Customer experiences should never be assumed. I always encourage the use of empirical methods in ascertaining anything in business. It is vital that you know everything there is to know about your customers. The good thing is that you can elicit feedback from your customers. Customers actually love to be engaged in giving feedback. Any effort as an entrepreneur that you put into understanding your customers better pays off. In this article, I am discussing 6 customer experience metrics you should track and how you can do that. These are globally recognized standards so they are highly recommended.
NPS – Net Promoter Score
A satisfied customer is most likely to tell others of their experience. You can attest to how that when you get good customer experiences with a brand you recommend it to others. To track this you will be trying to establish how often your customers recommend the brand to others. You can track using just two questions:
On a scale of 0 to 10 is your likelihood of recommending our brand to others?
Kindly explain why you chose that score.
Note that you can do this for the whole brand, a particular product, or service. You can even make customer feedback forms or cards that customers can fill. It really is up to your discretion how you go about it. Calculating the NPS becomes much easier:
First, take note that those who score 0 to 6 are what are called detractors. Those who score 7 and 8 are labelled passives; those who score 9 and 10 are entitled promoters.
× 100 = Percentage Promoters
× 100 = Percentage Detractors
NPS = Percentage Promoters – Percentage Detractors
NPS score benchmarks vary from industry to industry. Generally, a score of above 0 to 20 is considered good. Above 20 to 50 is considered favourable. Then above 50 to 80 is considered excellent. Above 80 is considered world-class.
CSAT – Customer Satisfaction
This is more straightforward to track because you simply use one question. There are variations in terms of the scale but a scale of 1 to 5 is commonly used. The question would be:
How would you rate your recent brand, service, or brand experience?
1 – Very Dissatisfied (Very Bad)
2 – Somewhat Dissatisfied (Poor)
3 – Neither Satisfied nor Dissatisfied (Average)
4 – Somewhat Satisfied (Good)
5 – Very Satisfied (Excellent)
CES – Customer Effort Score
This seeks to establish how easy it is or was to solve a customer’s problem. As in, your product or service, how easy was it for the customer to use it in solving their problem(s). There are two major variations you can choose from as follows:
How easy was it to solve your problem with our brand, product, or service?
Very Difficult, Difficult, Neither, Easy, or Very Easy
Our brand, product, or service made it easy for you to solve your problem
Strongly Disagree, Disagree, Somewhat Disagree, Undecided, Somewhat Agree, Agree, or Strongly Agree
CES is closely related to customer loyalty so take it seriously. Customers want solutions to their problems but they want their problems solved with ease.
CLV – Customer Lifetime Value
The CLV refers to the projection of the net profit that will be attained from a customer over a certain period. This is open to your own interpretation i.e. it can be in terms of profit, revenue, and so forth. Bear in mind that you will basically be dealing with estimations or averages. Let us say a customer brings in US$10 per month. Let us also assume you anticipate having that customer for 10 years. This means their CLV will be US$1200.
As an entrepreneur, you should be concerned to find out the number of customers who have since stopped using your brand, product(s), or service(s). That number is what gives us what is called a churn rate. It is essentially a measure of either the number of customers who have stopped or the percentage of customers who have stopped in a specified period. The churn rate can be calculated in 3 ways. Let us suppose you signed up 100 customers who bring in US$10 every month. If 20 of them stop using your brand, then your churn rate over a month period can be 20, 20 per cent, or US$200.
This simply measures how you are retaining customers over a certain period of time. Evidently, the retention rate is closely related to the churn rate. This is so because the higher the other than the lower the other or vice versa. From my earlier example, if the churn rate was 20 per cent then the retention rate was 80 per cent.
Just so you know NPS is the most commonly tracked metric. It is followed by CSAT, Churn Rate, Retention Rate, CLV, Own Metrics, and CES in that order. This was discovered in a study that was once conducted to find out how businesses track their customer experiences. The top 3 metrics which entail direct feedback from customers are NPS, CSAT, and CES in that order. If you do not already have this framework for your business now is the time. The most valuable commodity in this digital age is data. Collect lots of it for your business and come up with evidence-based insights and subsequent decisions. This can all be fun and exciting if you take it seriously and do it regularly.