According to Forrester’s 2019 US Customer Service Index survey, 81% of brands failed to improve on their customer experience (CX) scores from 2018, with several big-named industry leaders tumbling down the chart. Even though in 2016, 72% of the same business leaders agreed that measuring customer experience would be their #1 priority over the upcoming years.
So, what happened?
Businesses clearly understand the importance of high-quality customer service, so why are they failing in its delivery? Surely 4 years is long enough to implement a successful CX program…
Maybe because it’s not nearly as easy as it sounds.
Many companies are simply unsure of how to record and measure the results of their customer experience campaigns.
Where do you start? At which stages of the customer journey do you ask them for feedback? After purchasing? But then surely you’re missing several touchpoints from some of the earlier stages of the buyer’s journey.
In an ideal world, we would send out just one, single-paged questionnaire asking customers to document their experiences and highlight the significant touchpoints (and through which channels) they had with our brand.
But unfortunately, it doesn’t work like that.
The world is not ideal when it comes to measuring customer experience and it’s certainly not as simple as sending out a single questionnaire.
So let’s take a look at how it should be done.
Table of Content
Why is measuring customer experience important?
Firstly, we must look at why.
Why should we care about customer satisfaction anyway? If you operate a large business with different customers coming through the store every day, is it really worth investing your time and money into?
The simple answer is yes.
If you can create a memorable experience the first time customers interact with your brand, it’s highly likely they’ll return with future business.
Therefore, creating and effectively measuring CX becomes an important asset for any business.
This is especially true if you consider acquiring new customers can be up to 7x more expensive than repeating business. Looking after your existing customers (by creating positive experiences) is a long-term cost-effective strategy for all brands.
Also, after delivering consistently high-class customer experiences brands can build out and expand their communities. The larger the community, the more people there are to talk positively about your brand.
This is not only important for marketing your business (84% of customers agreed they no longer trust ads) but also in coming to your defense during a crisis.
The virality of social media means a string of negative attacks can spread across the web like wildfire, seriously impacting your brand’s reputation.
However, with a strong community behind you, damage from the blaze will be mitigated. Brand advocates can jump to your defense creating a “shield” against your attackers – and make the lives of your community management team a lot easier.
Finally, customer experience transformation projects also have proven quantifiable benefits.
According to Forrester’s Capturing ROI of CX, some of the world’s largest businesses can see an increase of hundreds of millions of dollars in revenue for every 1-point increase in the Forrester Customer Experience Index scale.
A lot of senior executives might raise their brow at such a claim, and despite unanimously agreeing on CX’s importance will still be unwilling to part with the dollars necessary in generating positive change.
To quantify the financial impact measuring customer experience can have on your business, try creating a compelling CX business case. Forrester has put together a useful ROI model to demonstrate how customer satisfaction and loyalty impact the bottom line give you a compelling case to put forward to your leadership team.
How do we measure customer experience?
So, now that we’ve discussed why we need to measure customer experience, it’s time to look at how.
To do that, we must first understand exactly what customer experience is.
If you were asked about a recent “experience” you had with a brand, you’d likely think back to a specific moment, situation, or interaction you had between product research and post-purchase.
This timeline is commonly referred to as the customer journey.
The “touchpoints” or interactions you have with the product, service, brand, or organization, across multiple channels is the customer experience.
Therefore, if we are to effectively measure customer experience we must first understand and map out the entire journey customers go through when interacting with our brand.
Each company has its own, unique, dynamic customer journey.
However, to make the process more manageable there are three common stages that 95% of customers will pass through on their journey: pre-purchase, purchase, and post-purchase.
The first stage – pre-purchase – includes all aspects of a customer’s interaction with the brand before a final purchase decision has been made. At this point in the journey, customers are aware they have a need and are searching for possible solutions.
Typical touchpoints customers have at this stage of the journey include (but are not limited to) marketing and advertising campaigns, word-of-mouth, email, social media, PR, brand website, etc.
The second stage – purchase – encompasses all interactions customers have with a brand while making a purchase.
