Shockingly (or maybe not), 96% of customers report that they would leave a business if they had a bad experience. After spending so much time and money building customer relationships, the ease with which we can lose those valuable customers is enough to keep us up at night. That’s why it’s critical to measure your customer experience—the good, the bad, and the ugly.
Customer experience metrics give you an objective way to measure your company’s performance. These metrics can also help you identify gaps in training, determine if you need to hire additional employees, or alert you to serious problems with your products or services.
We put together this guide to help you understand which customer experience metrics are important (and which ones are a bit misleading). Tracking these metrics can help you build stronger relationships and keep customers coming back for more.
Why Are Customer Experience Metrics Important?
As a customer experience (CX) professional, your principal responsibility is to care about how people feel about your brand at every stage of the customer journey. This includes how they feel about your website the first time they visit, how they feel when they have an in-person interaction with one of your employees, and how they feel when they use one of your products or services.
CX metrics are important because they help you make data-based decisions. Instead of relying on gut feelings about what customers want and need, you can monitor your CX metrics to keep a pulse-check on what your customers are thinking.
Customer experience metrics can also help you make decisions about staffing, training, and technology. For example, if you discover that customers are upset by long wait times, you may want to invest in new technology to increase efficiency.
Top 7 Customer Experience Metrics to Watch Like a Hawk
Monitoring customer experience metrics can help you identify small issues before they turn into major problems that drive away customers. Once you know how to calculate the metrics below, track them regularly to stay on top of changing trends.
Net Promoter Score (NPS)
The net promoter score shows you how many of your customers are likely to tell friends, family members, and colleagues about your business. It’s important because it helps determine if your customer service initiatives are successful. The better your service, the more likely customers will want to recommend your company to the people they care about.
To calculate your NPS score, ask customers to rate how likely they are to recommend your company. The rating scale should range from 1 to 10 to make it easy to determine how many promoters you have.
Once you have all the responses, sort them into categories. Customers who give you scores of 9 and 10 are your promoters. The people who give you scores ranging from 1 to 6 are considered detractors. Those who give you scores of 7 and 8 are known as "passives."
Now divide the number of customers in each category by your total number of survey responses to calculate the percentage of promoters, passives, and detractors. If you received 302 responses, your categories might break down as follows:
- Promoters: 215 responses = 71.2%
- Passives: 45 responses = 14.9%
- Detractors: 42 responses = 13.9%
The last step is to subtract the percentage of detractors from the percentage of promoters to determine your NPS. In this case, you’d subtract 13.9% from 71.2%, leaving you with an NPS of 57.3%.
How to Respond to Your NPS
There’s always room for improvement, but a high NPS indicates your company has been providing service you can feel good about. Keep focusing on excellent customer service. If your NPS isn’t where you’d like it to be, follow up with respondents. Use emails, interviews, and other methods to determine what your business needs to do to change some of those detractors into promoters.
Once you have the customer feedback you need, look through it to determine if you can identify any patterns. For example, if many detractors mentioned issues with the same department, you can provide additional training to employees in that department. You may even discover that employees need better tools to do their jobs effectively.
Customer Satisfaction Score (CSAT)
Your customer satisfaction score tells you how satisfied customers are with the overall customer experience or with one aspect of the products and services you provide. It’s helpful because you can use it to determine if new product features are well-received or if your service team is doing a good job meeting customer expectations.
To calculate your CSAT, send customers a short survey after each interaction with one of your products or employees. Ask them to rate the interaction on a scale of 1 to 5, with 1 representing a poor experience and 5 representing an excellent experience. Then, add up all the 4 and 5 ratings and divide them by the total number of responses.
Here’s an example. If you receive 127 CSAT surveys and 96 of them are in the target range (ratings of 4 or 5), your CSAT is 75.6% (96 divided by 127). Generally, a good rating is anything above 75%, but it depends on your industry. Hotels tend to have lower average scores, while the industry benchmark for breweries is at 85%.
