Learning how to measure customer experience is important because it allows businesses to understand customers’ thoughts and feelings about their products and services.
Businesses can use customer experience data to improve their offerings and make their customers happier. Additionally, happy customers are more likely to remain loyal to a business and recommend it to others.
The following will help you determine how to measure customer experience and identify customer experience metrics that you can use to track your efforts. Read on!
How to Measure Customer Experience
To deliver an exceptional customer experience, you need to be able to measure it. Doing so will help you identify problem areas and determine where improvements need to be made. But how do you actually go about measuring customer experience?
Let’s look at customer experience metrics in more depth below.
Customer Experience Metrics
Customer experience is more important than ever before. To compete, businesses must focus on providing a great customer experience at every touchpoint. But how can you tell if you’re meeting your customer’s expectations?
Several metrics can be used to measure customer experience, but not all are created equal. Here are 11 important metrics you should be tracking.
1. Net Promoter Score (NPS)
It is perhaps the most well-known metric, and measures customer satisfaction by asking them how likely they are to recommend a product or service to a friend or family member. However, NPS does not take into account customers who are unhappy but may not be willing to give a negative recommendation.
How to measure it:
- To calculate NPS, you first need to ask your customers how likely they are to recommend your business on a scale of 0-10.
- Next, you’ll need to group the responses into three categories: promoters (9-10), passives (7-8), and detractors (0-6).
- Finally, you’ll subtract the percentage of detractors from the percentage of promoters to get your NPS score.
Net Promoter Score = (Number of Promoter Scores / Total Number of Respondents) – (Number of Detractor Scores / Total Number of Respondents)
For example, if 30% of respondents are promoters, 40% are passives, and 30% are detractors, then your NPS score would be 30% – 30% = 0.
If you have a positive NPS score (above 0), that means you have more promoters than detractors, and your customer satisfaction levels are good.
A negative NPS score (below 0) means you have more detractors than promoters and your customer satisfaction levels need improvement.
2. Customer Satisfaction (CSAT)
CSAT is another common metric that asks customers how satisfied they are with a product or service on a scale from 1 to 5. This provides a more detailed view of customer satisfaction than NPS but may be subject to skewing if customers have different expectations for what “satisfied” means.
How to measure it:
- To calculate a CSAT score, you will need to survey your customers and ask them to rate their level of satisfaction on a scale of 1-5 (1 being very unsatisfied, 5 being very satisfied).
- You will then take the number of respondents who rated the product or service as a 4 or 5 and divide it by the total number of respondents.
For example, if you surveyed 100 customers and 60 rated the product or service as a 4 or 5, your CSAT score would be 60%.
CSAT Score = Satisfied Customers / Total Respondents
3. Customer Effort Score (CES)
CES is a newer metric that measures how much effort a customer has to put into using a product or service. This is important because even if a customer is satisfied with a product, they may not continue using it if it’s too difficult or time-consuming.
How to measure it:
- To calculate CES, you need first to ask your customers how easy it was for them to solve their problem on a scale of 1-5, with one being very difficult and five being very easy.
- You then take the average of all the responses to get the CES score.
(Total Sum of Responses) / (Number of Responses) = CES score
For example, if you had ten responses and the scores were as follows:
1, 2, 3, 4, 5, 1, 2, 3, 4, 5
Then the CES score would be:
(1+2+3+4+5+1+2+3+4+5) / 10 = 3
So, in this example, the customer’s average effort score would be a 3 out of 5.
4. Customer Lifetime Value (CLV)
CLV is a crucial metric for eCommerce businesses, as it represents the total value a customer will bring over their lifetime. It’s an important number for businesses to track because it can give them insights into how much revenue they can expect to generate from each customer and how much they should be spending on acquiring new customers.
How to measure it:
- The first step in calculating CLV is to determine the average purchase value. You can do this by taking the total revenue generated from all customers in a given period and dividing it by the number of purchases made during that period.
Average Purchase Value Formula:
APV = Total Revenue / Number of Purchases
- Next, you need to calculate the average number of purchases. This can be done by taking the total number of purchases made by all customers in a given period and dividing it by the number of customers who made those purchases.
Average Number of Purchases (ANP) Formula:
ANP = Number of Purchases / Number of Customers
- Once you have these two numbers, you can calculate the average customer’s value. This is done by taking the average purchase value and multiplying it by the average number of purchases.
Customer Value Formula:
Customer Value = Average Purchase Value × Average Number of Purchases
- The next step is to calculate the average customer’s lifetime span. This is the average length of time that a customer remains active with your business.
Average Customer Lifespan Formula:
ACL= Sum of Customer Lifespans / Number of Customer
- Finally, you can calculate your customer’s lifetime value. This is done by taking the average customer’s value and multiplying it by the average customer’s lifetime span.
