- In lesson #1, we discussed the steps that are necessary to develop a compelling customer experience strategy that can deliver meaningful and lasting results.
- In lesson #2, we showed you how to translate those ideas into a customer experience action plan.
- In lesson #3, we taught you how to look for customer experience opportunities in your business.
- In lesson #4, we showed you how to develop the customer experience business case.
- In lesson #5, we taught you the basics of customer experience project management.
- In lesson #6, we described some of the specific methods that you can use to improve your own customer experience.
- In this lesson, we’ll discuss how to measure the results of your customer experience efforts.
In business, you get what you measure. That mantra is true for customer experience management as well; if you want to achieve customer experience domination – you need to know what to measure. In this lesson, we’ll cover some of the most common customer experience performance metrics such as customer satisfaction, advocacy, and loyalty.
These customer-centric metrics should be an important part of any business’s key performance indicators. However, for those businesses that want to dig deeper, there are additional performance metrics that you should consider. In this lesson, we’ll discuss some additional metrics and factors that you should consider to measure the effectiveness and efficiency of your customer experience process.
The ability to measure your progress and results is the single most important tool for your customer experience efforts. Discover the fundamentals of measuring your customer experience in our latest lesson.
So let’s get started…
You’ve heard me rant about the strategic importance of customer experience management. Those companies that get it right will find themselves in the driver’s seat of the new economy. Those that don’t will languish.
Since I began publishing reports, podcasts, and solutions on the subject of customer experience management, I’ve seen a groundswell of interest from businesses around the globe. More and more businesses get it; winning with customer experience can yield significant results! In case you’ve missed some of my earlier rants, here’s just a short list of benefits that your business can achieve by making ecstatic customers by delivering an emotionally engaging customer experience:
- Revenue Enhancement: Satisfied customers will return more often and spend more money with your business. Simply put, happy customers will put more money in your pocket.
- Growth: Emotionally connected customers will tell others about your business, which can help your business to reach new customers and potentially new markets. Happy customers will also give you a better opportunity to try new products and services to expand you potential business offerings. In short, emotionally connected customers can ignite growth.
- Cost Reduction: Very satisfied customers continue to come back and spend their money. They don’t need much prodding – they simply love doing business with you. As a result, your business benefits by getting a greater return on your marketing dollar; less prodding and less reliance on profit-draining promotions means more contributions to your bottom line.
- Customer Retention (Churn): It’s a competitive world out there. Chances are, your competition is trying to woo your customers as you read this. Truly happy customers are more likely to stay, thus reducing their potential departure from your business to your competition (aka churn). It costs a lot of money to attract customers. Keeping them happy just makes business sense.
With so much at stake, why doesn’t every business commit to a customer-centric business strategy? The answer is simple; most companies don’t know how to measure the attributes of the customer experience in order to make it a tangible asset. As a result, processes that can’t be effectively measured fail to gain strategic importance. Learning to measure the right metrics of your customer experience process can make all the difference.
Step 1: Know What to Measure
Let us start at the highest level. Most often companies will tend to measure the overall customer experience with a handful of overarching metrics. The most common metrics that you should become intimately familiar with include satisfaction, advocacy, and loyalty:
- Customer Satisfaction: Customer satisfaction is the degree to which your customers enjoyed their overall customer experience. This measure will often encompass the degree to which your customers were pleased by their perception of, or interaction with, your product, service, value, quality, brand, innovation, support, and overall business relationship. Customer satisfaction is the ultimate customer experience metric, but using just this one overarching metric can mask the individual attributes of the customer experience that dramatically add or detract from an outstanding customer experience.
- Customer Advocacy: Customer advocacy is the degree to which your customers are willing to recommend your business to a friend or colleague. Customer advocacy is often an indication of how willing your customers are to say something positive about your business. As with any business, there will be both supporters and detractors, but the goal should always be to push the overall advocacy scores into increasingly higher territory.
- Customer Loyalty: Customer loyalty is the degree to which your customers will continue to come back to your business on a regular basis. Customer loyalty can be difficult to measure because it can often be interpreted in multiple ways. For example, loyalty can be measured as the total duration that a customer sticks with your business. However, total duration won’t always tell you when or how often your customers may continue to shop your competition. For example, a florist may fill 50% of a customer’s annual flower orders every year. The customer’s loyalty may not be 100% since 50% of their annual floral spend is going somewhere else.
If you are just getting started with customer experience management, measuring customer satisfaction, advocacy, and loyalty is a great place to start. These customer-centric metrics should be an important part of any business’s key performance indicators. However, for those businesses that want to dig deeper, there are additional performance metrics that you should consider.
To fine-tune your customer experience process, you must dig deeper into each phase of your process to measure what is working well and what needs improving.
Step 2: Dig Deeper into the Key Metrics of Customer Experience
Measuring customer experience doesn’t have to be as complicated as a scientific experiment on quantum physics. The trick is to develop an understanding of the key metrics at each point in the customer experience lifecycle:
Attraction: Attraction is the first phase of the customer experience lifecycle. This phase can represent the first time a prospective customer hears about your company. It can also represent the immediate recognition of a physical storefront or product as they pass by. Attraction is that first set of impressions that trigger an emotion in the customer. How do you measure your business’ attraction effectiveness? Here are just a few performance metrics that you should consider:
- Impressions: Did your marketing efforts reach the intended audience? With this metric, you should measure the total number of times that your brand or ad messages were presented to prospective customers.