How to Respond to Your CSAT
If your company has a high customer satisfaction score, continue investing in customer experience management. Consider rolling out new service initiatives to get your CSAT even higher the next time you send out a customer satisfaction survey.
When your CSAT is low, it’s important to contact customers and find out why they gave you low ratings. Send out a survey with questions about your products/services, technology, customer service, and other aspects of your business. This can help you identify the root causes of a low CSAT, giving you an opportunity to address them.
Depending on the responses you receive, you may find that your low score is due to one or more of the following:
- Poor website layout
- Difficulty checking out on an e-commerce site
- Slow response times from customer service
- Lack of self-service options
- Out-of-stock products
Customer Churn Rate
Customer churn rate helps you understand how many customers are leaving your business in a certain period of time. It’s one of the most important CX metrics because it helps you identify underlying issues that could drive customers away. Acquiring a new customer is much more expensive than keeping an existing customer, so you want your churn rate to be as low as possible.
Calculating Customer Churn Rate
To calculate your churn rate, you need to know how many customers you lost during a specific period of time. Many companies track their monthly churn rate, but you can also calculate a quarterly rate or an annual rate. Simply divide the number of customers lost during the period by the number of customers you had at the start of the period.
Let’s say that you had 626 customers on May 1. On June 1, you discover that you lost 20 customers in May. That means your churn rate is 0.032, or 3.2%. The lower your churn rate, the better.
How to Respond to Your Customer Churn Rate
A low churn rate typically indicates that a business has high levels of customer loyalty. If your churn rate is higher than you’d like, contact previous customers and ask if they’d be willing to share why they left your business. You may discover that your product has outdated features or that your customer support team isn’t delivering the best possible experience.
Repurchase Ratio (Customer Loyalty)
Repurchase ratio helps you understand how many customers return to your business rather than making a single purchase. It’s expensive to acquire new customers, so tracking your repurchase ratio helps you measure customer loyalty. If you have many loyal customers, it’s easier to keep your retention rate high.
Calculating Repurchase Ratio
If you follow a subscription model, all you have to do is divide the number of customers who keep their subscriptions by the number of customers who cancel at the end of their first subscription period. Here’s an example:
Let’s say you have 128 customers who cancel at the end of their first month of service and 218 who continue subscribing. Your repurchase ratio would be 58.7%.
The calculation is similar for transaction-based businesses. Simply divide the number of return customers in a specific period by the total number of customers during the same period. Assuming you have 984 customers in a 6-month period and 218 of those customers make more than one purchase, your repurchase ratio would be 22.2%.
How to Respond to Your Repurchase Ratio
If your repurchase ratio is low, look for ways to entice customers to return to your website or brick-and-mortar store. The sky’s the limit, but here are a few ideas to get you started.
- Send an email with a special offer for customers who’ve purchased something within the previous 90 days.
- Hold a special event, such as a launch party, at your physical location.
- Connect with past customers on social media.
- Spruce up your outdoor signage and indoor displays.
- Step up your content marketing efforts.
- Make sure employees are focused on improving customer interactions.
- Keep customer pain points in mind as you develop new products or services.
- Create a referral program to reward loyal customers for helping you with word-of-mouth promotion.
- Set up an onboarding program for new customers. If they feel invested in your company, they’ll be more likely to make repeat purchases.
Customer Retention Rate
Customer retention rate is the opposite of churn rate, as it tells you how many customers you’ve retained over a specific period of time. This customer experience measurement is important because it helps you understand if your company is doing a good job at building customer relationships and meeting the needs of your target audience.
Calculating Customer Retention Rate
To calculate your retention rate, you need to know the following:
- How many customers you had at the beginning of the period
- How many customers you had at the end of the period
- How many customers you added during the period
Let’s assume you want to know your CRR for the month of September. You review your records and locate the following information:
- You had 186 customers on September 1.
- You added 19 customers.
- At the close of business on September 30, you had 196 customers.
