With today’s more crowded and competitive markets Customer Experience (CX) has never been more important. In fact, according to in-depth studies from research consultants such as Walker, by as early as next year CX will overtake price and product as the key brand differentiator. So, it should come as no surprise to hear that growing numbers of companies are creating and developing customer experience (CX) strategies to grow their brand.
How do I measure customer experience to see if my CX strategy has been a success?
Devising a strategy with a series of steps that outline how you will improve your customer experience is a good start for moving your company forward, but you won’t really know whether it’s been a success or not unless you have the right measurements in place.
At this point you will need to ask yourself, what key performance indicators (KPIs) should I be using to demonstrate the perfect customer experience? And how do I measure these?
While many companies still use a combination of Net Promoter Score® (NPS) and web analytics data metrics to measure their customer experience, there is now growing debate about the role of NPS and the level of importance and flexibility it offers to evolving CX measurement standards. Consequently, there is now a wider range of metrics used by companies to track and measure the customer experience. Beyond NPS, some of the most commonly used metrics include:
- Customer Satisfaction (CSAT): typically used to measure how satisfied a customer is with a specific product, transaction or interaction with a company, CSAT is based on a 5-point scale from very satisfied to very unsatisfied. It is calculated by dividing all the positive responses by the total number of responses and then multiplying by 100.
- Customer Effort Score (CES): is a metric that involves measuring the customer's effort input. CES seeks to measure how easy a company makes it for a customer to accomplish their goal, which could include anything from how simple it was for a customer to solve a problem, to how easily they completed a transaction.
- Churn Rate: helps demonstrate how customers feel about a company by highlighting how many of them have stopped using a company's products or services. Generally, customer churn rate counts the total number of lost customers or the percentage of lost customers within a defined time period.
- Retention Rate: measures: how a business retains customers over a specific period-of-time. Closely linked with the churn rate; the higher the retention is, the lower the churn rate.
- Customer Lifetime Value (CLV): provides a prediction of the net profit attributed to the entire future relationship with a customer. CLV can be calculated both as the business value a customer brings during the whole time of their relationship with a company, or as a value over a defined period-of-time.
We'll discuss a number of these metrics in more detail later on in this post. But firstly, we will explore why using NPS to measure the value customers derive from their interactions with companies is no longer as straightforward as it once was.
Why NPS is no longer solely enough to measure customer experience
NPS was originally a brand loyalty metric and viewed as one of the best ways of measuring how well your company was engaging with its customers. This is based on the idea that those individuals most satisfied with your product or service would rate you with a high NPS score, meaning that they would be more likely to recommend your company to others. But given the growing number of touchpoints in today’s customer journey its value is no longer quite so clear cut.
Small nuances could be made to make the NPS question more specific such as ‘how likely would you be to recommend company X’ based on your:
- Trip to our store today
- Recent call with our customer service advisor
- Latest visit to our customer website
- Most recent purchase
- Experience with our user app
However, you would still only be left with a high or low NPS score and no contextual feedback from the customer about any specific issues they experienced, which may have influenced the rating they left and allow you to take positive actions to improve them.
So how can I improve how I measure customer experience?
With more metrics to work with, you would be better able to contextualise your customers’ experience and have more feedback about their actual issues with which to take actions.
There has been a lot of research around the area of customer experience with specialists such as Forrester Research, developing one of the most innovative methods to better manage and measure the customer experience.
Graph courtesy of: net solutions
According to Forrester with the CX Pyramid they developed, there are three specific ways of measuring customer satisfaction. Moving upwards in order from baseline essentials to more sophisticated business metrics, each level has its own degree of influence on your overall customer experience.
- Basic level: “Does my CX meet my customer’s needs?”
- Intermediary level: “Is my CX easy, requiring only minimal effort?”
- More advanced level: “Is my CX enjoyable for my customers?”
Forrester argues that if measured and managed effectively, these three steps can help businesses to improve their NPS score and their overall customer loyalty. And when you consider that the results of a recent Hubspot study revealed that over 80% of companies believe retention is cheaper than acquisition – it literally pays to keep your customers happy with the best possible customer experience.
The Three Steps of the CX Pyramid and how best to measure them
1) Meeting customer needs: similarly, to Maslow’s famous hierarchy of needs pyramid, the first stage of the CX pyramid looks at the basics namely ‘how effective is my company in meeting my customers’ needs?
Although metrics have been used by businesses for many years, they have become more sophisticated to allow for the evolution and growth in customer interactions, which can range from the traditional in-store and telephone experience to a digital based one.
