Your Guide to Customer Experience Metrics
In a world where customers hold the scepter of power, ensuring their satisfaction is paramount for not just success, but survival. But how do you gauge their satisfaction? Enter the realm of Customer Experience (CX) metrics, your secret weapon in decoding customer happiness. In this blog, you’ll embark on a journey through the landscape of CX metrics, complete with real-life examples and calculations. Let’s dive in.
The Wild World of Metrics
In the CX world, there are a tonne (no pun intended), of different metrics that can be used to measure how happy your customers are, how likely they are to buy from you again, their value, and so much more. Without clear knowledge and guidance, it can be easy to feel overwhelmed by all the acronyms and calculations. But rest assured, below, we break down the most useful metrics that will help you uncover how happy (or unhappy) your customers really are.
1. Net Promoter Score (NPS)
What it is: NPS measures customer loyalty by asking one simple, but powerful question: "On a scale of 0 to 10, how likely are you to recommend our product/service to a friend or colleague?". You can use 1-2 cascading questions to uncover the reasons behind your customer’s score.
Why it matters: NPS categorizes respondents into three groups: Promoters (9-10), Passives (7-8), and Detractors (0-6). The difference between Promoters and Detractors is your NPS score. NPS is a simplified metric that can help you gain a clear view of what your customers think, without having to analyze too many data points.
Example: Suppose 50 customers respond to your NPS survey, and 30 are Promoters, 10 are Passives, and 10 are Detractors. Your NPS score is (30 - 10) = 20.
2. Customer Satisfaction Score (CSAT)
What it is: CSAT measures customer satisfaction by asking, "How satisfied are you with our product/service?" with a scale typically ranging from 1 (very dissatisfied) to 5 (very satisfied).
Why it matters: CSAT provides a snapshot of how content your customers are with a specific interaction or transaction.
3. Customer Effort Score (CES)
What it is: CES gauges how easy or difficult it was for customers to resolve an issue or complete a task. Customers are asked, "How easy was it to solve your problem with our product/service?"
Why it matters: Lower effort scores indicate a smoother experience, which often correlates with higher satisfaction and loyalty.
4. Churn Rate
What it is: Churn rate measures the percentage of customers who stopped using your product or service during a specific period.
Why it matters: A high churn rate can be an alarming sign that something is amiss in your customer experience.
Example: If you start with 1,000 customers at the beginning of the month and lose 50 by the end, your churn rate is 5%.
Real-Life Calculations: Unpacking CX Metrics
Now, let's crunch some numbers with real-life scenarios.
Scenario 1: NPS Triumph
Imagine you run a pest control company, and you decide to gather NPS feedback (great choice). After 100 customer responses, you find that 60 are Promoters, 25 are Passives, and 15 are Detractors.
NPS Calculation:
NPS = (Promoters - Detractors) / Total Respondents
NPS = (60 - 15) / 100 = 45/100 = 0.45
Your NPS is 45. Not too shabby! It means the majority of your customers are delighted and likely to recommend you to anyone that bump into struggling with creepy crawlies, however there is room for improvement – turning your passives and detractors into brand advocates.
Scenario 2: CSAT Surprises
Suppose you manage a dental clinic. You collect CSAT scores after each patient experience, and you receive 150 responses with an average score of 3.8.
CSAT Calculation:
CSAT = (Sum of all Scores) / Total Responses
CSAT = (3.8 * 150) / 150 = 3.8
Your CSAT is 3.8. While it's not an A+, there's room for improvement to ensure your customers' smiles widen.
Scenario 3: Effortless Triumph
Now, picture yourself as the frontline manager for an insurance firm. You decide to measure CES after introducing a new claims process.. Out of 200 respondents, you find an average CES score of 4.9.
CES Calculation:
CES = (Sum of all Scores) / Total Responses
CES = (4.9 * 200) / 200 = 4.9
Your CES is 4.9, signaling that customers find your new policy process nice and easy. Bravo!
Scenario 4: Churn Troubles
Suppose you run a subscription-based cleaning company. At the beginning of the year, you had 10,000 customers. By year-end, 1,200 have canceled their subscriptions.
Churn Rate Calculation:
Churn Rate = (Customers at the Start - Customers at the End) / Customers at the Start
Churn Rate = (10,000 - 8,800) / 10,000 = 1,200 / 10,000 = 0.12 or 12%
Your churn rate is 12%, indicating that 12% of your customers chose not to continue their subscription. Time to investigate why and scrub up on your customer experience.
Beyond the Basics: Advanced CX Metrics
Now that we've mastered the fundamentals, let's delve into some more advanced CX metrics.
5. Customer Lifetime Value (CLV)
What it is: CLV estimates the total revenue a business can expect from a single customer over their entire relationship with the company.
Why it matters: It helps you understand the long-term value of your customers, aiding in budget allocation and marketing strategies.
Calculation: CLV = (Average Purchase Value) x (Average Purchase Frequency) x (Average Customer Lifespan)
For instance, if your customers spend an average of $50 every month and stay with your business for five years, your CLV is $50 x 12 (months) x 5 (years) = $3,000.
6. Customer Retention Rate
What it is: Customer retention rate tells you the percentage of customers who continue to do business with you over a specific period.
Why it matters: High retention rates typically mean lower acquisition costs and higher profits.
Calculation: Retention Rate = ((Customers at the End of the Period - New Customers Acquired During the Period) / Customers at the Start of the Period) x 100
If you start with 500 customers, gain 100 new ones, and end with 550, your retention rate is ((550 - 100) / 500) x 100 = 90%.
7. Customer Effort Score 2.0 (CES 2.0)
What it is: A more nuanced version of CES that not only asks about effort but also focuses on emotional engagement. It gauges customers' feelings during interactions.
Why it matters: CES 2.0 helps you understand not only how easy the interaction was but also how emotionally satisfying it was for customers.
Calculation: The calculation remains the same as CES, but the follow-up questions delve into emotional responses, allowing for a deeper analysis.
Metrics in Action: A CX Success Story
Let's take a page out of a real-life success story to see how these advanced CX metrics can be game-changers.
Aptive Environmental is the fastest growing pest control company in the world, on a mission to disrupt their industry with superior customer experience. Founded in 2015, Aptive entered the market with one key objective; to provide a stellar service that makes homes everywhere safer, more secure, and free of pests and problems.
Aptive was looking for a platform that would help them understand what actually mattered to their customers, what was letting them down, and how to take action.
They started measuring their NPS scores at a location, branch, team and individual level, which revealed what they were nailing and where their blindspots were. By working on their weaknesses through frontline feedback and coaching, Aptive has seen a monthly rise in NPS starting at 31.1 points and rising to 61.
“Using AskNicely has transformed how we work with our field service team. We have already seen a dramatic rise in our lowest performers toward our best performers leading to a 28 point NPS increase. The rework cost we are saving alone pays for the tool and we have a lot more we can do now that we have AskNicely.” — Dane Dellenbach, Sr Director of Strategy and Innovation.
Conclusion: The CX Metrics Odyssey
Customer Experience metrics aren't just numbers; they are the compass that guides your service brand toward customer-centric success. From the basic NPS, CSAT, and CES to the advanced CLV, Customer Retention Rate, and CES 2.0, each metric contributes to a comprehensive understanding of your customer landscape.
By wielding these metrics wisely and taking concrete actions, like our friends at Aptive], you can transform your customer experience into a sensational journey that customers will rave about. So, set sail on your CX metrics odyssey, and may the winds of customer satisfaction be ever in your favor!
