Are you selling in a crowded marketplace and want to ensure you’re meeting customer expectations?
Understand why your customers interact with your business the way they do by analyzing customer experience KPIs that directly impact your CX goals.
In this article, we’ll discuss the most important metrics and tools that boost customer loyalty and drive business growth.
TL;DR – Customer Experience KPIs
Not all performance metrics are alike. Choose key performance indicators (KPIs) or metrics critical for measuring the success of your CX processes based on your objectives.
Here are the top 10 customer experience KPIs to look at:
- Customer Churn Rate
- Average Resolution Time
- First Response Time
- Net Promoter Score
- Customer Satisfaction Score
- Customer Effort Score
- Customer Acquisition Cost
- Customer Lifetime Value
- Conversion Rate
- Customer Health Score
I discuss each metric in this article, so keep reading to learn how these metrics affect your CX strategy and ultimately, your business.
You can also maximize your business potential with marketing that’s personalized for your customers’ unique needs and context.
I’m Nora Sudduth, and I’m here to help you design a marketing strategy that reinforces a positive and memorable CX. Join me for a discovery call today.
What Are Customer Experience Metrics?
Customer experience metrics are factors that enable you to measure the success of your CX strategy, spot areas for improvement, and ensure a smooth customer journey for your clients.
For example, if you want to measure how effectively your messaging strategy attracts customers, you’ll want to monitor metrics like direct traffic and pages per visit.
Why Does CX Metric Tracking Matter?
Tracking customer performance metrics is crucial for determining the effectiveness of your CX strategy.
Without these quantifiable indicators, you won’t be able to objectively tell how your customers feel about your brand or know how to improve their experience.
Positive customer experiences drive sales, brand loyalty, and customer retention. This means it’s crucial for a successful business.
In fact, according to a Zendesk report, 60% of consumers purchase from a brand based solely on the experience they expect to receive. So, the more consistent you are at providing positive experiences, the more your customers are likely to stay with you.
Top 10 Customer Experience KPIs
Assess your customer experience strategy with these KPIs:
1. Customer Churn Rate
Customer churn refers to the number of people who leave your business, cancel their subscriptions, or stop using your products and services within a certain period.
It’s an important CX metric because it tells how effectively you retain customers.
An annual churn rate of 5 to 7% or lower means your customers find value and are loyal to your brand.
To calculate your churn rate, use this formula:
Customer Churn Rate = (Customers lost ÷ Beginning number of customers) x 100
2. Average Resolution Time
According to a Zendesk report, consumers prioritize speed in their customer experience. This means they want companies to resolve issues quickly.
Average resolution time (ART) tells how well you meet this particular customer expectation.
To measure this metric:
Average Resolution Time = Total resolution time ÷ Number of complaints or issues
3. First Reply Time
The time it takes for you to first respond to an inquiry, complaint, or request is your first reply time (FRT).
Faster response times mean more efficient processes and more satisfied customers.
Here’s how to determine your FRT:
Average First Reply Time = Total time taken to send first reply ÷ Number of tickets addressed
4. Net Promoter Score
Net Promoter Score (NPS) is a rating that customers give your business when asked how likely they are to recommend you to others.
It breaks down your customer base into three categories based on how they answer on a scale of 0 to 10:
- Promoters: Give a score of 9 to 10. These are happy customers and brand advocates.
- Passives: Give a rating of 7 to 8. Satisfied customers but not loyal to your brand.
- Detractors: Rate your brand from 0 to 6. Unhappy or disgruntled customers.
This metric shows how loyal your customers are to you and how pleased they are with their experience.
Compute your NPS using this formula:
Net Promoter Score = Percentage of promoters – Percentage of detractors
An NPS of 50 and above is considered excellent, although any rating higher than 0 is good enough since it implies that the number of promoters is higher than that of detractors.
Also, detractors provide valuable insight into how to improve your CX. You can even sway them to become promoters with a refined CX strategy and strategic messaging.
5. Customer Satisfaction Score
Customer satisfaction (CSAT) is a straightforward metric that shows you how happy your customers are with your brand.
The formula looks like this:
Customer Satisfaction = Number of happy customers ÷ Total number of respondents
A CSAT of 80% is considered the gold standard, but you should always consider your industry and context when determining your CSAT score.
6. Customer Effort Score
Customers want fast, accurate results when engaging with a business.
So, how easy it is for them to finish a transaction, say a purchase, significantly affects how they feel about you.
Gain insight into customer effort by conducting surveys that ask them to rate the ease with which they complete an action on a scale of 1 to 7.
Then, analyze survey results by using this formula:
Customer Effort Score = Number of responders that answer 5 to 7 ÷ Total number of respondents
7. Customer Acquisition Cost
Customer acquisition cost (CAC) is the amount spent to acquire new clients, users, or customers.
This is significant because the lower your CAC, the better your ROI. It also means that your key messaging resonates with your audience and is effective at drawing them further in the sales journey.
