Customer experience (CX) is the sum of all the interactions and emotions that a customer has with a brand, product, or service. It can make or break your business, as happy customers are more likely to buy again, refer others, and leave positive feedback. But how do you measure and improve CX? Here are some key metrics that you should track and optimize.
NPS is a simple but powerful metric that asks customers how likely they are to recommend your brand, product, or service to others on a scale of 0 to 10. It divides customers into three categories: promoters (9-10), passives (7-8), and detractors (0-6). The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. A high NPS indicates a loyal and satisfied customer base, while a low NPS signals a risk of churn and negative word-of-mouth.
Many companies often use the sole NPS question, "How likely are you to recommend [X]?" as a quick way to measure consumer sentiment. (Consumers can answer in 20 seconds or less, thus, more customers are likely to answer the survey.) For example, companies often email this question to customers after they receive an online order. However, using this question in isolation will not capture specific drivers of engagement or dissatisfaction. As such, NPS is often more impactful when paired with a question such as "Why did you rate it that way?" For example, "Because the product was well made and I received it within two days" identifies strength in product quality and shipping time. Using these two questions provides critical context.
CSAT is a metric that measures how satisfied customers are with a specific aspect of your brand, product, or service, such as quality, delivery, support, or features. It usually asks customers to rate their satisfaction on a scale of 1 to 5, or with emojis, stars, or thumbs. The CSAT score is calculated by dividing the number of positive responses by the total number of responses. A high CSAT score indicates that customers are happy with your offering, while a low CSAT score reveals areas for improvement.
High CSAT scores are great and definitely better than low CSAT scores but they shouldn't be confused with having competitive advantages. Multiple companies in the same industry can have high CSAT scores.
I agree with both the points above regarding NPS and CSAT scores, however, they are only insightful with context and strategy. These surveys either are conducted with respondents answering for all brands in the industry/ category or the respondents are benchmarking their experience and feelings vs your competitors. Understanding how your are doing in isolation vs your strategy and differentiated advantages is great but benchmarking against your competitors adds the needed context to make decisions and better understand consumer drivers.
CES is a metric that measures how easy or difficult it is for customers to achieve their goals with your brand, product, or service. It usually asks customers to rate their effort on a scale of 1 to 7, or with statements such as "very easy" or "very hard". The CES score is calculated by averaging the responses. A low CES score indicates that customers can get what they need without much hassle, while a high CES score suggests that customers encounter friction and frustration.
This is a one-sided metric but an important one to track, especially in B2B enterprise software or for products that are complex to use. The other part is understanding how much benefit a product or service delivers - the true benefits it delivers including functional, emotional and social benefits. You can measure benefits on a similar scale of 1 to 7. If you capture both, you can contrast the effort and benefit scores and get a richer understanding of which customers receive high benefit at low effort and which ones are not - particularly customers that receive benefits but with high effort are ones that need to be addressed. Looking at the combo of effort and benefits can therefore lead to more meaningful set of targeted actions.
CLV is a metric that estimates how much revenue a customer will generate for your business over their entire relationship with you. It takes into account factors such as purchase frequency, average order value, retention rate, and profit margin. The CLV formula is CLV = (average order value x purchase frequency) x (average customer lifespan x retention rate) x profit margin. A high CLV indicates that customers are loyal, profitable, and worth investing in, while a low CLV implies that customers are unengaged, unprofitable, and likely to churn.
CCR is a metric that measures how many customers stop doing business with you over a given period of time. It is calculated by dividing the number of customers who left by the total number of customers at the start of the period. A low CCR indicates that customers are retained and satisfied, while a high CCR signals that customers are dissatisfied and defecting.
Customer feedback is not a metric per se, but a source of qualitative data that can complement and explain the quantitative metrics above. Customer feedback can be collected through various methods, such as surveys, reviews, testimonials, social media, forums, or interviews. Customer feedback can help you understand the reasons behind customer behavior, preferences, expectations, pain points, and emotions. It can also help you identify opportunities for improvement, innovation, and differentiation.
Basically all of the measures above (NPS, CSAT et al) are just indicators of either a problem or an opportunity to grow. I implore you, never use these in isolation to make decisions or you’ll miss the single most important truth - what customers ACTUALLY think. Customer feedback is the most important tool in any businesses arsenal.
Having a plan in place to address negative social media reviews is huge as it can spin out of control quickly. Try to address them swiftly and fairly online but for more serious issues try to address it offline. Secondly, you should be monitoring your Google page star rankings and other similar ratings regularly online. One star reviews could be ruining your business and you don't even know about it.
Couldn’t agree more Keith. Customers can’t really tell us how they feel, they rationalize their answers and so you’ll always be building a functional benefit only which you will constantly be revising at the pace of your industry. Strong CX experiences come from immersing yourself with your customers and their whole pre to post journey. For example, a grocery retailer CX experience found that the way the grocery carts are designed (push vs pull handles - flipping them from the current ubiquitous way) actually increases basket size and revenue! The emotional and physical shopping experience is impact by so many variables that can’t be articulated through a survey.