8 key performance indicators for assessing your customer experience
Being able to track your performance is an important part of running a business. It’s like turning the headlights on while driving in the dark. Whether you’re doing good or not, you should know what’s causing it because it can help you determine where to go next.
But out of all the key performance indicators you can look at to determine how good of a customer experience your business provides, some are more important than others. The 8 KPIs listed below are some of the most crucial ones you should be looking at.
Customer Lifetime Value (CLV)
This is a projection of the net profit that may be obtained from a customer through the entire time they patronize your business.
It shows how much repeat business you can expect and how loyal a regular customer can be. That means CLV also affects and is directly affected by NPS and CSAT. CLV is a KPI that can say a lot of things about your long-term performance.
Customer Effort Score (CES)
CES is basically how much a customer will put up with to make a purchase from you. You want to make things as easy for your customers as possible. The fewer steps it takes for them to complete a transaction with you, the better.
CES is usually obtained through a short survey that asks customers how easy the experience is for them. It’s usually done with a 5 or 7 point scale, with 1 when they strongly disagree with the following statement and the 5 or 7 when they strongly agree.
Customer Retention Rate
This measures how a business retains customers over the long term. It works with customer lifetime value in gauging how much return business you’re getting. While CLV shows how much you can earn from a regular customer, retention rate shows how long you can keep them loyal to your brand.
It’s also inversely proportional with customer churn rate. For example, 10% churn rate in a year means you have a retention rate of 90%. This metric is especially important for service-oriented businesses, even more so for those with subscription-based business models.
Loyal customers are five times more likely to buy from you again, five times more likely to forgive your mistakes, four times more likely to refer your business to other people, and seven times more likely to try a new product or service. This is according to a survey done by the Temkin Group.
Customer Churn Rate
As mentioned, customer churn rate is like the opposite of customer retention rate. It’s the rate at which customers abandon a service subscription over time. This KPI is important as it shows what may be wrong about your service.
Having a high customer churn rate doesn’t only mean a low customer retention rate, but also may entail a low CSAT score. It means you have to take measures to improve the customer service in your business.
Average Resolution Time
Being able to take care of your customer’s problems quickly is a sign of good customer service. That’s why average resolution time is an important KPI to track as a high score here can help you with your reputation and your customer churn rate.
In this aspect, First Contact Resolution (FCR) is the ideal. Being able to solve problems in real time for customers is crucial to building and maintaining customer satisfaction.
This determines your chances of being able to make customers do what you want them to do, which is usually purchasing your products or utilizing your services. Obviously, having this at a high number is one of your most important goals.
Having high conversion rate simply means your audience is more easily convinced to buy your products and services. But that’s not the only thing you should be paying attention to.
Of course, even if that number is high, it’s no good if you don’t get enough potential customers to begin with. Therefore, this metric cannot stand on its own. You need all the other KPIs to draw a more complete picture of your business performance.
Net Promoter Score (NPS)
Loyal customers who are consistently satisfied with your company may go on to recommend you to family and friends. This spreads the word about your products and services with social proof, which then becomes your business’ net promoter score.
The rate at which people would recommend your business to others can be seen as a measurement of customer satisfaction. NPS lets you know if you’re doing well with your customer service.
While product-oriented companies may find it useful, it’s especially necessary for service-oriented companies to know if they’re actually doing well.
NPS has become a popular metric among Fortune 500 companies, and for good reason.
Customer Satisfaction (CSAT)
You can’t please all of the people all of the time. Therefore, measuring customer satisfaction is crucial to ongoing success as it can reveal weaknesses you may need to work on, as well as strengths you should bolster further.
Measuring CSAT along with NPS can help you know just how well you’re serving your customers. High CSAT can lead to high NPS, and the opposite can also be true.
Good scores in both these metrics mean your customers are more likely to do repeat business with you, while the opposite can have them not return and switch to another brand.