Find out how much you’re spending to gain new customers with this formula:
Customer Acquisition Cost = Sales and marketing expenses ÷ New customers gained
8. Customer Lifetime Value
Closely related to your CAC is the customer lifetime value (LTV). It refers to the revenue gained from each customer throughout their relationship with your brand.
A high LTV means your customers are deeply engaged with you and are satisfied with their experience. It also implies that you retain your existing customer base well.
To determine your LTV, first establish your average customer value. Here’s how:
Customer Value = Average purchase value x Total number of purchases
Next, compute your LTV with this formula:
Customer Lifetime Value = Customer value x Customer lifespan
On average, a CAC to CLV ratio of 1:3 means your CX and marketing strategies work.
9. Conversion Rate
Another indicator that your CX is a success is whether your audience and non-paying customers (such as those subscribed to freemium subscriptions or free trials) convert into paying customers.
A good conversion rate also shows that your prospects find value in your products or services (which include customer support and other customer-facing strategies) and are pleased to continue or upgrade to a paid subscription.
What’s considered a good free-to-premium conversion rate depends on several factors, including your business model and industry.
For example, a conversion rate of 18.6% to 29% is considered a healthy number for a SaaS company.
To determine your conversion rate, compute using this formula:
Conversion Rate = Free trial customers who converted ÷ Total number of free trial customers
If you’re not seeing as many conversions as intended, it can mean that your CX and marketing strategies are amiss.
Get more leads and sales from your marketing with ConversionRX, a comprehensive assessment program I’ve developed to help you identify why your funnels aren’t working.
10. Customer Health Score
Monitor your customers’ status to spot problems early, as well as reinforce strategies that are producing good results.
You can do this by measuring customer health based on specific aspects of your business, such as product usage, service quality, website activity, and customer service.
To accurately gauge customer health:
- Choose customer behaviors that you want to assess
- Create a scoring system and assign a value per customer action
The formula looks like this:
Customer Health Score = Total customer action value #1 + Total customer action value #2 + Total customer action value #3
To explain this formula:
- Customer action: A transaction or activity that customers do in relation to your business, such as submitting a complaint ticket or making a purchase.
- Action value: Assign a higher value to customer actions that have a greater impact. Action values can range from 1 to 5 or 1 to 10, depending on your scoring system.
- Total action value: Multiply the number of times a customer action occurs by its action value to arrive at its total action value.
Once you have total action values per key customer action, you can add those together to arrive at your Customer Health Score.
Presenting the data can be tricky, so you can make it easy for your team to understand or visualize findings using the following:
- Percentage scale: Present key actions in percentages to make them easier to understand.
- Color scheme: Assign colors to specific behaviors. For example, use red to indicate alarming patterns.
- Customer rankings: Depict customer segments using a ranking system to visually represent customer sentiment over time.
How to Measure Customer Experience
To measure the success of your customer experience, you need to:
- Establish metrics that directly impact your CX goals
- Measure your customer experience KPIs
- Analyze results to gain insight into your overall CX
You can refer to the top 10 metrics mentioned above to check how well your CX strategy is doing.
Customer Experience KPI Tracking Tools
Monitoring CX KPIs is time-consuming and even painstaking work. Using tools can automate certain processes and make analyzing results faster and more accurate.
Here are some of the most useful KPI tracking tools across different categories:
- Analytics: You can automate tracking and results analysis for things like website activity, customer sentiment, and voice of customer using various analytics tools.
Examples of these tools are Hubspot’s Customer Feedback and InMoment’s Customer Experience Management.
- Social Listening: You can use tools like Sprout Social and Hootsuite to analyze conversations around your brand and gain helpful insights into people’s feelings and opinions.
These tools can help you cover major platforms and analyze the data hassle-free.
- Surveys: Survey tools like Mention and Zonka Feedback are extremely helpful for understanding customer behavior and gaining feedback.
They can also be modified to produce qualitative results if you need more in-depth insights.
Frequently Asked Questions (FAQs)
Check out these FAQs on CX KPIs:
What Role Does Customer Lifetime Value (CLV) Play in CX KPIs?
The customer lifetime value reflects how much revenue you gain from each customer throughout their relationship with your brand.
It’s a vital customer experience KPI because it shows whether you’re succeeding at retaining customers and providing a good customer experience.
How Do You Set Goals for Customer Experience KPIs?
To set realistic KPI goals, consider these factors:
- Industry benchmarks
- Competitor results
- Historical performance
How Often Should Customer Experience KPIs be Reviewed?
How often you should review CX KPIs depends on factors like your objectives, sales cycle, and business tenure.
For example, if you have a short sales cycle, it might be helpful to review KPIs monthly to spot issues early and make CX changes as soon as possible.
Conclusion
Customer experience KPIs are necessary for monitoring the success of your CX strategy. But that’s not all.
They also keep you on the right track to create loyal customers and drive more revenue.
In other words, they are crucial for business success.
But remember: Effective marketing goes hand in hand with great CX because it’s what wins customers in the first place.
I can help you design a marketing strategy that attracts customers, keeps them engaged, and fosters a positive customer experience. Book a discovery call with me today.
