Customer experience refers to the way customers perceive your product through every interaction they have with it. Happy customers use your product again and again leading to sustained revenue, whereas frustrated customers tend to churn and cost you money. Alongside this, statistics show that 42 percent of customers are willing to pay more if they have a good customer experience.
By focusing on your customer experience, you not only improve revenue, but also brand reputation, churn, and employee satisfaction. This leads to quality interactions that build lasting relationships. At this point you might be asking yourself, “Well how can I improve my customer experience then?”
The secret lies in tracking KPIs. This article introduces you to customer experience KPIs and serves as a guide to the different metrics you can use to keep an eye on the strength of your customer relations.
Key performance indicators (KPIs) measure the customer experience and provide an insight into the effectiveness of interactions between the product and customers. Monitoring customer experience KPIs helps companies understand customer satisfaction, loyalty, and the overall experience.
Customer experience KPIs need to be defined before a product is launched and monitored continuously post launch to track performance. To help get you started, the following list provides an overview of common customer experience KPIs you should consider tracking:
CSAT helps with measuring how satisfied customers are with a product or service. Satisfied customers become repeat customers, in turn leading to consistent revenue. With this metric, you usually gather data via a survey asking customers about their satisfaction with the product or service.
You calculate CSAT by doing:
CSAT = (Number of satisfied customers/total number of customers asked)*100
For example, if there are 60 customers who responded positive on satisfaction survey out of 100 customers who were surveyed then the CSAT is 60 percent.
CSAT scores vary based on different industries. Typically, a CSAT score above 70 percent is considered good with averages on the higher side for ecommerce and hospitality.
To improve your CSAT score, try implementing the following:
A net promoter score determines the loyalty of your customers and the likelihood of them recommending your product to their friends. In a survey, you ask your customers to rate on a scale of 1 to 10 how likely they are to recommend your product to a friend. Scores ranging between 9-10 are promoters, 7-8 are passives, and 0-6 are detractors.
You calculate NPS by:
Net promoter score (NPS) = Percent of promoters-percent of detractors
An average NPS scores cluster around 30-50 with high performing companies scoring 70+.
The insurance, ecommerce, education, and consulting industries have NPS on the higher side (60+), whereas the construction and logistics industry’s average NPS is on the lower side (less than 40).
To improve your NPS you can:
A customer effort score measures how easy your customer can have an issue resolved or achieve their goal.
You calculate this with:
Customer effort score (CES) = Sum of responses from all respondents/total number of respondents
Typically CES questions appear in a survey that asks customers to provide a rating on a scale of 1-5 or 1-7, with 1 being the lowest effort and 7 or 5 being the highest effort. For instance, if a survey was held with 75 customers who rated how easy it was for them to use the product on a scale of 1 to 5. Assuming the sum of the score was 300, then the CES = 300/75 = 4.
With CES scores, you want to aim for lower scores as they reflect a better customer experience and ease of use. Generally a CES should be 2 or lower.
That said, to improve your CES you can:
FCR tracks the percentage of customer issues resolved during the first interaction. This measures the performance of the customer service/call center department.
You can calculate this by doing:
FCR = (Number of issues resolved on first contact/total number of issues reported)*100
For instance, if there are 1000 issues reported in a time period and 700 are resolved on first contact (could be any channel) then the FCR stands at 70 percent.
A first contact resolution (FCR) of 70-79 percent is considered a good industry benchmark. The aggregate average FCR sits around 68 percent across all industries.
To improve your FCP you can:
Average resolution time is the average time it takes to resolve customer issues from start to finish. It’s also called average time to resolution, average ticket resolution time, and mean time to resolution (MTTR).
You calculate MTTR by doing:
MTTR = Total resolution time for all tickets resolved / total number of tickets resolved
While you want the lowest possible resolution time, industry benchmarks vary.
That can you can improve your MTTR with:
Customer retention rate indicates the percentage of customers who continue to do business with you over a specified period. It’s the opposite of the customer churn rate.
You calculate it with:
(E-N)/S*100
Where:
The average CRR varies by industry, ranging from 68 percent in SaaS to 84 percent in media and entertainment, or professional services.
To improve CRR:
Customer churn rate measures the percentage of customers who stop doing business with the company or don’t use the product anymore. Churn rate can be used to identify what led customers to leave your product or service. It could be anything such as quality, dissatisfaction, pricing, accessibility etc.
You calculate churn rate by taking:
Churn rate = (Number of customers lost during period/number of customers at start of period)*100
While churn rates vary, most benchmarks hover around 5-7 percent for SaaS companies.
To improve churn rate:
CLV estimates the total revenue you can expect from a single customer account throughout their relationship. This metric helps to identify gaps that need to be covered to engage customers in a long term relationship.
You calculate a customer’s lifetime value by taking:
CLV = (Average purchase value*purchase frequency)*customer lifespan
Generally you want a high CLV relative to your CAC. Most benchmarks put CLV at three times CAC.
To improve your customer lifetime value:
The customer complaint rate tracks the number of complaints received relative to the number of interactions or customers. It provides insights into how often customers express dissatisfaction with your products or services. This can be measured by channel, category or resolution.
You calculate your customer complaint rate by taking:
Customer complaint rate = (Number of complaints/total interaction with customers)*100
Aim to keep your rate lower than 10 percent. To keep up with this:
Social media sentiment looks at what your customers say about you on social media platforms. This provides insights on how customers feel about your product. You might also hear this described as “opinion mining,” since it involves analyzing texts or comments to reveal thoughts or feelings.
Sentiment analysis tools categorize posts as positive, negative, or neutral. Positive mentions as a percentage of total mentions gives insight into your overall user base.
Strive to keep your positive sentiment about 70 percent. To maintain this:
The above list identifies major customer experience KPIs, but some of these metrics might be more relevant to your product rather than others. While deciding which KPI to measure for your product, it’s crucial to consider the business goals set by the organization and how these KPIs can be aligned with the identified overarching business goals.
It doesn’t make sense to measure all these KPIs just for the sake of measuring them. Instead try to focus on one relevant KPI that reflects your desired business outcome. Measuring and monitoring customer experience KPIs is one step forward towards making a most lovable product with fully engaged customers.
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