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What is Customer Experience?
Customer experience, or CX, can be defined as a customer’s perception of a brand based on their overall experience with an organization across all touchpoints within the customer journey. In order for a business to run successfully, it must pay attention to CX by using customer experience metrics to understand customers’ perspectives on their end-to-end journey so that any potential pain points can be identified and eliminated.
Why Measure Customer Experience?
Customer experience is a key contributor to the success or failure of all businesses. Owing to the pervasiveness of the internet, customers now have access to a plethora of product alternatives at their fingertips. If one company or product doesn’t satisfy their needs, they can easily shift to another brand. Without great customer experience, customers will simply switch to another organization.
When organizations are able to provide customers with a great customer experience, they are able to differentiate themselves and achieve a competitive advantage within their industry. This competitive advantage will ensure that customers stay loyal to their organization for a longer period of time, increasing the company’s CLV and positively affecting its bottom line.
Conducting exploratory research seems tricky but an effective guide can help.
Now that we’ve understood the importance of tracking customer experience, we can go over the different CX metrics used by organizations to track customer experience and satisfaction levels. Here are six useful customer experience metrics that brands can use to measure and track customer experience:
NPS® = % of Promoters – % of Detractors
The easiest way to calculate CLV is by using the following formula:
CLV = average number of times a customer makes a purchase each year X average value of a purchase X average length of a customer relationship (in years)
CSAT = (Number of customers who were satisfied with their experience (4 or 5 on the scale) / Total number of customers who responded to the survey question ) x 100
CES = Number of customers who found the interaction easy (4 or 5 on the Likert scale) / Total number of customers who responded to the survey question
The customer retention rate can be calculated using the following formula:
Customer Retention Rate = [(Total customers at the end of the specified time period – Total customers gained within the specified time period)/ Total customers at the beginning of the specified time period] x 100
The customer churn rate can be calculated using the following formula:
Customer Churn Rate = [(Total customers at the beginning of the specified time period – Total customers at the end of the specified time period)/ Total customers at the beginning of the specified time period] x 100
Customer experience is a customer’s perception of a brand based on their overall experience with the organization over various touchpoints within the customer journey, whether they be digital or non-digital.
You can’t fix something you don’t understand; without tracking and measuring customer journey, organizations won’t be able to take the correct measures to enhance CX. Therefore, in order to improve CX and achieve a competitive edge within their industry, organizations must measure and track CX.
The following metrics can be used to measure customer experience:
Net Promoter®, NPS®, NPS Prism®, and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld. Net Promoter Score℠ and Net Promoter System℠ are service marks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.