Customer Lifetime Value = (Customer Value × Average Customer Lifespan)
For example, let’s say that a customer spends $100 with you each month, and they’ve been a customer for ten months. This means their customer value is $100 per month.
Let’s say your average customer remains loyal to your business for 24 months. This means that the customer in our example has a CLV of $2,400 (($100 × 24 months).
CLV is a valuable metric because it allows you to see how much each customer is worth to your business over time.
5. First Contact Resolution (FCR)
FCR is a metric that looks at how often a customer’s issue is resolved on the first contact with customer service. This is important because it shows how effectively a company’s customer service solves problems.
How to measure it:
- To calculate FCR, you divide the number of customers whose issues were resolved on the first contact by the total number of incidents.
FCR (%) = Resolved Incidents on First Contact / Total Incidents × 100
For example, let’s say you have ten incidents total, and 7 of those were resolved on first contact. Your FCR would be 7/10, or 0.7. To turn this into a percentage, you would multiply it by 100, giving you an FCR rate of 70%.
Improving your FCR can have a major impact on your business. Not only will it save you time and money, but it will also improve customer satisfaction and loyalty.
Customer experience metrics can be a valuable tool for business leaders when measuring the quality of customer interactions and determining what areas need improvement.
This metric tells how often customers abandon their shopping carts before purchasing. A high cart abandonment rate can indicate a problem with the checkout process, product pricing, or overnight shipping and dropshipping costs.
How to measure it:
To calculate the cart abandonment rate, you need to know two things:
- The number of shopping carts that were created
- The number of shopping carts that were abandoned
Cart Abandonment Rate Formula:
Completed Purchases / Shopping Carts Created x 100 = Cart Abandonment Rate (%)
For example, if you had 100 abandoned and 200 shopping carts created, your cart abandonment rate would be 50%.
There are several reasons shoppers might abandon their carts, including high shipping costs, complicated checkout processes, and lack of trust in the website. By understanding your cart abandonment rate, you can work to reduce it and improve your conversion rate.
7. Customer Churn Rate (Customer Attrition Rate)
This metric tells you how often customers stop doing business with you. A high customer churn rate could indicate that your product or service is not meeting customer needs or that your prices are too high.
How to measure it:
To calculate your customer churn rate, you’ll need to divide the number of lost customers by the total number of customers at the start of the time period. Then, multiply that number by 100 to get your customer churn rate.
Customer Churn Rate Formula:
(Lost Customers / Total Customers at the Start of Time Period) × 100
For example, let’s say you had 1,000 customers at the beginning of the year, and by the end of the year, 100 had canceled their service. In this case, your customer churn rate would be 10% (100/1,000 × 100).
Knowing your customer churn rate is important because it can help determine how well you retain customers and spot any potential problems early on. If you see your customer churn rate increasing, it could be a sign that you need to make some changes to your business to keep your customers happy.
8. Customer Retention Rate (CRR)
This metric measures how long customers continue to do business with you. A high customer retention rate means that your customers are satisfied with your product or service and are unlikely to switch to a competitor.
How to measure it:
It’s calculated by taking the number of customers at the end of a period (E), subtracting the number of new customers acquired during that same period (N), and then dividing by the number of customers at the beginning of the period (S). This gives you the percentage of retained customers from one period to the next.
CRR = ((E-N)/S) × 100
For example, if a company has 80 customers at the beginning of a month, and it acquires eight new customers and ends with 80 customers, its customer retention rate would be:
CRR = ((80-8)/80) × 100 = 90%
A high customer retention rate is a good sign that your business is doing well. It means that you’re attracting new customers and keeping the ones you already have. To improve your CRR, focus on providing excellent customer service and creating a great customer experience.
You should also consider offering loyalty rewards or discounts to encourage repeat business. By improving your CRR, you can keep your customer base growing and ensure your business is on the path to success.
9. Customer Referral Rate
This metric measures how likely your customers are to refer others to your business. A high referral rate is a good sign that your customers are happy with their experiences and are spreading the word about your company.
How to measure it:
To calculate your customer referral rate, you’ll need to know two things:
- the number of referred purchases
- the total number of purchases
Customer Referral Rate Formula:
Customer Referral Rate = Number of Referred Purchases / Total Number of Purchases
For example, let’s say you have ten customers who purchased after being referred by another customer. And in total, you had 100 customers make a purchase. Your Customer Referral Rate would be 10%.
There are a few things to keep in mind when calculating your customer referral rate.
- First, referrals can come from many sources – word-of-mouth, social media, and emails. Make sure you include all referral sources in your calculation.
- Second, not every customer who is referred will make a purchase. The average conversion rate from referral to purchase is only 2-4%. So don’t be discouraged if your customer referral rate isn’t as high as you’d like – it’s quite normal.
