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Customer Experience (CX) Metrics

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Table of Contents

Introduction

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.

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Six Useful Customer Experience Metrics

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: 

  • Net Promoter Score® (NPS®): NPS® is an effective measure of customer experience and loyalty that is often used by businesses to predict growth. NPS® generally takes the form of a single survey question where respondents are asked to rate how likely they are to recommend a specific brand or its products to others. Survey responses are used to categorize respondents into three groups; promoters, detractors, and passives. Then, the NPS® formula is used to calculate the firm’s NPS® score, which is indicative of overall customer satisfaction, customer loyalty, and CX. The NPS® formula is: 

NPS® = % of Promoters – % of Detractors

  • Customer Lifetime Value (CLV): CLV is an estimate of the overall value of an organization’s average customer over the whole period of their relationship. This metric is very useful when trying to assess the customer experience and can help make decisions about how much money should be invested in retaining current customers and how much money should be invested in acquiring new customers. 

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)

  • Customer Satisfaction Score (CSAT): CSAT can be used to measure customer satisfaction regarding a specific touchpoint within the customer journey or to measure customer satisfaction regarding the customer’s overall experience with the organization through their customer journey. CSAT surveys will generally ask customers to rate their satisfaction levels on a five-point Likert scale (from very dissatisfied to very satisfied). Responses are used to calculate the CSAT score by dividing the number of responses that were a 4 or 5 by the total number of responses received. The following is the CSAT formula: 

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

  1. Customer Effort Score (CES): CES measures the amount of effort customers exert while interacting with your brand. The less effort a customer has to exert while. CES uses a single survey question where customers are asked to rate the ease of a certain interaction on a five or seven-point Likert scale that generally ranges from very difficult to very easy. Survey results are used to calculate customer effort score with the help of the following formula: 

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

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  • Customer Retention Rate: Customer retention rate is a measure of the number of customers that continue doing business with your organization. 

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

  • Customer Churn Rate: Customer churn rate, also known as customer retention rate, is a measure of the number of customers that stop doing business with your company within a specified period of time. 

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

FAQs on Customer Experience

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 Score (NPS)
  • Customer Retention Rate
  • Customer Lifetime Value (CLV)

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.

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