In today's rapidly evolving and competitive business environment, achieving robust results in terms of customer experience KPIs (key performance indicators) can significantly impact a company's overall success. Customers have come to expect seamless interactions, personalised services, and timely support, making it imperative for businesses to continually assess and improve their customer experience (CX) efforts.
Historically, customer experience KPIs focused on performance measures, such as Average Handle Time (AHT) and volume of contacts answered, however, in recent years there has been a shift to customer-centric and experience-oriented measurements as these have a greater impact on company success.
The table below highlights some common contact centre metrics and how they were used historically verses how they are used today:
As an independent technology consultancy specialising in customer experience projects, we understand the significance of quantifying the success of CX. In this blog post, we will delve into three key customer experience KPIs that are used today, namely Net Promotor Score, Customer Satisfaction Score and Customer Effort Score which measure CX success, along with two further metrics, Customer Churn Rate and Customer Retention Rate, which are impacted by CX.
1. Net Promoter Score (NPS)
The Net Promoter Score (NPS) is a widely recognised metric that evaluates customer loyalty and advocacy. NPS is derived from a simple question: "On a scale of 0 to 10, how likely are you to recommend our company/product/service to a friend or colleague?" Respondents are grouped into three categories: Promoters (9-10), Passives (7-8), and Detractors (0-6). To calculate the NPS, subtract the percentage of Detractors from the percentage of Promoters.
NPS provides an insightful snapshot of overall customer sentiment, allowing businesses to identify areas that need improvement and those that excel in delivering exceptional experiences.
2. Customer Satisfaction Score (CSAT)
The Customer Satisfaction Score (CSAT) is another key metric for how you measure customer experience. It looks at satisfaction level of customers after specific interactions with a product or service. Typically, it involves a brief survey with a question like, "How satisfied are you with the service you received today?" to which respondents choose from a scale of 1 to 5 or symbols representing ratings.
CSAT feedback helps businesses understand immediate customer impressions and identify potential pain points in their customer journey. It's especially valuable for pinpointing issues in individual touchpoints or transactions.
3. Customer Effort Score (CES)
The Customer Effort Score (CES) gauges the ease of completing a particular task or interaction with a company. A typical CES question could be, "Overall, how easy was it to resolve your issue today?” Respondents usually provide a rating on a scale, such as 1 to 5.
A low CES indicates that customers found it effortless to achieve their goals, while a high CES score indicates that the customer experience was more cumbersome. By minimising customer effort, businesses can increase satisfaction, loyalty, and ultimately, retention.
It is important to note here that a lower score is what companies should be aiming for, whereas on the previous two metrics (NPS and CSAT) higher scores are associated with positive results.
4. Churn Rate
Churn rate measures the percentage of customers who stop using a company's products or services over a specific period.
A high churn rate is an indication of customer dissatisfaction and is detrimental to a company's long-term success.
To calculate churn rate, divide the number of customers lost during the period by the total number of customers at the beginning of the period, then multiply by 100 to get the percentage.
For example, if you had 1,000 customers at the beginning of the quarter, and 150 customers stopped using your product or service during that quarter, and you had 850 customers at the end of the quarter, the customer churn rate would be calculated as follows:
Customer Churn Rate = (150 / 1000) * 100
Customer Churn Rate = 15%
In this example, the customer churn rate for the quarter is 15%, meaning that 15% of the customers at the beginning of the quarter stopped using your product or service by the end of the quarter.
Reducing churn involves understanding the reasons behind customer attrition and implementing strategies to address those issues effectively. One way to gather this information is to access the CSAT rating and review other information provided by customers during post-contact surveys.
5. Customer Retention Rate
Customer retention rate is the flip side of churn rate. It measures the percentage of customers who continue to do business with a company over a specific period.
To calculate the retention rate, subtract the number of customers acquired during the period from the total number of customers at the end of the period. Divide this number by the total number of customers at the beginning of the period, then multiply by 100.
For example, if you had 1,000 customers at the beginning of the quarter, acquired 200 new customers during the quarter, and had 900 customers at the end of the quarter, the customer retention rate would be calculated as follows:
Customer Retention Rate = ((900 - 200) / 1000) * 100
Customer Retention Rate = 70%
In this example, the customer retention rate for the quarter is 70%, meaning that 70% of the customers from the beginning of the quarter were retained by the end of the quarter.
A high customer retention rate indicates that the company is delivering positive experiences that keep customers coming back for more.
Conclusion
In the realm of customer experience, the question of how you measure service quality and customer satisfaction is best indicated by the level of customer happiness, loyalty, and advocacy achieved. Adopting the right metrics enables businesses to quantify their CX efforts and identify areas for improvement. The Net Promoter Score, Customer Satisfaction Score, and Customer Effort Score provide valuable insights into the overall sentiment and transactional experiences. Additionally, monitoring Churn Rate and Customer Retention Rate helps gauge the long-term impact of CX initiatives.
As an independent technology consultancy specialising in customer experience projects, we believe that understanding and acting upon these metrics are crucial steps towards creating meaningful and lasting customer relationships. By continually measuring and refining customer experience success, businesses can position themselves as CX leaders and gain a competitive advantage in the market.
Improving CX for your business
Is the customer retention rate at your company lower than you would like? Has the customer churn rate recently increased, but you are unsure why? Are you interested in reviewing your contact centre metrics to improve the customer experience at your company? Our Contact Centre Consultants are experts in conducting contact centre reviews and creating strategies to transform companies.
Interested in finding out how our team can assist you in your next contact centre transformation project? Contact us and one of our experts would be happy to tell you more.