KPIs for CX
In the digital era, finding accurate methods of measuring the success of customer experience initiatives is augmented by the growing expectation consumers have for engaging experiences, personalization, and proactive services both in-store and online. However, as competition in customer acquisition and retention rises, many are seeking to understand how to measure the impact of CX on a company’s bottom line both in the short and long term.
What Is CX?
CX, or Customer Experience, is an umbrella term that encompasses all interactions between customers and companies. It includes everything from the first contact with a brand through post purchase support. The goal of CX is to create a positive relationship with each customer so they will become loyal advocates who spread the word about your business. Loyal customers build stronger relationships over a period of time and increases overall revenue.
Why Invest In Customer Experience
The customer experience and customer engagement market is projected to surpass $100 billion in annual worldwide revenue by 2026, and global CX software revenue will return to 2019 levels by next year. 80% of customers now consider their experience with a company to be as important as its products — and half the customers who participated say they switch to competition after just one experience.
The Importance Of Measuring CX Success
In today’s competitive marketplace, it has never been more important to measure the success of your CX. Companies must be able to prove their efforts were worth it; otherwise, they risk losing market share and missing out on new opportunities.
In order to do this, you need to know what key metrics matter most. For example, if you want to increase sales, then you might focus on conversion rates while if you want to improve customer satisfaction levels, you may choose to look at Net Promoter Score (NPS).
Measurement of customer experience (CX) can be tricky because there are so many factors involved. In order for a corporation to be able to accurately measure customer experience, there needs to be an understanding of what a customer did when interacting with our brand, comprehending their journey, and understanding how these relate to customer engagements.
Using a customer journey map to visualize your experience is a great place to start. Journey maps are a visual story about how people interact with your brand. They help companies gain a deep understanding of their customers and act as a bridge between businesses and buyers.
What Is Customer Retention?
Customer retention refers to retaining existing customers. When a customer becomes dissatisfied with a product or service, he/she may either leave or stay. If a happy customer stays, he/she is said to be retained. On the other hand, if a customer leaves, he/she is not counted as being retained.
Retaining customers is vital for any business. A study on customer retention rates conducted by McKinsey & Company found that 70 percent of customers would recommend a company based on its ability to retain them.
Key Categories When Measuring CX
Gartner argues that although the number of customer experience metrics used is large, most fit into five categories:
- CSATs (Customer Satisfaction Assessments) are the most common type of customer experience measurement. They include both explicit measures like surveys and implicit ones like reviews and mystery shopper reports.
- Customer loyalty/customer retention/customer churn rate metrics can be retrospective, such as average tenure, or more predictive of the likelihood of a customer remaining a customer. Examples include purchase frequency (how often someone buys), number of different ways they buy from you (e.g., online vs. phone vs. store), type of customer (new vs. returning) and their level of engagement.
- Advocacy/reputation/brand. Metrics like these help companies understand whether their products or services are meeting customer expectations.
- Quality/operations. These are the most underrated metrics. If a product or service doesn’t meet expectations, then regardless of whether any action was taken to remedy the situation, the customer experience will be poor.
- Employee engagement. This fifth set of metrics is included in perhaps only 10% of CX initiatives. A Gartner survey identified employee engagement as a major concern in delivering CX improvements, with 86% of organizations ranking it as having an equal or greater impact than other CX challenges.
PSFK Community Survey
In a survey of the PSFK community, respondents stated that the KPI used to measure the performance and quality of customers’ brand or purchase experience depends on each stage of the customer journey. For example, one brand responded that they use things like clicks and awareness to measure marketing, conversion to measure their digital experience, intent to recommend, or net promoter score for the in-person experience. Other brands use NPS, CSAT primarily, while tracking FTR, contact per order add to cart rate, and on time delivery to draw correlation.
Q: What are the KPIs you are using to measure the performance and/or quality of your customers’ brand or purchase experience?
Hospitality: We have different KPIs at different stages of the customer journey. For example, we use things like clicks and awareness to measure our marketing, conversion to measure our digital experience, intent to recommend, or net promoter score for the hotel experience, etc.
Retailer: NPS, CSAT, we will introduce Customer Effort Score soon (post transaction, post delivery, post interaction with customer care). We also track: FTR, Contact per order, add to cart rate, on time delivery
Q: What do each of these KPIs tell you and how do you utilize them?
Hospitality: We review them monthly and use them to set goals for the teams. Every team knows what they’re going to be measured on.
Retailer: Advocacy, satisfaction, promptness of customer care, how much effort customers exert, the drivers behind intention to purchase online, timely delivery.
Q: Of those KPIs, which is the most important metric to your organization?
Hospitality: Intent to Recommend and Net Promoter score. Retailer: From CX it’s NPS, CSAT but everything else.
Q: Are there any areas of CX that are currently unmeasured or insufficiently measured, where you need more visibility?
Hospitality: Sometimes our data doesn’t allow us to get to a sufficient level of detail on certain metrics.
Retailer: Data quality, ROX.
Q: Please choose one of these two options that best describes how you utilize CX KPIs.
Hospitality: We do both of the above. — set annual targets/ objectives and use them at the operational level on an ongoing basis.
Retailer: We set CX KPI objectives/targets on an annual basis.
Q: What percentage of your overall performance evaluation is based on CX KPIs?
Hospitality: I think it’s about 30%. Retailer: 10%.
Measuring KPIs in CX is important because it helps companies understand whether their efforts are working. It allows them to make changes if needed. And it provides insight into what needs improvement.
If you want to learn more about measuring CX KPIs, contact the PSFK research team.