Businesses, particularly in retail and consumer goods, place particular focus on this stage of the journey as it’s where the financial transaction takes place.
This is why in-store customer experiences (store layout, aesthetics, customer care agents) are typically the most developed, analyzed, and measured in the majority of businesses looking to create that perfect shopping experience.
Other types of brand touchpoints during the purchase stage of the journey include the company website, trade shows, product packaging, sales reps, etc.
The third and final stage – post-purchase – covers all interactions customers have with a brand after purchasing their product or service. Unfortunately, this is a frequently overlooked stage by many brands.
A lot of the equity, trust, and hard work that went into encouraging the sale are wasted through the poor management of the post-purchase customer experience.
Do you remember earlier we talked about the cost-effectiveness of returning customers over new acquisitions?
Some typical touchpoints during the post-purchase stage are interactions with the customer service team, online forums, newsletters, loyalty programs, social media, etc.
After you’ve analyzed and mapped out your customer journey road map, it is important to go back through and carefully identify the critical touchpoints or ZMOT (Zero Moments of Truth) throughout the customer journey that have the most significant influence on key customer outcomes.
Not just when the customer finally pulls the trigger and makes a purchase, but ANY pivotal moment during the journey that could cause customers to fall off.
Once you’ve highlighted which key touchpoints you need to focus on you’ll be in a far better position to choose which CX metrics to use to best measure the effectiveness of your campaigns.
What are CX Metrics?
While customer experience is indeed about people’s emotional responses to a brand, we still need to find a quantifiable method in which to measure their satisfaction.
Remember that old saying:
“what can’t be measured, can’t be improved?”
CX metrics are our way of identifying whether or not the customer experience initiatives we put in place are working or not. If not, they’ll allow us to identify at which stage along the customer journey we need to improve.
Now, there are 4 CX metrics available to us depending on which touchpoint along the customer journey we are measuring. They include:
- Net Promoter Score (NPS)
- Customer Satisfaction (CSAT)
- Customer Effort Score (CES)
- Churn Rate
Each of these CX metrics will enable you to measure different customer service criteria.
Relationship Marketing expert Chrisitan Gronross consolidated these criteria into six sections:
- Professionalism and skills (solving customer issues quickly and professionally)
- Attitudes and behavior (show a genuine interest and empathy towards customers)
- Accessibility (how easy it is to contact your brand if an issue arises)
- Reliability and trustworthiness (keeping promises made to customers)
- Recovery (if an error is made the ability to respond and resolve the situation)
- Reputation and credibility (are you able to uphold expected standards?)
Net Promoter Score (NPS)
Let’s start with the most popular metric for measuring customer experience – NPS.
Introduced by Fred Reichheld in a 2003 Harvard Business Review article, NPS has become the business-standard CX metric with two-thirds of all Fortune 1000 companies reportedly using it to eke out an advantage over their competitors.
So what’s all the fuss about? Why so much focus around one particular measurement of customer sentiment?
The answer lies within its simplicity.
To calculate your NPS you simply have to gather the answers to the following question:
On a scale of 0-10, how likely is it that you would recommend [INSERT BUSINESS] to a friend or colleague?
Customers are then placed into 3 groups depending on their scores:
Promoters (score 9-10) are your brand advocates, customers will shout your names from the rooftops and come to defend you should you face a brand crisis.
Passives (score 7-8) are satisfied customers but not particularly enthusiastic about your brand. They could be susceptible to a competitor’s offerings if not looked after.
Detractors (score 0-6) are unhappy customers who certainly won’t be recommending you to friends and family. They can be potentially damaging to your brand.
Calculating your NPS is done by subtracting the percentage of Detractors from the percentage of Promoters.
Your scores could range from -100 (where all customers are Detractors) to +100 (where all customers are Promoters).
Let’s look at an example.
Imagine 100 customers responded to your NPS query:
Promoters = 25%
Detractors = 15%
25-15 = 10 (NPS)
In terms of scores, they vary massively across industries but a positive score is generally considered anything above 0, with +50 deemed very good and anything +70 considered exceptional.
Some companies may decide to alter the language slightly but apart from that, it remains more or less the same.
