EXPERT INSIGHTS

Jan-23-2024

6 customer experience metrics to measure & how to improve them

Khoros Staff

Satisfied customers are a mark of success for any business. They’re likely to spend more money, be loyal, and recommend your brand to others. However, the opposite can also be said about unsatisfied customers. In fact, research from Qualtrics and ServiceNow revealed that 80% of customers said they switched brands because of a poor customer experience.

Measuring the customer experience allows brands to determine whether they satisfy customers through various interaction points. This information helps brands determine what’s working well with their customer experience and what pain points are holding them back from better serving their audience.

If you’re looking for ways to measure and improve the customer experience, keep reading to learn everything you need to know about the most common customer experience metrics including what they are, how to measure them, and how to improve them.

What is a customer experience metric?

Customer experience metrics (also known as CX metrics) are KPIs that quantify the customer’s experience through a numerical score. They can be used to gauge customer sentiment and satisfaction with your brand to determine whether they’d purchase from you again or even recommend your brand to others. 

Brands can use the scores associated with customer experience metrics as a benchmark and leading indicator when making improvements to customer service operations or when reconsidering the customer journey. These benchmarks can be used to monitor progress over time and can be compared to industry standards to see how your brand stacks up to competitors. Ultimately, the benefit of measuring the customer experience is providing valuable insights that enable your brand to make improvements resulting in higher satisfaction and loyalty.

6 most common customer experience metrics

CSAT, NPS, and CES are the most popular customer experience metrics which are all used to quantify customer satisfaction, each with its own uses and limitations. Businesses can use these customer experience metrics together to identify where there may be room for improvement in terms of customer care, including interactions, workflows, and technology. These metrics often represent customer impressions of the brand, its products, and maybe its corporate identity as a whole — but they’re best used when granularly measuring the places where customers engage your brand to ask questions, get help, or make a purchase. For additional context, many brands also look at the customer experience metrics CLV, churn rate, and retention rate. We’ll discuss each of these metrics below.

1. Customer Satisfaction (CSAT)

Customer satisfaction (CSAT) scores measure the degree to which customers are pleased with a product, service, or experience. Brands use CSAT scores to determine customer satisfaction at specific interaction points. For example, a brand may use CSAT to determine how satisfied customers are with its checkout process, when using the product/service, and following conversations with support.

How to measure CSAT

Typically, to measure CSAT a brand would ask a question on a survey like “How satisfied were you with X?” or “How would you rate your satisfaction with X?”. CSAT scales can range from poor to excellent, 1 – 5, 0-100, or even happy face to angry face.

Regardless of the scale you use, CSAT scores will inevitably be displayed in percentages.

How to calculate CSAT

Calculate a CSAT score by taking the number of positive responses and dividing it by the total number of responses, then multiplying the value by 100 to get the percentage of satisfied customers. 

CSAT= (number of positive responses/total number of responses) x 100

2. Net Promoter Score (NPS)

To measure NPS, customers are asked how likely they are to recommend a company or product to a family member, friend, or colleague on a scale of 0 – 10. This question can be asked at any point after a user takes an action related to your brand such as purchasing a product, creating an account, contacting your support team, etc.

Based on the responses, customers are scored into three categories:

  • Promoters — Customers who responded with a score of 9 or 10. These are your most loyal and enthusiastic customers.

  • Passives — Customers who responded with a score of 7 or 8. These customers are satisfied with your business, but not as likely to recommend it as promoters.

  • Detractors — Customers who responded with a score of 0-6. These customers are unsatisfied and may discourage friends and colleagues from engaging with your business.

How to calculate NPS

To calculate NPS, you’ll need to calculate the percentage of respondents who are promoters and the percentage who are detractors. To get your final NPS score, subtract the percentage of detractors from the percentage of promoters. You will end up with a number between -100 and 100. An NPS score of -100 indicates every customer is a detractor, while an NPS score of 100 indicates every customer is a promoter.

For reference, here’s the NPS formula:

NPS score = (% promoters - % detractors) x 100

3. Customer Effort Score (CES)

Customer effort scores (CES) measure how easy it is to engage and interact with your brand. While this doesn’t measure satisfaction directly, it can be an excellent indicator of customers’ experiences when they’re looking for information, making purchases, asking questions, or looking for support. CES is a great way to identify customer pain points when interacting with your brand, such as if they have a hard time performing a specific action during the customer journey.

How to measure CES

To measure CES, customers are typically asked to rank their experience with a business from one (very easy) to five (very difficult). In some cases, this is also presented as a scale from Strongly Agree to Strongly Disagree in response to questions about the customer’s experience.

CES surveys are most commonly used:

  • After a customer touchpoint that has led to a purchase

  • Immediately after a customer service interaction

  • To track the overall customer experience with your product or brand

How to calculate CES

To calculate CES, add all the scores from all responses and divide the sum by the number of respondents. The lower the score, the better.

For reference, here’s the formula for calculating CES:

CES score = Total sum of responses/Number of responses

4. Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) is a prediction of the average revenue a customer is expected to bring to your company over time. In simpler terms, it’s a revenue metric but it still represents customer loyalty and satisfaction because happy customers are likely to purchase from your brand again, increasing their customer lifetime value. This metric is also important for forecasting growth when combined with a brand’s retention and churn rates.

How to measure CLV

Measuring this CX metric varies depending on the industry. For example, SaaS companies measure CLV by dividing monthly recurring revenue by the total number of customer accounts and then dividing that result by the user churn rate. But this can look different for an e-commerce company.

A high CLV in general can indicate positive customer experiences. After all, your customers are staying loyal to your brand. A low or decreasing CLV can indicate that there’s room for improvement.

