Whether you’re a distributor or manufacturer or have a business in the built environment industry, we all want to attract and retain customers. But how? Your actionable plan should begin with implementing a customer experience (CX) strategy for your business using key performance indicators (KPIs) to identify and track your efforts.
Investopedia defines KPIs as "...a set of quantifiable measures that a company uses to gauge its performance over time. These metrics determine a company's progress in achieving its strategic and operational goals."
Think of KPIs as the most impactful and actionable metrics for your business. Common characteristics of KPIs are:
- They're quantitative, not qualitative, meaning a number can be attributed to them.
- They're pragmatic, not superfluous, meaning they're connected to company processes and standards (not metrics for metrics' sake).
- They're focused, not generalized, assessing if performance is improving, stagnant, or deteriorating.
- They drive action, meaning they propel change.
We want to examine KPIs used to track CX data to analyze and improve your customer experience platform over time. Here are four KPIs that your CX tracking should start with, understanding that they should adjust and change over time:
Note: KPIs are always specific to the industry and company that requires them. There's no one-size-fits-all, cookie-cutter approach to developing your key performance indicators. Realize you need KPIs, then start small with a core set of "standard" CX KPIs. Once you get data back, refine and adjust your KPIs to tailor them to your business and audiences.
KPI No. 1: Satisfaction
Measuring, monitoring, and assessing customer satisfaction levels is a baseline CX tracking program metric. CSAT (customer satisfaction score) attributes a number to customer satisfaction levels. The higher the number, the better the customer experience.
Remember, delighted customers are likelier to do business with you again and refer you to other customers. Unsatisfied customers might switch their loyalties to another brand. Measuring satisfaction and translating that data into a CSAT score is typically done via customer surveys. These surveys can be complex, but the most effective types are accessible for a customer to complete and are phrased accurately.
As an example, your customer makes an online purchase. At the close of the purchase process, a pop-up window might ask: "How would you rate your overall experience today?"
The customer would be given options, and numbers are attributed to their response. These responses are often scaled from 0 to 10, with zero being the worst and ten the best.
By collecting satisfaction responses, you can populate CSAT scores and give a solid KPI to improve CX performance in the future.
KPI No. 2: Customer Churn Rate
Customer churn rate is when customers abandon a service subscription over time. A high churn rate generally links to lower CSAT scores. A low churn rate indicates greater satisfaction levels. Churn represents lost customers, lost potential repeat business (or lower customer lifetime value), and lost potential referrals. It also increases the need for customer acquisition.
InTouch InSight provides this formula to measure churn: Churn Rate (%) = # of Lost Customers / # of Active Customers.
Churn occurs across various touch points, from email unsubscribes to lack of repeat business. Regardless of where churn is happening at a high rate, you need to have your finger on the company's churn pulse to right the ship, if needed.
KPI No. 3: Customer Effort Score (CES)
How much effort did a customer need to invest to solve a problem or obtain what they needed from your company? Measuring CES-and its closely related KPI, Average Resolution Time (how long it takes a customer service interaction to be resolved satisfactorily for the customer)-is critical to maintaining high customer satisfaction, retaining customers, and reducing churn.
A CES score is gathered through a post-engagement short survey and measured on a scale of 1 to 7, with 1 being a high effort. The higher your CES score, the better on most scales. A quick formula for measuring CES: CES (%) = Total # of respondents who agree (5 or above) / total # of respondents surveyed.
The goal is to make things as easy as possible for our customers, so they can handle the situation and move on to another brand. Tracking, assessing, and adjusting your approach based on CES is critical to successful CX management.
KPI No. 4: Net Promoter Score (NPS)
The KPI measures customer satisfaction and loyalty to your brand. NPS tells you how likely your customers are to promote or refer your company to others. Generally, delighted customers should generate a strong NPS, as these two are tightly linked metrics. NPS can be broken down into three distinct subcategories, identified by their NPS on a scale of 0 to 10.
- Promoters (NPS: 9-10). These are your brand evangelists who are highly loyal to your brand and will often sing your company's praises unprompted. You want a lot of these.
- Passives (NPS: 7-8). These folks are generally happy but won't go out of their way to sing your praises or refer you.
- Detractors (NPS: 0-6). These folks are unhappy with your brand and will soon be out the door. I don't want any of these, for sure.
Like CSAT and CES, NPS is tracked via one or two post-engagement questions that ideally only take five seconds for a customer to complete. Remember, we want everything, including providing feedback, to be as easy and convenient as possible. We want our efforts to improve the CX to avoid becoming part of the problem.
The suite of KPIs you deploy is specific to your industry and market. KPIs are not meant to be set in stone. They're designed to evolve alongside your business.
That said, the KPIs listed above are good starting points when hoisting up your new CX strategy, as they provide important insights and possible red flags to understand as it unfolds in real-time.
If you're ready to reshape your customer experience management approach, we can help. Illumine8 helps businesses in the built environment to create, maintain, and tweak their branding and customer experience platforms to maximize customer loyalty, increase repeat business, and amplify brand reach to generate new high-converting leads.
Reach out to us today. We'd love to discuss your vision and how you see your company getting there.