Do understand the KPIs that you’re measuring? Think about that question for a few seconds. Most people would answer, “Yes of course, why else would I measure them?”.
The truth is that there are many who measure KPIs only because it is a requirement of their position, and they don’t fully grasp which are the most relevant to follow for their field, let alone how to interpret them.
Now, it is notoriously difficult to identify the KPIs which determine CX success, and even more difficult to measure the return on investment for your CX program.
it is notoriously difficult to identify the KPIs which determine CX success.
At Feedbackly, tend to think that sustainable growth is the only thing that actually matters because quick wins melt away quickly. With that in mind, we’ve focused on measuring the KPIs which are the best indicators of the long-term success of your CX strategy and of your company as a whole.
Based on the millions of responses we’ve collected and analyzed from our customers, we present to you our customer experience KPI hall of fame.
1. CSAT – Customer Satisfaction Score
Let’s start with something simple. Customer Satisfaction Score (CSAT) is the most basic and arguably the most robust way to measure the success of your CX strategy.
CSAT is measured on a 5-point scale:
The wording of these 5 choices can change slightly but the meaning must remain the same. As you can see above, we have chosen to go with the more colloquial “happy”.
CSAT is usually measured by distributing surveys to key customer segments. You may want to measure the satisfaction of customers in your retail store. To do so, you could display a survey in your store after the checkout counter using a Feedbackly Terminal.
After collecting your data, your CSAT score can be calculated by adding up the number of customers who chose each option from ‘very satisfied’ to ‘very unsatisfied’, and multiply the number of responses for each option by the correct multiplication factor.
So for instance:
2 responses for ‘very satisfied’ – multiplication factor of 1
3 responses for ‘satisfied’ – multiplication factor of 0.75
2 responses ‘neutral’ – multiplication factor of 0.5
4 responses ‘unsatisfied’ – multiplication factor of 0.25
1 response ‘very unsatisfied’ – multiplication factor of 0
Total 12 responses
(2*1) + (3*0.75) + (2*0.5) + (4*0.25) + (1*0)) / 12
(2+2.25+1+1+0) / 12 = 0.5208 = 0.52 = 52% (this is how we calculate CSAT in Feedbackly)
52% would be considered a suboptimal CSAT score which would require deeper investigation to identify the root cause.
Make sure that you check industry benchmarks so that you can accurately compare your performance.
2. CES – Customer Effort Score
Are you making it easy for you customers to buy from you? This is the question that your customer effort score aims to answer.
The ease of buying a product or using a service can and should be measured to see if friction can be eliminated. For larger companies, a small reduction in sales friction could correspond to millions in increased revenue.
Customer effort score is measured using a 5 or 7-point scale asking a variation of this simple question:
‘How much effort did you personally have to put forth to handle your request?’
The respondents answer with some variation of these options:
1 = Very low effort
2 = Low effort
3 = Neutral
4 = High effort
5 = Very high effort
This could be in reference to (a) purchasing a product or service, (b) getting information, (c) getting a problem solved, or (d) actually using the product.
The calculation is a simple average. So you add up the values of all responses and divide it by the total number of responses.
If 345 people responded to your CES survey, and the total sum of their responses is 1543, your CES score would be 4.5. Depending on your scale system (whether you are using a 5 or 7-point system), the quality of this score varies.
3. NPS – Net Promoter Score®
Net Promoter Score is an industry standard in CX. The score is calculated using an 11-point recommendation scale, always using this question:
“How likely is it that you would recommend our company/product/service to a friend or colleague?”
The respondents are given a scale from 0-10, with 0 being not likely and 10 being very likely.
To calculate your Score, Subtract the percentage of detractors from the percentage of promoters:
Once you have your NPS score, you need to benchmark it. Counterintuitively, your Net Promoter Score could be anywhere from -100 to 100. Check industry benchmarks to see where your company stands.
4. Employee Engagement
Sir Richard Branson said that “Happy staff are proud staff, and proud staff delivers excellent customer service, which drives business success.”
Happy employees = Happy Customers.
The world rarely is this simple but he has a point. What we have noticed that employee engagement has a direct effect on your customer experience. We’ve written before about having the right balance between employee experience (EX) and customer experience (CX).
Part of ensuring that your employees are satisfied is keeping them engaged. Methods for engagement usually depend on the industry and the individual motivating factors of each team member. We’ve previously put together a list for improving EX in startups.
While looking at millions of interactions, we actually noticed that the biggest driver of good customer experiences is actually employee engagement, not happiness. Engagement starts with hiring the right people.
Without the right people in the right positions, engagement and satisfaction will naturally be harder to achieve. It is the responsibility of management to ensure that the talent acquisition and screening processes are working.
Another factor is culture. Company culture is probably the most difficult thing to change in an organization. For employee engagement, creating a culture of ownership is crucial.
When responsibilities are defined and tasks are delegated, employees must feel that they are truly responsible and own the work that they are doing. Without this feeling, engagement plummets and accountability decreases.
Employee engagement is notoriously difficult to measure because of fuzzy definitions. Most employee engagement measurement programs focus on these key aspects:
- Future orientation
Satisfaction can be measure on a 5-point scale, as outlined above. Alignment can be measured with any one of the many models, such as the Quinn Model. Future orientation is usually conducted as an interview, where the manager asks open questions to identify where the employee sees themselves in the future.
All 3 aspects (including quantitative and qualitative data) should be collected and combined to determine employee engagement.
5. RCR – Returning Customer Rate
Returning customer rate or referred also as the “retention rate” is very commonly used in the eCommerce world but less common in other businesses. RCR indicates the percentage of customers who purchase a product or service from your business again after already purchasing a product or service in the past.
A well-known way to improve RCR is loyalty programs. They’ve been around for ages – you buy 10 coffees and you get one free. This can and has been improved upon with digital monitoring systems where companies to see exactly how many times a customer has purchased from them, what they bought, and which store they bought it in.
This is useful information when it comes to improving RCR because it means that you can deliver targeted upsell or cross-sell promotions to them.
Fundamentally, there are only two ways to increase sales: bringing in new customers or bringing back the ones who already did business with you. Since the cost to acquire new customers is always higher than the cost to sell to existing customers, focusing on RCR will always be part of a winning strategy.
To measure RCR, you can either approach it in the old school way: simply asking your customers if they have already purchased from you before, or you can join the rest of us in the 2020s and automatically calculate it within your digital systems. Most CRMs or POS systems will have this metric built into the dashboard.
FREE eBook: NPS® – The Fundamental Guide
Jaakko is an award-winning CX professional and entrepreneur at Feedbackly, founder and community professional at the biggest entrepreneurial digital community in Finland – Yrittäjä.io. He is a notorious keynote speaker from entrepreneurial stories to day to day human communications and customer experiences.