How to calculate CLV

To calculate, take the average purchase value (whatever that is for your company) and multiply it by the average purchase frequency.

Here’s the general formula:

Customer lifetime value = customer value x average customer lifespan.

5. Churn rate

The customer churn rate is a metric that represents how many customers have stopped using your products or services. It measures the percentage of lost customers and is sometimes calculated as a lost business value. Brands should consistently measure churn rate,

How to calculate churn rate

The churn rate calculation is easy but your business should first determine the time period you want to measure against such as monthly, annually, or quarterly. The formula is as follows.

Customer churn rate = (lost customers / acquired customers over a set period) x 100

6. Retention rate

Retention rate is the opposite of churn rate, measuring a brand’s ability to keep customers over time. This metric calculates the percentage of customers a brand retains over a specific time period. It helps predict customer loyalty and engagement.

How to calculate retention rate

Simply take the number of customers at the end of the period and subtract the new number of customers within that period. Divide that by the number of customers at the start of the period and multiply by 100. Here’s the formula.

Customer retention rate = ((CE - CN) / CS) x 100

Which customer experience metrics should you measure?

The customer experience metrics you decide to measure should be based on the knowledge gaps you are looking to fill and the long-term goals for your brand. For example, your brand may wish to better understand customer sentiment at a particular touchpoint in which case one CX metric might be more relevant than others. On the other hand, your brand may wish to better understand and improve the customer experience as a whole which would indicate the need to utilize several CX metrics.

How to improve customer experience metrics

We’ve established how to measure customer experience and that it’s important to track CX metrics to gauge satisfaction. But once you know your brand’s customer experience scores, how can you improve them? Here are four ways to get started.

1. Speed up customer service interactions

In a Khoros survey, around 50% of respondents said that they have interacted with brands on social media. Of customers who do interact with brands on social media, 65% expect brands to respond to their message and around 30% said they would stop giving a brand their business if the brand did not meet the customer’s timeframe expectations for a response. It’s neither easy nor satisfying to spend hours trying to resolve customer service issues. Speeding up customer service interactions can help improve customer satisfaction scores and make customers spend more.

The best way to achieve this is to modernize your contact center. Modern contact centers deflect calls to digital channels and automate repetitive and predictable tasks with chatbots, which streamlines workflows and resolves customer needs more quickly.

An online community is also a great self-service resource for any enterprise looking to reduce customer resolution time. Instead of relying on a phone or chat agent to help with an issue, online communities give customers the resources they need to solve their own problems. Online communities can scale organically as a business grows, as they often rely on user-generated content (UGC) to resolve issues and answer questions. HP, for example, reduced first response time by 37% and resolution time by 41% with a Khoros-powered community.

2. Boost customer service interactions

Sometimes a customer’s problem can’t be resolved in a single customer service interaction. Should an interaction need to span sessions or transfer between agents or chatbots, make sure that the customer’s conversation transcript and interaction history transfer with it. If agents aren’t able to refer back to conversation history and notes, customers have to repeat themselves. This causes frustration and ultimately lowers customer satisfaction.

In a survey of 200 enterprise brands and more than 1,000 customers, we found that 62% of customers want to be able to engage with brands across multiple digital channels and 77% of consumers want brands’ customer service teams to communicate internally so customers don’t have to repeat themselves. This is problematic for brands because 77% of the businesses we surveyed said they struggled to create a cohesive journey across channels and devices.

To improve the customer experience, make channel switching easy for consumers and service agents. Customers should be able to start an interaction on one channel and move to another without having to repeat themselves. To achieve this, agents need the ability to quickly access interactions from across channels through an omnichannel platform like Khoros Care.

The result will be a better customer experience and higher CX metric scores.

3. Be where customers need you

Make it easy for your customers to get help. In a Khoros study of consumer preferences, the biggest gaps between what channels consumers want to use and what brands actually make available is in SMS and web chat. You can bridge this gap by diversifying your customer care channels. Offer people the ability to contact you through web chat, SMS, social, messaging, review sites, and peer-to-peer communities. This will allow customers to reach you on the digital channel of their choice, saving them from seeking you out (and we already know that saving customers time is a good thing).

4. Increase the number of customers who participate in customer satisfaction surveys

Customer satisfaction surveys can give you a better understanding of how your customers feel, but if the total number of survey respondents isn’t large enough to represent your customer base as a whole, you might not be getting the most accurate data. The more consumers who participate in customer satisfaction surveys, the better your data will be.

You can improve your survey’s response rate through personalization. According to research by McKinsey & Company, 71% of customers expect brands to deliver personalized interactions. To personalize your survey notifications, you can A/B test email subject lines and body content, include the customer’s name, send the survey in the customer’s preferred language, and more.

See how Khoros helped increase Midco’s CSAT survey completion rate by 460% in our case study.

5. Listen to the customer and implement feedback

Listening to the voice of the customer and acting on that feedback is critical to improving retention among existing customers and attracting new customers, ultimately improving your CX metrics and revenue. To understand what your customers want, it’s important to look at customer experience analytics data. This will allow your brand to see where improvements need to be made and implement changes for better customer experience management. According to McKinsey & Company, companies can increase sales revenue by 2-7% and profitability by 1-2% by improving the customer experience.

AI-powered digital engagement, made better with Khoros Service

Improve customer experience metrics by modernizing your contact center with Khoros Service. Let AI and automation streamline your workflows so you can listen, filter, categorize, and route incoming conversations to the best possible bot, human agent, or self-service resource to resolve the customer’s inquiry (which has been proven to boost customer satisfaction).

To learn more about our digital customer service solution and how they can help your brand improve the customer experience, request a demo today.

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