The end goal of any Customer Experience program is on the one hand to create business value through acquiring, retaining and growing profitable customers and on the other hand to achieve your business results (either revenues for a company or number of users for a nonprofit organization, for example).
In other words, a Customer Experience program is successful if you have created and captured value. Companies need to keep in mind that their Customer Experience efforts have an impact on their business objectives. These objectives need to be linked to marketing objectives as it is important for marketers to measure what matters both for marketing and the business to improve their Customer Experience.
In the end, companies that want to grow further into Customer Experience and deliver high quality personalization need to start measuring their Customer Experience efforts.
Companies face some challenges, listed below, as product and price are no longer a point of difference.
1. Increase customer satisfaction, loyalty and advocacy
Focusing on Customer Experience across the customer journey can increase your number of satisfied and loyal customers. You need to create a great experience to delight your customers. A delightful customer experience makes your customers come back and these loyal customers are your best brand ambassadors.
2. Reduce customer churn
Companies need to start focusing on retention, as it is as important as acquiring new customers. Retaining existing customers is less costly than acquiring new customers. A satisfied customer is less likely to leave your brand. You can grow your company by 40% without acquiring one single new customer
3. Boost revenues
Happy customers add revenues with additional sales, and positive word of mouth attracts new ones. According to Nielsen’s 2012 report on Global Trust in Advertising, 92 percent of consumers say they trust recommendations from friends and family, above all other forms of advertising. In a more recent study from Jay Baer and Daniel Lemin in 2018, 64 percent of consumers say that recommendations from family matter more than ever when getting a product, compared to 45 percent who say friends are important.
Customer Experience Measurement Scorecard
Each challenge has different KPI’s that can be measured and give an indication of your performance in terms of Customer Experience and personalization strategy. Companies can track these measures to see which areas they are underperforming in, and detect where improvements can be made. Making use of a customer experience measurement scorecard can help you to measure customer experience and determine the critical moments and pain points for a customer. You need to link the KPI’s below with one of the challenges to create a measurement system along the customer journey.
Example of a Customer Experience Measurement Scorecard:
- Set an objective: This is what you want to achieve, e.g. reduce customer churn.
- Measure this objective: Identify a KPI that is quantifiable, realistic, and can be influenced. e.g. churn rate.
- To make it more tangible you need to define a clear and quantifiable target for your set objective, e.g. churn rate < 10%.
Which KPI's to choose ?
The KPI’s below are relevant for most companies but need to be adapted to your business if you want to optimize their use.
Net promoter score (NPS)
A famous KPI to measure is the Net Promotor Score (NPS) or the percentage of your customers who would—or wouldn’t—recommend your company to their friends, family or colleagues. It’s typically measured by asking the customer to rate, on a scale from 0 to 10, the question: “How likely are you to recommend “X” to friends and family?”. Customers whose answer lies on the scale between 0 and 6 are detractors, between 7 and 8 are passives and between 9 and 10 are promotors. The NPS is calculated by subtracting the detractors from the promoters.
Customer Satisfaction (CSTA) & Customer Effect Score (CES)
Related to the NPS, you can measure the Customer Satisfaction (CSAT) and the Customer Effect Score (CES). The Customer Satisfaction is a score that is given by a customer for a certain experience. This KPI can be measured via a survey that asks customers to rate their satisfaction for “X” on a scale that has a range from ‘not at all satisfied’ to ‘very satisfied’. Next, the Customer Effect Score (CES) measures the effort, on a scale, that a customer needs to do for an interaction via a post interaction survey.
Customer Churn Rate
If you have a bad score on the KPI’s above and you want to know the percentage of customers that don’t stay loyal to your company, you can measure the Customer Churn Rate. You measure this KPI by looking at the total number of lost customers divided by the total number of active customers over a given time period.
Direct traffic (to your website)
Of course, you can also measure some KPI’s that are linked to your website. To start, you can measure the direct traffic to your website. This is all visitors that result from a specific action that wants to drive interactions with the company. To know the direct traffic for your company you need to add up all traffic that generates activity.
Indirect traffic (to your website)
Linked to the previous KPI is the indirect traffic which measures all visitor traffic that is a result of actions with the intention to create brand and product awareness. To measure this, you need to add up all traffic from different sources that comes to your web page via an indirect route.
Conversion Rate (of your website)
Next, you can measure the Conversion Rate of your website which indicates the percentage of interactions that has a completed transaction by channel or product, for example. This KPI is measured by dividing the total number of completed sales transactions by the total number of interactions handled. Web analytic tools like Google Analytics make it possible to measure this KPI online.
Pages per visit & frequency (on your website)
Finally, it can be relevant to have a look at the pages per visit and the frequency of visits. This refers to the number of pages that a visitor to the website views during one visit to the website and the number of visits done by a customer in a specific time period. These are standard measures in web analytic tools.
This is only a short list with some relevant KPI’s that can be used in a Customer Experience environment. These measurements are already a starting point that can help you to gain some insights or to break down a specific problem. It is recommended to start relatively small by choosing the right KPI’s to get a few insights and quick wins and later add some more KPI’s according to the situation of your company.
To define the right KPIs, you could, for example, choose a specific part of your business or customer base that will result in more value for your company or focus on a specific part of the customer journey that you want to improve. This will allow you to find the pain points and see the benefits of your efforts quickly.
Want to know how we can help you out? Get in touch with THoMer Stephanie, our personalized customer experiences expert.