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Customer experience (CX) refers to all the interactions a customer has with a company across all touchpoints and channels throughout their buying journey*. Good customer experience aims to create a positive experience for the customer that results in brand loyalty, high levels of satisfaction, and even customer advocacy (where they tell others about your business). Unless your product/service is a one-time sale by nature, the goal of customer experience is also to encourage repeat business.
In addition to the product or service itself, other factors that impact customer experience include
*A buyer's journey starts with the initial awareness and consideration stages and continues to after-sale support.
There are six main metrics you can use for measuring customer experience
Why doesn’t customer retention rate have an initialism like the rest? Your guess is as good as mine!
Let’s look at each one in more detail.
NPS is a widely used metric to measure customer experience and predict business growth. It’s based on a single survey question — how likely are you to recommend this business/product/service to others on a scale of 1-10?
Based on these answers, customers are segmented into Promoters (9-10), Passives (7-8), and Detractors (0-6). Your Net Promotor Score is the percentage of promoters minus the percentage of detractors.
CSAT measures how happy a customer is with a product, service, or customer support interaction. Typically this is determined by a satisfaction survey that asks customers to rate, on a scale of 1-5, how satisfied they were with [blank]. The score is then calculated as a percentage of satisfied customers (4-5) divided by the number of respondents.
CES measures how much effort customers put into interacting with your business, e.g., making a purchase, resolving an issue, etc. Your CES is often calculated on a scale from 1-10 or 1-7, with lower scores indicating higher effort, using customer responses to the question “[company] made it easy to handle my issue” Strongly disagree (1) ….. Strongly agree (7).
CLV calculates the total amount of revenue a customer is likely to generate over the course of your relationship and takes into account purchase history, purchase frequency, and customer retention rates.
The easiest way to calculate Customer Lifetime Value is the average value of a purchase x number of times the customer will buy each year x the average length of a customer relationship (in years).
The Customer Retention Rate is simply the number of existing customers who remain customers after a given period. This metric helps you understand what keeps customers coming back and can highlight areas of improvement in your customer service.
Customer Retention Rate is calculated by dividing the number of customers remaining at the end of the period by the total number of customers at the beginning of the period. Depending on your business and fluctuations in demand, you may want to evaluate retention on an annual, quarterly, monthly, or even weekly basis.
Churn Rate is often confused with customer retention because, on the surface, it measures similar themes, but they use two different data points. Churn Rate looks at how often customers stop doing business with you (as opposed to how frequently you retain customers, measured by your retention rate).
Churn rate is calculated by dividing the number of customers lost over the period by the total number of customers at the start of the period. As with retention rate, you may want to evaluate churn on an annual, quarterly, monthly, or even weekly basis depending on your business and industry.
There are four main ways you can measure customer experience
Although similar, a customer survey is typically a series of questions that cover more than one aspect of the customer journey. On the other hand, customer feedback forms are usually tied to specific events, e.g., Did [customer service agent X] resolve your issue today?
Social Media Listening is the process of tracking and analyzing social media channels, looking for mentions of your brand, product, hashtags, or industry keywords. It helps to gain insights into customer sentiment, behavior, preferences, and emerging trends and lets you know what customers are saying.
Tip: Use software to analyze social media conversations to identify patterns and themes without spending your entire life on Facebook! HubSpot has a comprehensive round-up of social listening tools to get you started.
Measuring customer experience isn’t easy because it relies heavily on customer feedback, which is entirely subjective. The data you use to measure customer experience can be affected by biases, such as selection bias, response bias, and sampling bias. As a result, you may draw conclusions from unreliable data. Measuring customer experience using multiple metrics and constantly seeking feedback can help mitigate this, as will fostering a customer-centric culture within your business.
Another challenge is identifying the root cause of issues. Analyzing data is time-consuming, and identifying patterns and trends is difficult for inexperienced people. Chances are, as a small business owner, you don’t have a customer experience team who can handle this, so you must learn to do it yourself. Investing in software and analytics tools and establishing measurement frameworks will help, as much of the hard work is automated.
As we’ve discussed, customer experience directly impacts customer loyalty, retention, and competitive advantage, so it’s essential to measure and take action on it continually. Ensure you’re collecting customer feedback regularly, monitoring social media and review sites to understand what customers are saying, and improving your customer service to keep customers happy and coming back.
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