by the number of respondents.

The CES metric offers a straightforward approach to pinpoint potential customer churn, remove obstacles in the customer journey, and ultimately improve the overall customer experience. A

Gartner report states: “94% of customers with low-effort interactions plan to repurchase in comparison to 4% who experienced high effort scores.”

4. Customer Lifetime Value (CLV)

A metric that estimates the total revenue a business can expect from a single customer; generally measured across a year-long connection. It’s useful because it gives businesses the power to understand the value of each customer to then make strategic decisions about customer acquisition tactics moving forward. And, even more importantly, the CLV can help businesses identify any issues that might be negatively impacting customer loyalty and retention.

An article from the European Business Review reports that customer acquisition is typically 5 times more expensive than customer retention. The CLV, in this context, can help identify the customers that represent the most value to a business, and also the products and services that bring in the most sales, and work to retain them.

5. Customer Retention Rate

A metric that measures the ability of a company to retain customers over a specific period of time. It provides insights into the number of customers who have stopped making purchases, and the number of customers who continue to make purchases during that time frame.

Don’t, however, confuse Retention Rate with Churn Rate – they are entirely different metrics. Retention Rate is the ratio of customers that return to do business; whereas Churn Rate calculates the number of customers lost over a period of time.

Customer Retention Rate is useful for identifying friction within a customer journey to prevent that customer from turning to the competition. Going hand-in-hand with Customer Lifetime Value, it provides crucial insight for understanding the effectiveness of Customer Experience efforts and marketing strategies.

And, just to hammer in the importance of customer retention, studies indicate that conversion rates for new customers typically fall in the 5% to 20% zone, whereas for existing customers that rate increases to 60% to 70% – it’s significant.

Final Thoughts

CX metrics allow you to take a step back and objectively evaluate the question: “Are my customers satisfied with the products and/or services I offer?”

By employing the five metrics discussed in this article, businesses can gain profound insights into areas where customer experience can be improved. However, it is important to note that TSA utilises a range of further metrics tailored to each client and campaign. By combining multiple metrics, we gather comprehensive data to deliver useful insights for our clients, so that consequent strategies to improve CX are effective.

In conclusion, leveraging CX metrics and customising them to specific needs is key to enhancing customer experience and driving business success.

TSA are Australia’s market leading specialists in CX consultancy and contact centre services. We are passionate about revolutionising the way brands connect with Australians. How? By combining our local expertise with the most sophisticated customer experience technology on earth, and delivering with an expert team of customer service consultants who know exactly how to help brands care for their customers.