Now use this equation to calculate your retention rate: [(E-N)/S] x 100. In this scenario, E is your ending number of customers, N is the number of customers added during the month, and S is the number of customers you started with at the beginning of the month. Your CRR would be 95.2%.
How to Respond to Your CRR
If your customer retention rate is starting to dip, look for ways to keep customers engaged. Here are a few options:
- Optimize your customer onboarding experience
- Send weekly emails to alert customers to new products or services
- Highlight loyal customers in case studies or white papers (for B2B firms)
- Offer products or services that aren’t available elsewhere
- Provide excellent after-sales service
- Personalize customer interactions as much as possible
Customer Effort Score (CES)
Customer effort score helps you measure how much effort a customer has to expend to complete a task. The task could be something simple, such as signing up for your email newsletter, or something more complex, such as browsing a selection of products, adding one to an online shopping cart, and completing a purchase.
The CES metric is important because it helps you understand if you’re making things too difficult for your customers. Think about what you’d do if you tried to buy something online and had to go through a long, complex process to complete the transaction. You’d probably get frustrated and buy the same item from a different website. Your customers are likely to do the same.
To calculate your CES, send out a survey after a customer interacts with your business. You may want to send the survey after a customer makes a purchase or contacts your customer support line for assistance.
Average Resolution Time (ART)
Average resolution time helps you assess the efficiency of your support team. It describes the average amount of time it takes to solve a customer’s problem. Tracking ART is important because it can help you determine if you need additional support team members, if your current team members need additional training, or if you need to invest in new tools.
To calculate your ART, you need to know how many calls or tickets you receive in a specific period and how long it takes to resolve them all. Divide the amount of time it takes to resolve each problem by the total number of calls or tickets received.
Let’s assume you had 242 tickets in a 30-day period. It took your support team 416 hours to resolve them all. Your average resolution time would be around 1.72 hours. Whether this is a good ART depends on what type of work you do. For simple requests, this is too high. If you fix computer hardware, 1.72 hours per ticket is great.
How To Respond To Your ART
If your average resolution time is too high, it may be due to poor training or a lack of resources. Here are a few things you can do to reduce your ART without overwhelming employees:
- Create an internal knowledge base to give support team members access to extensive documentation.
- Empower team members to make decisions without having to ask for permission from a supervisor.
- Monitor employee performance to determine if you need to provide additional training on call handling.
- Invest in AI technology to make it easier to handle simple requests.
...and the Customer Experience Metrics to Challenge
The metrics below aren’t useless, but they don’t give you much actionable information. If you want to make data-driven decisions, you’re better off monitoring the metrics above.
Total Number of Customers
Most businesses would love to have thousands of customers, but your total number of customers isn’t as important as the metrics described above. It tells you nothing about how loyal those customers are, how many times they buy from you each year, or how much they spend on each order.
Which would you rather have?
- 100 customers who spend an average of $1,000 per year with your business
- 1,000 customers who spend an average of $100 per year with your business
If you chose 100 customers who spend an average of $1,000 per year, you understand why your total number of customers doesn’t matter as much as the other metrics. In both scenarios, you’d generate $100,000 per year in revenue, but it would take a lot less effort to serve 100 customers than it would to serve 1,000 customers.
Monthly Active Users
Monthly active users refers to the number of unique visitors who come to a company’s website each month. Although it’s not something you should ignore completely, it doesn’t provide as much information as other metrics. For example, if you have 10,000 monthly active users, what does that really tell you? It informs you that 10,000 different people visit your company’s website each month.
It doesn’t tell you if those customers are happy with your product, if they find it easy to navigate the site, if they’re buying from you or simply reading your free content, or anything else that could help you make business decisions.
How Does Your Customer Experience Measure Up?
Our goal as customer experience leaders is always to play defence against negative customer experiences, and regularly analyze our "gameplay" when we drop the ball. With a careful eye on the metrics that matter (and a grain of salt for the others), you can pinpoint the strengths and weaknesses in your customer journey—and most importantly, keep your fans happy.
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