How To Measure Customer Experience

In order to differentiate your brand and propel profits, an exceptional customer experience is mandatory for reaching your business goals. Customer experience, or CX, is how your users receive and interact with every touchpoint of your business. Considering the customer journey is brimming with multiple lines of communication, steps, and interactions – CX metrics, or customer experience measurement tools, are crucial for evaluating and improving your business processes. Without the use of CX metrics, it’s almost impossible to know what is, and isn’t working for your customer experience. 

Top 8 Most Important Customer Experience Metrics

Fortunately, there are a handful of CX tools to evaluate the efficiency of your business. Let’s dive right into the 8 most common, and advantageous ways to measure customer experience.

1. Customer Satisfaction Score (CSAT)

How can you measure your customer’s overall satisfaction? With the help of CSAT, or Customer Satisfaction Score, you can generate a percentage score of your customer’s satisfaction. CSAT asks respondents variations of survey questions such as  ‘How would you rate your overall satisfaction with the [products / services] you received?’ or ‘How satisfied were you with your experience?’ with a rating scale of 1 ( very unsatisfied) to 5 (very satisfied). 

To calculate your CSAT score, take the sum of your 4 (satisfied) and 5 (very satisfied) responses, and divide that number by the total number of responses. 

While ideal CSAT scores vary by industry, most businesses should aim for a score above 75%.

2. Net Promoter Score (NPS)

The power of word-of-mouth marketing is beyond impactful, which is why the Net Promoter Score is a fantastic resource for analyzing customer satisfaction and loyalty. NPS gages customer loyalty off of one survey question, ‘How likely are you to recommend (company) to a friend or colleague?’ 

Respondents answer on a scale of 0-10, with lower scores being unlikely to recommend, while higher scores show strong customer loyalty. The ratings are broken down as follows:

  • Promoters (score 9-10): Extremely loyal customers who are likely to refer your company.
  • Passives (score 7-8): Merely satisfied customers who are not loyal to your company. These customers are open to competitors and are not as likely to refer your business. 
  • Detractors (score 0-6) Dissatisfied customers who are likely to spread negative sentiment about your business.

To calculate your final NPS score, discard your passive responses and subtract the percentage of Detractors from the percentage of Promoters.

 This will leave you with a score between -100 to 100. Negative scores means your customer experience needs improvement, while scores 0-100 represent positive customer feedback. More specifically, scores 0-20 are satisfactory, 20-50 are great, and above 50 is extraordinary.

3. Customer Effort Score (CES)

The Customer Effort Score is an effective tool for understanding the efficiency of communication and customer service within your CX. Overall, CES measures how much effort your customers are exerting in order to use your product or service, communicate with staff, or resolve any issues along the line. Traditional CES surveys ask respondents a question similar to ‘How easy was it to interact with [company]?’.  Respondents then rank their experience on a  scale of either 1-7 or 1-5, from ‘very difficult’ to ‘very easy.’

To calculate CES, find the average by dividing the sum of your scores by the total number of responses. 

Since there are multiple variations and ranking styles for CES surveys, there is no universal score to strive for. As a broad goal, companies using the 1-5 scale should strive for a CES above 2, while scoring above 5 is strong for the 1-7 ranking.

4. Customer Lifetime Value (CLV)

Customer Lifetime Value, or CLV, is a calculation of the total amount a customer is predicted to spend with your business throughout the entire relationship or interaction. By accounting the frequency of purchases, value of spend, and costs associated with the customer, Customer Lifetime Value identifies your customer retention, as well as your most profitable customers. CLV is also essential in understanding the customer journey by providing a more holistic view of individual transactions. 

To calculate CLV, follow this formula:

CLV= Gross Margin Per Customer Lifespan * Retention rate / (1+ Discount Rate – Retention rate) 

Let’s break it down further and look at each of our CLV factors:

  • Gross Margin Per Customer Lifespan:

The profit each customer provides during the relationship.

  • Discount Rate:

The inflation rate used to calculate the future value of present cash flows.

  • Retention Rate:

The percentage of customers that have stayed loyal to your product or services for a given period of time.

When it comes to CLV, the higher the better! As a rule of thumb, a positive CLV will be 3-5 times higher than your costs for acquiring a customer. 

5. Customer Churn Rate

While CLV evaluates customer retention, Customer Churn Rate calculates the average number of customers you’re losing. Since the cost of acquiring new clients is significantly higher than keeping an existing customer, churn rate is vital for monitoring business efforts and profitability. 

To calculate your Customer Churn Rate, simply divide the number of lost customers by the total number of customers at the start of the period. 

Since acceptable churn rates vary from industry to industry, a benchmark for ideal churn is difficult to define. Overall, a business should be aiming for the lowest churn rate possible. The lower the churn rate, the fewer customers you’ve lost.  

6. Average Resolution Time

How can you determine the efficiency of your customer service? Through the calculation of Average Resolution Time (ART), you can measure the average time it takes your support teams to solve a customer’s issue. Most typically, ART is used as a digital customer experience metric to evaluate the speed of live-chat and over-the-phone support. Since Average Resolution Time is directly related to customer satisfaction, streamlining your company’s communication and support is key to a positive CX. 

To calculate Average Resolution Time, simply divide the total amount of time taken to resolve issues by the total number of support tickets or reported issues.

While the suggested ART score varies by business and complexity of issues, it is recommended to aim for an Average Response Time of five minutes or below.

7. Customer Referral Rate

Not to be confused with NPS, Customer Referral Rate (CRR) evaluates the percent of customers originating from referrals. CRR not only tells you the portion of referral purchases driving profits, but it is also effective for measuring your current or previous clients’ satisfaction. With a higher Customer Referral Rate, you can be confident that your customer experience is leading to positive word-of-mouth. 

To calculate Customer Referral Rate, simply divide your number of referred clients by your total client base. 

As a strong starting point, businesses should strive to achieve a minimum CRR of 2%

8. Sentiment Analysis

As a unique approach to measuring customer experience, sentiment analysis utilizes artificial intelligence to dissect a client’s messages, speech, and tone. Most commonly, Sentiment Analysis is utilized on textual data to determine whether customer feedback is positive, neutral, or negative. Since all companies acquire countless numbers of client emails and messages daily, Sentiment Analysis actively monitors brand sentiment to prevent poor customer feedback from falling off the radar. Although Sentiment Analysis is a fairly new CX metric, it is quickly evolving and will be an extremely innovative resource in the years to come.

How to Choose What Metrics to Track

What customer experience measurement tools are best for your business? To reap the most reward for your company, follow the CX metrics that monitor your perceived weak spots, provide actionable data, and are easy for you to manage and understand. Remember: CX metrics are supposed to alleviate your businesses’ responsibilities- not add to them.

Customer Experience Metric Tracking with Experience Dynamic

Are you looking for a partner to drive your entire CX transformation journey, and dive deeper into customer feedback? Experience Dynamic’s proven methodology delivers end-to-end support to guide you from the first mile of CX research and strategy to your day-to-day marketing execution. Our collective of companies (LaneTerralever and Convince & Convert) can help you establish a competitive advantage that differentiates your organization in the market and drives profitable customer experience results. Whether you need guidance and strategy to chart a winning path forward or a hands-on partnership throughout an entire CX transformation journey, we are here to help.

To learn more about these marketing insights and how to improve the customer experience, download our latest national study, “The State of Customer Experience in 2023” which uncovered the hidden drivers and expectations of today’s consumers, from Generation Z to Baby Boomers.

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