- Action Rate: The rate at which your prospects actually took action in response to your marketing efforts. Often, you can measure this as the ration of action to impressions. For example, a highway billboard may be seen by 10,000 people each day and yields 100 walk-in customers, representing an action rate of 1%. In the on-line world, this metric is often called the click-through-rate (CTR).
- Conversion Rate: The rate ate which your prospects actually reached a desired goal in your sales process. This may be conversion to a lead, or ultimately conversion to a sale.
Interaction: The interaction phase is you and your customers ‘time in the box’ together. This is the time when the customer browses your products & services, asks questions, selects products, and checks out. It is your best opportunity to make a great impression. Here are a few performance metrics that you should consider:
- Transaction Amount: This metric is the measure of how much revenue that you realized from each customer.
- Transaction Frequency: The rate at which customers bought from you over a given time period. A coffee shop, for example, would strive to see their customers visit them daily.
- Transaction Efficiency: The overall efficiency of the transaction process as measured in process steps, touch points, and overall duration. In simple terms, this is the measure of how easy it is to do business with you.
Cultivation: The cultivation phase is time after your customers experience you and your business. It is the time that they reflect on their experience, tell their friends and family about it, and hopefully, come back again and again. Here are a few performance metrics that you should consider:
- Service Rate: The rate at which your entire customer base utilized your customer service capabilities during a given time frame. For example, if 1 out of every 100 customers contacted customer service, your service rate would be 1%. An increasing service rate would indicate that there is some issue with your customer experience process.
- Resolution Closure Rate: The rate at which any customer question, inquiry, or problem is resolved. For example, if 8 out of every 10 new customer service calls is resolved immediately, the closure rate would be 80%.
- Resolution Efficiency: A measure of the overall efficiency of the problem resolution process. The efficiency rate can be measured in terms of steps, touch points, and duration. For example, a customer question that is answered immediately online is very efficient, whereas, a customer issue that requires multiple phone calls, emails, or service calls would receive a low efficiency rating.
Step 3: Look at the Big Picture
So far, we’ve discussed the overall customer experience metrics to consider, as well as additional metrics to measure customer attraction, interaction, and cultivation performance attributes. To get a complete picture of your customer experience landscape, you should also consider digging deeper into your customer’s background, needs, and individual behaviors:
- Customers (who): Dig into your customer base by developing a better understanding of their basic demographic and socio-economic attributes. Not all segments of your customer population may react to your customer experience in the same way. For example, a mother visiting your business with kids in tow will have a different experience than your working professional.
- Wants and Needs (why): Develop a deeper understanding of why your customer came to your business in the first place. For businesses with a broad product or service offering, each individual customer want or need can vary widely. For example, each customer visiting a hardware store may have a unique want or need.
- Channels (where): If your business operates in multiple markets or channels, make sure that you establish metrics to measure how well your customer experience performs across multiple locations or channels. For example, your customer experience may be very different from one location to the next.
- Behaviors (how): Each customer may navigate your touch points in a different manner. Make sure that you establish a mechanism for measuring how well your customer experience rates given different customer scenarios.
Now that we’ve discussed a variety of customer experience metrics that you should consider for your business, it’s time to put them to work. In order to be able to measure your progress, we recommend that you benchmark your performance metrics before you begin your customer experience project. This will provide you with a baseline from which you can show improvement.
Once you implement any new customer experience processes or capabilities, you should re-measure and compare the results to the original benchmarks. Make this a habit. The practice of continually measuring where you are and where you’ve been will instill the every-important desire for continual improvement.
There is an old saying in business that you get what you measure. I’ve found this saying to hold true in nearly every instance. If you want customer experience improvement; measure it. If you want to find out where your current process is breaking down, measure it. If you want to achieve customer experience domination, measure it!
That wraps up Lesson #7. To recap our lesson, the three steps that we covered included:
- Know What to Measure
- Dig Deeper into the Key Metrics of Customer Experience
- Look at the Big Picture
Congratulations, you’ve now completed our 7 Steps to Customer Experience Domination!
In our 7 Steps to Customer Experience Domination, we covered a lot of ground. We walked through the steps that are necessary to develop a compelling customer experiences strategy. We showed you how to translate those ideas into an action plan and we taught you how to look for customer experience opportunities in your business. We discussed some of the methods for improving your own customer experience capabilities and we’ve taught you about the key metrics from measuring the results of your customer experience efforts.
If you followed each step carefully, then you and your business are well on your way to customer experience domination in your respective industry or market.
If you’ve had success by following our program, we’d love to hear about it!
You can get more ideas, methods, and advice to support your customer experience improvement efforts in our Customer Experience Solution Kit. In our comprehensive solution kit, we provide you with everything you need to get started with your customer experience project. The Customer Experience Solution Kit can help you to:
- Identify key customer experience strategies
- Establish a foundation for your customer experience process
- Identify key touch points
- Diagnose overall customer experience capabilities
- Identify key improvement projects
- Determine project scope and approach
- Plan your customer experience project
- Develop a customer experience business case
- Manage your customer experience improvement project
- Establish a methodology for customer experience management
Learn more about our comprehensive Customer Experience Solution Kit now!