The Top 5 Customer Experience KPIs
By Ron Welty, Founder & Chief Client Officer
In a competitive marketplace where customers have endless options, customer experience has become a key differentiator for businesses. In fact, Gartner reports that 89 percent of businesses will soon be competing primarily on customer experience. As your business places a greater emphasis on customer experience, it’s important to know which metrics or key performance indicators (KPIs) will show you where your business currently stands. Here are the top customer experience KPIs to watch.
Customer Churn Rate
Customer churn is the percentage of customers who stop doing business with your company during a specific time period. You’ll want to track your churn rate to ensure it’s as low as possible.
Churn rate % = Number of lost customers / Number of active customers
There could be many reasons why customers leave, such as poor customer service, a discontinued promotion, or the removal of a popular item or service. To reduce your customer churn rate, it’s important to monitor your customer experiences and gather customer feedback to avoid these potentially fatal business decisions. You can then use this information to make informed, proactive decisions that will help lower your churn rate.
Customer Retention Rate
The opposite of your churn rate, your customer retention rate will show you the percentage of customers who remained with your company over a set period of time.
Retention rate % = (Number of customers at end of period – Number of new customers acquired during period) / Number of customers at start of period
With so many options to choose from, loyal customers are a testament to your customer experience. NewVoiceMedia found that 67 percent of customers will switch brands because of a poor customer experience. Brands can increase their retention rate by creating a sense of community, rewarding valuable customers, and even incentivizing at-risk customers.
Customer Lifetime Value
Your customer lifetime value (CLV) is a projection of the amount of revenue a single customer will generate during their tenure with a company.
CLV $ = (Average sale price per customer x Average number of times customer buys per month) / Monthly customer churn rate
An American Express survey found that 70 percent of customers are willing to spend an average of 13 percent more with companies who provide excellent customer experiences. Personalization is one of the best tactics for improving CLV, per Econsultancy. A few easy ways to personalize the customer experience could be using a customer’s name, knowing their preferences, and providing customized recommendations.
Customer Acquisition Cost
If money talks, then your customer acquisition cost, or how much money you spend to acquire a new customer, can speak volumes on your customer experience.
Customer acquisition cost $ = Sales and marketing costs / Number of new customers acquired
The less money you need to spend on sales and marketing to attract customers, the better your customer experience. The same American Express survey found that one happy customer leads to an average of nine referrals for a business. Whether it’s in-person, on your website, or even on social media, ensure your customer experience is buttoned up everywhere your customers experience your brand.
Average Resolution Time
When a customer has a question or problem, how quickly does it get resolved? Your average resolution time is the time it takes to solve a customer’s issue from start to finish.
Average resolution time = Sum of all interactions for total resolved issues – Total number of resolved issues
In today’s age of instant gratification, the majority of customers expect to reach a company 24/7. Along with average resolution time, another KPI you may want to track is your average first response time, or the average amount of time between when a customer reaches out for help to the time your company responds. Customers expect brands to respond within one hour—even on nights and weekends. Whether it’s through chatbots, social media, email, or the phone, it’s important to have dedicated and properly trained associates who can provide quick and effective solutions.
Evaluate Your Customer Experience
Tracking your KPIs is vital to understanding the day-to-day life of your business. However, this data won’t be useful unless it’s ready to view, intuitive to understand, and easy to publish.
IntelliShop understands that the key to improving your business is having real-time, accurate information about how your locations are performing. From mystery shopping programs to voice of the customer tools, we have the solutions to evaluate your customer experience and present our findings to you in a detailed, actionable InSite™ report. Contact IntelliShop today to see how we can provide a positive customer experience ROI for your brand.