Only companies that collect data and calculate relevant metrics for customer experience can improve it sustainably. Here you will find the most important metrics that our clients utilize in customer experience programs.
Satisfied customers are loyal customers. They are more likely to recommend brands and purchase again. Therefore, many companies rely on customer experience programs to evaluate their customer journey and learn from the results. But which key metrics are calculated in customer experience programs? We have summarized the most important ones that our clients rely upon here:
- Customer Lifetime Value (CLV)
The Customer Lifetime Value is the revenue that a person generates as a customer for one company over a certain period of time (e.g. their adult life). An increase in Customer Lifetime Value correlates with higher customer loyalty, more sales per customer, and lower costs for acquiring new customers.
CLV = (Average Revenue per Customer per Purchase X Average Number of Purchases per Month) / Monthly Customer Churn Rate
- Customer Acquisition Costs
New Customer Acquisition Costs include the amount a company invests (e.g. in marketing or sales) to acquire a new customer. The least expensive way to acquire new customers is to be recommended by existing customers. So, if your customers are enthusiastic about the shopping experience that you offer, it lowers your cost of acquiring new customers.
Average Cost to Acquire a New Customer = All sales and marketing costs / Number of new customers acquired
- Up-Sell and Cross-Sell Rate
Up-Sell and Cross-Sell Rates describe the proportion of people who purchase an additional product or an upgrade. Up-sell refers to a sale that goes beyond what the customer originally intended to purchase, for example a more expensive car model. Cross-Sell refers to the sale of a related product, such as a trailer for the car.
Up-Sell/Cross-Sell Rate (%) = Number of people spending more than they originally intended / total number of transactions
- Conversion Rate
The Conversion Rate describes the proportion of visitors who completed the customer journey with a purchase. Regardless of the channel, a customer who interacts with a brand usually has the intention of purchasing a product or service. If a sale is not concluded, this is often due to a poor Customer Experience. A Customer Experience Program provides actionable information and indicates how to improve the conversion rate.
Conversion Rate (%) = Number of customers that purchased / Total number of interactions processed
- Average Transaction Value
Average Order Value is the average amount a customer spends when purchasing a product or service. This amount has a significant impact on a company's revenues. The average order value can be increased by particularly engaging or elevated shopping experiences.
Average Transaction Value = Sales revenue / Total number of sales transactions
- Average Revenue per Customer
The average customer revenue describes the revenue that can be traced back to a single customer over a stated period of time. This metric is an important indicator for companies to measure the value of a customer.
Average Revenue per Customer = Total Sales revenue / Total number of customers
- Net Promoter Score (NPS)
Net Promoter Score measures customer satisfaction and loyalty to a brand. The NPS data is collected through a scaled survey that is measured from -100 to +100. Customers are divided into promoters and detractors. Promoters are customers who are loyal to a brand and will recommend it, while detractors tend to be dissatisfied and unlikely to remain long-term customers.
NPS = % of Supporters - % of Detractors
- Customer Churn Rate
Customer Churn Rate is the percentage of customers who do not re-purchase after an initial purchase, either because they simply do not buy again or because they cancel within a certain period of time.
Customer Churn Rate (%) = Number of lost customers / Number of active customers
- Customer Retention Rate
Customer Retention Rate is the percentage of customers who remain loyal to a company over a certain period of time. Similar to the Customer Churn Rate, Customer Retention is extremely valuable for business growth. Studies have shown that a 5% increase in Customer Retention can increase a company's revenue by more than 25%.
Customer Retention Rate (%) = (Number of customers at the end of the period - number of customers acquired in the period) / Total number of customers at the beginning of the period
- Customer Satisfaction
Customer satisfaction is usually measured through customer feedback (e.g. Voice of Customer). Customers indicate how satisfied they are with the products and services of a company on a scale from 0 to 100%.
Customer Satisfaction (%) = Number of satisfied customers / Total number of responses to a satisfaction survey
- Net Emotion Score
Net Emotion Score (NES) is the difference between the positive and negative emotions associated with a product, service or brand. Positive emotions are associated with feelings such as happiness, joy, trust, and interest. Negative emotions, on the other hand, are associated with feelings such as dissatisfaction, frustration, disappointment, and neglect.
NES = Average of positive emotions - average of negative emotions
- Issue Resolution Time
Issue resolution time is the average amount of time between when a customer interaction is first initiated to solve an issue and that interaction is marked as resolved.
Average Issue Resolution Time = Sum of elapsed time for all cases / Total number of issues resolved
- First Response Time
First Response Time is the average amount of time between when a customer submits a case and when customer support responds. This time is typically measured in minutes during business hours.
Average First Response Time = Sum of all first response times / Total number of cases resolved
- Cost per Interaction
The average cost per interaction is the cost required to process an interaction (call, order, etc.). Reducing these costs has a positive impact on a company's bottom line by increasing efficiency in customer service.
Average Cost Per Interaction (in $, £, etc.) = Money invested in each activity (call, order, etc.) / Total number of activities
Which key metrics do you already measure?
Understanding each metric is the first step to a successful customer experience program. Then, collecting data and calculating these metrics is the optimal way to assess the effectiveness of your Customer Experience delivery.
Need more information on this topic? Our team would be happy to help you!