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Five Concrete Ways to Measure Customer Experience

analyticsCustomer experience (CX) can be a very overwhelming and confusing topic. It’s not customer service, but it does include customer service, as well as every other function for that matter. Often, this confusion culminates at one specific point - which metrics to use.

At its core, CX is “the thoughts and perceptions customers have toward a brand.” (Forrester). Let’s drill into that word - perceptions, or how people feel about things. How on earth are we supposed to measure that effectively!?

This is not a new challenge. Historically, we’ve been extremely reliant on surveys for all kinds of customer data; this has never been super effective, and it is comically ineffective with today’s customers. Net Promoter Score (NPS) is old enough to have a driver’s license, and in most situations has little to no correlation to actual customer behaviors.

No wonder there is such a huge gap between the work of CX and the ability to demonstrate ROI. Our customers have evolved. It’s time for us to do the same.
This blog will explore several emerging options for measuring customer perceptions. Out of all the wonderful things technology and machine learning has done to revolutionize the contact center, it’s the new Voice of Customer capabilities that have me the most excited. We can get closer to our customers than ever before, fueling the work of CX and demonstrating ROI in far greater ways.

Customer Growth Engine

Your customer base is the organization's most valuable asset, and it should be managed as such. Introduced by Jeanne Bliss in Chief Customer Officer 2.0, Customer Growth Engine has major “mic drop” factor.

Here’s how it works: On a quarter by quarter basis, measure how much you were able to increase your customer base by volume and value, followed by how many customers were lost by volume and value. Customers lost subtracted from customers gained is your Customer Growth Engine score for that quarter.

Part of the power is to use whole numbers instead of percentages. These straight-forward terms allow you to see how many customers are entering the journey versus how many are choosing to leave. If your customer base is in decline, the obvious question is why? No more hiding behind hypothetical metrics like NPS; this one heavy-hitting number should accelerate a robust dialog and a sense of urgency among stakeholders.

Customer Sentiment

Customer sentiment is the way a customer feels about a product or service. In the past we hardly even tried to capture this, but with tremendous advances in Voice of Customer technology, it is now one of the absolute most effective ways to measure Customer Experience. Customer sentiment is extremely important, as more and more of our customer feedback data comes from unstructured channels (reviews, social media, organic interactions, consumer communities) versus structured channels (surveys).

A customer sentiment score can be established by implementing a Customer Experience Management platform with strong automation capabilities. By bringing all customer interaction data into this centralized location, everything from recorded calls, to customer emails, to social media posts, to reviews on third party sites can be organized and scored. This makes it possible to use all that tricky qualitative or unstructured data we used to dismiss, and provide actionable insights and a consistent method of measurement.

Customer Engagement Score or Customer Health Score

While the concept of customer health is difficult and time consuming to measure, it is also tremendously valuable. This would be a "composite metric" that provides a value of health associated with specific customers based on a series of selected inputs. Select inputs associated with various touch points, and this will result in a simple number that spans the holistic nature of Customer Experience. Many organizations will generate a Customer Health Score for just their top 100 customers as an example, or customers in a particular strategic segment. In my own personal experience, I was able to use a Customer Health Score metric for a specific product release very effectively.

(For more on calculating CHS and recommendations on inputs, see "How To Score Customer Health" by Dan Stienman on Gainsight.com.)

A complementary metric to Customer Health Score is the "Customer Maturity Index." This takes the individual customer focus even one step further to consider how capable the customer is to derive value from a vendor's solution. This, too, is a composite metric with various custom inputs.

(For more on measuring CMI, take a look at this article from Boaz Maor and Ralf Wittgen.)

Customer Lifetime Value (CLV)

Customer Lifetime Value is a measure of all the money a customer spends with your brand over the entire relationship. This metric is especially good for situations where you have the ability to develop a meaningful relationship with customers over a long period of time. There are many ways to calculate this, most of which are extremely complicated, but it doesn't have to be. A simple version can be achieved by taking the annual profit per customer, multiplied by the average number of years a customer remains, and then subtract the cost of customer acquisition.

CLV can be a powerful companion to NPS if you can show how much greater the lifetime value is for a “promoter” versus a “detractor.” This provides a direct association between NPS and revenue growth. At Officium Labs, we have been able to correlate improvements in Customer Satisfaction to a significant increase in CLV, demonstrating tremendous value for CX work in a Fortune 10 company.

(CLV Calculator has an Excel template for download, as well as some examples.)

By using some combination of these modern metrics, we can measure both the customer’s perception towards our brand, as well as the impact that perception is having on their overall loyalty. 

There is no perfect CX metric, and there never will be. We will always be experimenting and evolving in our ability to measure how customers feel toward our brand. And you know what? That’s okay. The truth will be found by those who work hard to seek it, and who refuse to grow complacent with lazy metrics.