As the traditional and digital worlds have become more intertwined, many traditional metrics now work in synergy with their digital counterparts. A great example of this is Goal Completion Rate (GCR), which can be measured via Google Analytics or from feedback in a short survey. GCR can work hand in hand with the 'meeting customer needs' stage, which typically focuses on asking the customer ‘Were you able to reach your goal?
However, to get the most valuable feedback and insight from this question, it is critical to ensure it is targeted right after a specific customer interaction, so that the data can be tied to a specific task. For example, this could involve anything from successfully ordering a product after speaking to a telephone sales representative, or downloading and setting up a customer app.
It is also important to break this question down, as there will often be different degrees to which your customer may or may not have accomplished their goal, which you will want to capture. Using a question structure such as ‘Did you reach your goal today? With options: Yes/ Partially/ No’ will enable you to achieve this. For those that provided a partial or no answer, it would also be useful to provide an open text follow-up question, to better understand what your customers were looking for or expected, so you could further improve the customer experience in this area going forward.
Some goals are much more challenging to measure, such as a user bouncing or leaving a specific web page, which is often viewed as negative. However, this can be positive for the user if they completed their goal, such as in searching for and finding the information they needed. In such a scenario the launch of a pop-up survey to obtain qualitative feedback about their experience as they are trying to leave the website could be extremely valuable.
2) Making things easier for your customers: the next stage of the CX Pyramid seeks to explore how easy it was for your customers to reach their goal, whether that’s going into a store to find and buy a specific product or completing a specific task on your website.
This can be measured using the Customer Effort Score (CES), which is based on the idea that organisations create loyal customers when those customers are able to find what they’re looking for easily or solve issues more quickly.
CES is a metric which is always related to a certain task or action, making it essential to use it following a specific interaction or task. It is commonly used to measure a standard question such as ‘how easy was it to do X, Y, or Z?
To measure ease of use, companies typically use a 5-point scale ranging from strongly agree to strongly disagree with more neutral options in the middle. For example, if you were a hardware store owner and wanted to gauge how well your assistants on the shop floor were helping customers find and buy the products they needed, you might like to use a similar question to the following:
‘Were you happy with the advice our shop floor support team provided and were they able to find the right product for your needs? (1 is strongly agree and 5 is strongly disagree)’
CES complements GCR perfectly, making it simple for you to put two survey questions together, which will provide you with a greater insight into an individual customer’s experience following their interaction with your company. You could use something along the lines of:
“Did you reach your goal today? And if yes, how easy was it to reach that goal?
If your user described their experience as difficult or hard, it would then highlight to you that you needed to improve your user experience. You could then implement some necessary changes to improve this, then measure what difference this made to your customers’ user experience, by tracking how your CES changed over time.
3) Making your customers’ experience enjoyable: the final and most sophisticated stage of the CX Pyramid looks to measure the level of enjoyment customers felt during their customer experience. This could be gained through questions such as ‘how enjoyable did you find your in-store experience with us today? or ‘was your shopping experience on our website a pleasurable one?
This can be measured using a Customer Satisfaction (CSAT) question, which focuses on how your users feel. CSAT, also known as an emotional score, is a multi-functional metric. It can give you a general view of customer emotion, or a magnified look at the mood around a specific topic, feature, or step in your customer journey. CSAT is typically based on a 5-point scale from very satisfied to very unsatisfied.
CSAT is calculated by dividing all the positive responses by the total number of responses and then multiplying by 100. This results in your CSAT percentage where scores closest to 100% indicate the highest levels of satisfaction and those at the other end of that spectrum the lowest satisfaction levels. So, for example, if you had 35 positive responses and a total of 50 responses, your CSAT would be 70%.
35 / 50 x 100 = 70%
For more step by step support on how to calculate your customer satisfaction rate you may like to take a look at our Satisfaction Rate Calculations page.
Other metrics you could use to measure your customers’ enjoyment include any comments they shared with others on social media following a digital interaction with your brand, or word of mouth praise following an in-store visit.
Using CX metrics to better understand why customers’ feel and behave like they do
When you collect different types of feedback data, you get a more robust view of exactly what is going through your customer’s mind. It is why incorporating GCR, CES and CSAT metrics to better understand if your customer’s interaction with your company met their goal and provided an easy and enjoyable experience for them is so critical. And when you combine this with the NPS metric, as well as qualitative feedback, you will be able to gain the more rounded CX strategy you need to better understand why your customers’ feel and behave the way they do.
NPS®, Net Promoter® & Net Promoter® Score are registered trademarks of Satmetrix Systems, Inc., Bain & Company and Fred Reichheld.