Its simplicity is what’s made it so universally popular.
To get real value out of the NPS and apply it to your customer journey, you’ll want to use it to set up the following question:
“Why did you give the score you gave?”
Analyzing and parsing the answers to the second question will pinpoint specific areas in the journey customers are having problems with and provide actionable insights on how they can be improved.
Customer Satisfaction (CSAT)
Another great CX metric for looking at specific areas of your customer journey is Customer Satisfaction (CSAT).
A CSAT survey asks customers how satisfied they were with a specific product, service, or sales experience, and their answers are applied to a rating scale. This is typically measured from 1-5 (extremely dissatisfied to extremely satisfied) and can be calculated as follows:
So for example, 100 people take your CSAT survey about their experience with a customer service call.
- ⭐ 5
- ⭐⭐ 5
- ⭐⭐⭐ 30
- ⭐⭐⭐⭐ 50
- ⭐⭐⭐⭐⭐ 10
50+10 = 60 (4-star and 5-star rating)
60/100 x 100 = 60
While similar to NPS, CSAT measures customer satisfaction with an individual product, service, or interaction whereas NPS measures customer loyalty to the organization (how likely are they to recommend you to a friend or colleague?)
It’s this targeting of the “here and now” and the gathering of instantaneous customer feedback related to specific touchpoints that makes it a great tool for measuring customer experience.
For example, you could use CSAT to gauge how customers found your onboarding process:
Customer Effort Score (CES)
The third metric we are going to look at is the Customer Effort Score (CES).
As its name implies, CES determines the relative efforts a customer had to put in to resolve a specific problem. CES surveys are often sent immediately after an interaction with the support team.
How much effort did you have to put in to fix the issue after speaking with our customer representative?
CES can be calculated in the same manner as a CSAT survey, on a sliding scale of 1-5 with (1) being Very little and (5) being A great deal.
CES surveys are great at determining whether or not the removal of certain obstacles in the customer journey is having a positive effect on the overall customer experience.
Customers want a swift, trouble-free resolution to any problems they have with your product/service making effort the perfect barometer for measuring change
SaaS organizations might also use a CES survey to gauge their customer onboarding experience.
Onboarding is where the majority of users first come into contact with the product meaning brands have a short window of opportunity to make a positive impact.
Making the installation and training process easy, fast, and intuitive has a huge impact on whether or not the software will be universally adopted by your customer’s team or left unwanted and abandoned (customers are unlikely to renew their subscription service if the tools remain unused).
A CES survey will help customer success teams iron out any small obstacles during the onboarding process.
The final metric we are going to look at is Churn Rate.
Churn Rate is defined as:
“The percentage of your customers who decide not to renew their subscription to your product or service.”
This is a critical metric that needs monitoring for companies running a subscription-based revenue model.
To calculate customer churn rate, you simply select a defined time period (Q3 or Q4, for example) and tally the total number of customers acquired against those that left.
Then, simply divide the number of churned customers by new acquisitions, and multiply that decimal by 100%.
It’s important to note that churn is inevitable and happens to all companies (Fortune 500s down to a local software provider).
However, while that may be the case, it’s still good to know why churn is happening
Is it a case of simply no longer needing the product? Have they chosen to move their business to a competitor? Or did they have a negative experience somewhere along the customer journey?
You can then use this information to pinpoint weak points in your CX chain and provide a better service for your clients.
A final point before we sign off is to make sure you don’t overdo it with your surveys.
Customers can become fatigued if asked for feedback on every single interaction they have with your brand – and you’re just one of many providers vying for their time.
To avoid this, make sure you’re focusing on the critical touchpoints we highlighted earlier in the post when mapping out your customer journey (ZMOT and post-purchase). These are where you are going to get the most “bang for your buck”
Yes, it’s important to gather and measure customer experience data, but just be careful not to overdo it.
If you’d like to learn more about measuring customer experience, understanding digital channels, setting goals, take a look at our alternative online MBA program.
It’s already helped over 50,000+ students master their digital marketing skills, many of whom had little to no prior marketing experience.