- Finally, your customer referral rate can fluctuate over time. For example, it may be higher in the beginning when you first launch your product or service, and then taper off as you get more customers. That’s why tracking your customer referral rate over time is important so you can see how effective your referral marketing efforts are.
10. Average Response Time
This metric measures how quickly you can respond to customer inquiries and complaints. A quick response shows that you’re attentive to your customers’ needs and are working to resolve any issues as quickly as possible.
How to measure it:
To calculate your average response time, you will need to know the total time taken to respond during the selected time period and the number of responses in the selected time period. You can then use this information to calculate the average response time.
Average Response Time Formula:
Total Time Taken to Respond During the Selected Time Period / The Number of Responses In the Selected Time Period = Average Response Time
For example, if you have ten responses in a selected time period, and it took 100 minutes to respond to them, your average response time would be 10 minutes. (100 / 10 = 10)
This information can help you plan and manage your customer support operations more effectively. By knowing how long it takes, on average, to respond to customer queries, you can ensure that you have sufficient resources in place to meet customer demand.
If your average response time is too high, you may need to review your processes and make changes to improve efficiency. This could involve investing in new technology or training for your team.
11. Average Resolution Time
This metric measures how quickly you’re able to resolve customer issues. A quick resolution time shows that you’re efficient in addressing customer concerns and are working to keep them satisfied.
How to measure it:
To calculate your Average Resolution Time, divide the total duration of all resolved customer conversations by the number of customer conversations. This will give you the average time it takes to resolve a customer conversation.
Average Resolution Time Formula:
Total Duration of Resolved Conversations / Number of Customer Conversations = Average Resolution Time
For example, if you have ten customer conversations resolved in an hour, your Average Resolution Time would be 6 minutes (60 minutes / 10 conversations).
Remember that the shorter your average resolution time is, the better! This metric is an excellent way to gauge how efficiently your team resolves customer issues.
Monitoring these metrics will give you a good idea of how well your customer experience management efforts are paying off. If you see improvement in any of these areas, it’s a good sign that your customers are happy and that your business is on the right track.
Types of Customer Experience
There are four primary types of customer experience:
- Functional experience: This type of experience is based on the functional aspects of the product or service being delivered. It encompasses things like whether the product or service works as advertised, and how easy it is to use.
- Emotional experience: This type of experience is based on customers’ emotional connection with a brand. It includes factors like how well the brand connects with customers on an emotional level and whether customers feel positive or negative emotions when interacting with the brand.
- Social experience: This type of experience is based on customers’ social interactions with a brand. It includes whether customers feel like they are part of a community and how well the brand engages with customers on social media.
- Experiential experience: This type of experience is based on the overall customer experience, including all of the abovementioned factors. It encompasses customers’ entire journey with a brand, from awareness to purchase to post-purchase.
The most important thing to remember is that all four types of experience are important, and they all play a role in the overall customer experience. While some customers may place more importance on one kind of experience over another, all four should be considered when crafting the ideal customer experience.
Frequently Asked Questions About How to Measure Customer Experience
We get asked a lot of questions about how to measure customer experience. Here are the most frequently asked ones and our answers.
What Are the 3 Main Components of Customer Experience?
Customer experience is made up of three main components:
- Discovery: The discovery stage is all about customer awareness. Customers first learn about your product or service and consider whether it meets their needs. To make a good impression during this critical stage, you must ensure that your marketing materials are clear, concise, and easy to understand.
- Engagement: Once customers have decided that your product or service is right for them, they enter the engagement stage. This is where they start to interact with your brand more personally. To keep them engaged, you must provide excellent customer service and create compelling content that resonates with their needs and interests.
- Delivery: The delivery stage is when customers finally receive and use your product or service. This is your chance to make a lasting impression and ensure they’re satisfied with what they’ve received. To do this, you must ensure that your product or service lives up to their expectations and that the delivery process is smooth and hassle-free.
By providing an excellent customer experience at every stage of the customer journey, you’ll create loyal, satisfied customers who will keep coming back for more.
How Do You Measure Digital Customer Experience?
There are three ways to measure digital customer experience:
- Website / eCommerce analytics: This can give insights into how customers interact with your website, what pages they’re spending the most time on, and where they’re dropping off.
- Social media monitoring: This can help you see what people are saying about your brand online and get an idea of the sentiment around your digital customer experience.
- Customer surveys: Asking customers directly for feedback on their experience can be a great way to get actionable insights that you can use to improve your digital customer experience.
What Is a Customer Experience Framework?
A customer experience framework is a systematic approach to improving how businesses interact with their customers. It is designed to help organizations identify and implement strategies that will create positive customer experiences.