A great customer experience can be just like great art; you can’t necessarily describe it in words, but you know it when you see it. Which brings up a great story recently shared by Business and Marketing Reporter Jade Floyd. While recently on her honeymoon, the reporter found a painting she loved in a local gallery that was unfortunately out of her price range. She called the gallery to see if the artists had any prints available or a payment plan option; neither of which were options. She had all but put the idea out of her mind, when 6 months later, she received a call from the gallery. It seems the artist was getting ready for a show in Chicago, and upon hearing about how much Floyd had loved her painting, decided to offer it to her at a discounted price before taking it with her to the art show.
No doubt, that is an example of a great, personalized customer experience. Also in little doubt is, how does one quantify or measure it? Even for businesses that have more structured sales cycles and processes, developing the strategies that provide a better customer experience and then tracking it to ensure their efforts are working can be a daunting proposition. While strategizing about customer experience is becoming more and more mainstream, there is still significant debate as to what are the best KPI’s for measuring an improved customer experience. With so many different metrics available, there is still a ways to go before organizations can standardize both the concept and the measurement tools to improve it. Until more standardized measurements are adopted, here are some measurements to keep in mind when tracking your CX strategy success.
Analyze Customer Journey Analytics
To truly assess your customer’s journey, you’ll first need to have a journey map that presents you with an accurate picture of how a lead or customer experiences your brand. Additionally, a customer journey map will help you understand all the touchpoints a customer experiences on their journey. To achieve this, it helps to utilize a data-driven analytic platform in place, like FiO’s Insight Marketing Platform, which unites the metrics on your various brand channels and allows you to create an analytical awareness of where you’re hitting CX home runs, and in what areas you might be falling short.
You’ll probably want to start with culling together analytics on your social media, ads, website, product reviews, customer loyalty programs, emails, and surveys. Identify metrics that reflect stronger customer engagement, such as increased followers and engagements on social media channels, greater conversions on emails, more frequent usage of your loyalty programs, and stronger product reviews. Putting several of these KPIs together by using a data-empowered iCRM, you’ll be able to begin regularly tracking your customer’s journeys and achieve greater Customer Lifetime Value (CLV.)
Speaking of CLV
Customer Lifetime Value (CLV) is a prediction of the net profit attributed to the entire future relationship with a customer. CLV can be calculated both as a business value that the customer brings during the whole time of the relationship with your brand or as a value over a defined period (a year, 5 years, or anything else that makes sense to your company). It is usually looked at as an average. Customer lifetime value (CLV) is one of the most important metrics to measure at any growing company. By measuring CLV in relation to cost of customer acquisition (CAC), companies can measure how long it takes to recoup the investment required to earn a new customer — such as the cost of sales and marketing. Businesses use customer lifetime value to identify customer segments that are most valuable to the company. The longer a customer continues to purchase from a company, the greater their lifetime value becomes.
This metric is something that customer support and success teams can directly influence during the customer’s journey. If you want your business to acquire and retain highly valuable customers, then it’s essential that your team learns what customer lifetime value is and how to calculate it. One common B2C measurement formula involves measuring customer lifetime value is to take the average order or purchasing total of a particular customer multiplied by the average number of purchases in a year multiplied by average retention time in years. This provides the average lifetime value of a customer based on existing data.
Churn rate is the percentage of your customers or subscribers who cancel or don’t renew their subscriptions during a given time period. While some churn is inevitable, it’s still important that you learn why customer loss is happening in your organization so you can reduce it as much as possible and find the holes you need to plug in your customer experience.
Determining churn rate is the easy part. Designate a regular span of time (monthly, quarterly, or annually is best) and tally up the total number of customers you’ve acquired and the number of customers who were lost during that time. Then, divide the number of customers who churned by the total number of customers acquired, and multiply that decimal by 100% to calculate your churn rate. Once you’ve regularly tracked this number, you can determine where you stand quantitatively, but the hard part of figuring out WHY you lost those customers remains. Is it because of a lack of engagement? Infrequent or stale content? A poor user experience? By analyzing your churn rate and comparing it with some of the other KPIs discussed in customer journey mapping, you can likely identify some commonalities that will give you insight into where – and how – you’re losing your customers.
Customer retention measures not only how successful a company is at acquiring new customers but also how successful they are at satisfying existing customers. It increases ROI, boosts loyalty, and brings in new customers. Retention rate is one of the most important metrics to track, and one of the most vital to your overall revenue stream. Consider the following: Only a 5% increase in customer retention can increase company revenue by 25-95%. It’s significantly easier and more cost-effective to retain customers than to acquire new ones, returning customers spend more, buy more, and refer friends and family.
Customer retention rate is the measurement of how a business retains customers over a specific period of time. The metric is highly connected to the churn rate: the higher the retention is, the lower the churn rate would be. For instance, if your churn rate is 10% over a year, that means that 90% of customers stayed with your company. Thus, the retention rate is 90%.
When in Doubt, Ask
Besides looking at analytics, the best way to understand your customer experience is to talk to your customers. One way you can do this is through surveys. Regular customer communication and feedback should be always encouraged, particularly on your social media channels, but a regular customer survey effort can give you deep insight into your customers thoughts and opinions on your brand. You can also develop a survey that provides additional tracking metrics and scoring options, which can then offer benchmarks of your current customer experience ratings, as well as help you develop goals for future outcomes.
The customer experience can feel very abstract. Although it might seem hard to measure things like brand loyalty, these metrics can help make the abstract more understandable and concrete. Plus, you can only learn how to improve your customer experience once you begin measuring it. If you’re unsure of how to implement some of these metrics or have yet dive into the world of data analytics and how you to use them to improve your customer engagement, contact the team at Group FiO, or better yet, sign up for our ZERO PARTY DATA FREE TRIAL BY CLICKING HERE.