4.1 Key performance indicators (KPIs) for customer experience

Key performance indicators (KPIs) are crucial for measuring customer experience success. They help businesses track progress, identify areas for improvement, and align efforts with strategic goals. From Net Promoter Score to Customer Lifetime Value, these metrics provide valuable insights into customer satisfaction and loyalty.

Setting smart targets for KPIs is essential for driving meaningful improvements. By considering historical performance, industry benchmarks, and customer expectations, companies can establish realistic goals. Aligning KPIs with business objectives ensures that customer experience efforts contribute directly to overall success.

Key Performance Indicators for Customer Experience

Commonly Used KPIs

Top images from around the web for Commonly Used KPIs

• 

  Fair Use at CES 2017 - Re:Create View original

  Is this image relevant?

• 

  Content_measures | KPI table | Olivier Carré-Delisle | Flickr View original

  Is this image relevant?

• 

  DevOps Metrics View original

  Is this image relevant?

• 

  Fair Use at CES 2017 - Re:Create View original

  Is this image relevant?

• 

  Content_measures | KPI table | Olivier Carré-Delisle | Flickr View original

  Is this image relevant?

1 of 3

Top images from around the web for Commonly Used KPIs

• 

  Fair Use at CES 2017 - Re:Create View original

  Is this image relevant?

• 

  Content_measures | KPI table | Olivier Carré-Delisle | Flickr View original

  Is this image relevant?

• 

  DevOps Metrics View original

  Is this image relevant?

• 

  Fair Use at CES 2017 - Re:Create View original

  Is this image relevant?

• 

  Content_measures | KPI table | Olivier Carré-Delisle | Flickr View original

  Is this image relevant?

1 of 3

• Net Promoter Score (NPS) measures customer loyalty by asking customers how likely they are to recommend a company's products or services to others on a scale of 0-10
• Customer Satisfaction Score (CSAT) measures customer satisfaction with a specific interaction or overall experience, typically using a 5-point scale from very unsatisfied to very satisfied
• Customer Effort Score (CES) measures the ease of a customer's experience with a company by asking how much effort was required to complete a specific task or interaction
• First Contact Resolution (FCR) measures the percentage of customer inquiries or issues that are resolved during the first interaction with a company's support team

Financial and Retention KPIs

• Customer Churn Rate measures the percentage of customers who stop doing business with a company over a specific period, indicating the level of customer retention
  • For example, if a company has 1,000 customers at the beginning of the month and loses 50 by the end of the month, the churn rate would be 5%
• Customer Lifetime Value (CLV) measures the total revenue a company can expect to generate from a single customer throughout their relationship with the company
  • CLV is calculated by multiplying the average purchase value by the average number of purchases per year and the average customer lifespan in years
  • For instance, if a customer spends an average of $100 per purchase, makes 4 purchases per year, and remains a customer for 5 years, their CLV would be$2,000 ($100 x 4 x 5)

Setting Targets for Customer Experience KPIs

SMART Targets and Historical Performance

• Targets for customer experience KPIs should be specific, measurable, achievable, relevant, and time-bound (SMART) to ensure they are effective in driving improvement
  • For example, a SMART target could be "Increase NPS from 60 to 65 within the next 6 months"
• Historical performance data can be used to establish a baseline and set realistic targets for improvement based on past trends and current capabilities
  • If a company's CSAT score has consistently been around 80% over the past year, setting a target of 85% for the next quarter would be realistic and achievable

Industry Benchmarks and Customer Expectations

• Industry benchmarks provide a reference point for comparing a company's performance against competitors and identifying areas for improvement
  • For instance, if the average CES in the telecom industry is 4.2 out of 5, a company with a score of 3.8 would know they need to focus on reducing customer effort
• Customer expectations and feedback should be considered when setting targets to ensure they align with what matters most to customers
  • If customers consistently mention long wait times as a pain point, setting a target to reduce average wait times by 20% would directly address their concerns
• Targets should be reviewed and adjusted regularly based on changes in the business environment, customer needs, and company performance
  • For example, if a company launches a new product line or enters a new market, KPI targets may need to be adjusted to reflect the new circumstances

Aligning KPIs with Business Objectives

Linking KPIs to Strategic Goals

• Customer experience KPIs should be directly linked to the company's strategic goals and objectives to ensure they are driving meaningful business outcomes
  • If a company's strategic goal is to increase market share, KPIs such as NPS and customer retention rate would be highly relevant
• Aligning KPIs with business objectives helps to prioritize initiatives and allocate resources effectively based on their potential impact on the bottom line
  • For instance, if improving FCR is linked to reducing customer service costs, investments in agent training and knowledge management systems would be justified

Communicating Alignment and Avoiding Unintended Consequences

• Regularly communicating the connection between customer experience KPIs and business objectives helps to engage employees and create a customer-centric culture
  • Sharing success stories of how improvements in KPIs led to increased revenue or cost savings can motivate employees to prioritize the customer experience
• Misaligned KPIs can lead to unintended consequences and behaviors that may improve the metric but not necessarily the overall customer experience or business performance
  • For example, if agents are solely focused on reducing average handle time (AHT), they may rush customers off the phone without fully resolving their issues, leading to lower CSAT scores and higher churn

Leading vs Lagging Customer Experience Indicators

Predictive Leading Indicators

• Leading indicators are predictive metrics that provide early warning signs of potential issues or opportunities in the customer experience, allowing for proactive management
• Examples of leading indicators include:
  • Customer sentiment analysis: Tracking the emotional tone of customer feedback (positive, neutral, negative) can reveal emerging trends and potential problems
  • Employee engagement scores: Highly engaged employees are more likely to deliver excellent customer service, so monitoring engagement can predict future CX performance
  • Website or app usage data: Analyzing user behavior and drop-off points can identify areas of friction or confusion that may lead to customer frustration

Historical Lagging Indicators

• Lagging indicators are reactive metrics that measure the outcomes or results of past actions or events in the customer experience, providing a historical view of performance
• Examples of lagging indicators include:
  • Customer satisfaction scores (CSAT): Measuring how satisfied customers were with a recent interaction or overall experience
  • Customer churn rates: Tracking the percentage of customers who discontinued their relationship with the company over a given period
  • Revenue per customer: Calculating the average revenue generated by each customer can indicate the financial impact of CX improvements or declines
• A balanced set of leading and lagging indicators is needed to effectively monitor and manage the customer experience over time
  • Leading indicators help identify potential issues early on, while lagging indicators confirm whether improvements were successful and impactful
• Leading indicators should be prioritized for driving continuous improvement, while lagging indicators are used to validate the impact of initiatives and inform strategic decision-making
  • For instance, monitoring customer sentiment and employee engagement (leading) can guide proactive efforts to enhance CX, while tracking CSAT and revenue per customer (lagging) can measure the results of those efforts