The KPIs Fortune 500 Organizations Use To Audit Their Customer Experience Performance
Every company needs to have a clear plan with well-defined goals. Metrics provide valuable information about a company's efforts and customer activity, but they aren’t valuable if they don’t provide actionable information. Key Performance Indicators (KPIs) are those metrics that help companies focus on places they want to improve. Here are 11 KPIs Fortune 500 companies will be using to audit their 2018 customer experience performance.
Net Promoter Score (NPS):
When you are focused on customer loyalty, the NPS can help identify the behaviors of the customer without the use of a complex customer satisfaction survey. This KPI can be used to improve the acquisition and retention rate of customers. The NPS simply asks, “How likely are you to recommend this company/brand/service?” The responders use a scale of 0-10 that provides three loyalty groups. Those scoring 9-10 are promoters and loyal supporters. The people scoring 7-8 Are passives and not overly enthusiastic—they are often easily swayed by competitors. Detractors give a score of 0-6 and they are unhappy customers that are likely to discourage other customers from using the brand in question. The NPS score is then calculated by subtracting the percentage of detractors from the percentage of promoters.
The average NPS for brands is 34.3%, according to SPG Consulting estimates.
Customer Satisfaction (CSAT):
If you want to know how satisfied your customer is, asking directly may give you the best idea. The Customer Satisfaction KPI is based on asking simply “How satisfied were you with your experience today?” It is easy to pinpoint the exact moment of delight or disappointment for the customer by asking a very specific question about a very specific experience. The Customer Satisfaction Score can be tracked to show the big-picture in the customer’s journey. To get the most out of the CSAT, the survey should be sent after a meaningful part of the customer lifecycle occurs (like after onboarding or 6 months before a services renewal).
An unhappy customer will tell 9-15 people about their experience on average, according to the White House Office of Consumer Affairs.
Average Resolution Time:
How long should a company take to respond and then find a solution? Customers today are expecting faster responses than ever—especially if they are experiencing a problem. Measuring the amount of time, it takes on average for the company to respond to a problem will keep the company aiming for quicker times.
The average customer expects a response time of 1 hour or less—even after business hours or on the weekend—according to Convince and Convert.
Customer Effort Score (CES):
How many hoops are your customers willing to go through to get help from a company or obtain a service that is offered? The Customer Effort Score measures how much customers are willing to go through to remain loyal to the business and how hard they feel the process was. This KPI survey question asks, “Rate how much effort it took to complete your transaction or resolve your issue, with 1 noting low effort and 5 being the most effort. To get the CES score, add together all the CES, then divide the total CES by the total number of survey responses. This KPI is considered highly actionable, providing a stat that predicts customer behavior and pinpoints moments where interactions fall short.
The CEB found nearly all customers say they will repurchase (94%) if they had a low effort experience, while 81% of customers reporting high effort went to speak badly about the company to others.
Customer Churn Rate:
Every business faces a certain level of customer loss with time. Measuring the Customer Churn Rate (or Customer Attrition Rate) helps a company know what to expect in establishing goals for growth. Retaining a customer almost always costs less than attracting and converting a new one, so companies use this metric to find points where they should focus their attention on preventing loss. Most companies distinguish between their Net Customer Churn and Gross Customer Churn rates. The Gross Customer Churn Rate is the total number of customers lost over a given period, while the Net Customer Churn Rate subtracts the new customers from the Gross Customer Churn Rate. Companies always want to have a negative Net Customer Churn Rate (which means they are bringing in more new customers than they are losing).
Forbes has reported that just a 5% increase in customer retention can increase profitability by 75%.
Customer Retention Rate:
If Net Customer Churn is an important KPI, then knowing the retention rate is a metric you must know. Customer Retention Rate is the opposite of Churn or the percentage of people who stick around. You can calculate Customer Retention Rate by first subtracting new customers from your total number of customers during a given period and then divide that number by the customers that the business had at the start of that period. Multiply that number by 100 to get the Retention Rate percentage.
Forbes also noted that 80% of the average company’s revenue is most likely to come from 20% of existing customers.
Net Emotional Value:
Happy customers are often the customers that will go out to promote your company. A direct relationship can usually be found between a high Net Emotional Value (NEV) and a high Net Promoter Score (NPS). To get the NEV, ask questions that lead to either positive or negative feelings about aspects of the company on a scale of 1-10. The negative scores are then subtracted from the positive ones to get the overall score.
According to Beyond Philosophy, companies with an NEV score of 5 or more (on a scale of 10) will likely have an NPS of 40% or higher.
Problem Resolution Time (PRT):
When customers, users or key stakeholders have a problem, Problem Resolution Time measures how long it takes to get a solution in place. The clock starts ticking as soon as the help desk ticket, email or support contact is made. Getting a solution as quickly as possible is key to retaining customers and encouraging loyalty.
Over 70% of customers end their business relationship with a brand because of poor customer service and most of those go to a competitor, according to a Genesys survey.
First Response Time (FRT):
Most customers are sensitive to getting help quickly and from a knowledgeable source. While the initial response might be automated, the First Response Time measures how long it takes for a customer to hear from a non-automated source in response to their issue. Companies may find it helpful to rate the urgency by how hindering and widespread the issue is.
After experiencing a positive experience, 85% of customers will increase their spending with the company, according to McKinsey & Co.
Cost Per Interaction/Activity:
To combat natural customer retention loss and increase growth, some focus should be placed on finding and attracting new leads. Understanding what drives new customers is important in honing your acquisition skills. Companies need to calculate how much each activity costs and which ones drive the most qualified leads.
HubSpot reports that blogging is the top inbound activity for most Marketers (55%) and that 90% of consumers haven’t made up their mind about a brand before they start their search.
SERVQUAL (Service Quality Questionnaire):
Also known as the RATER model, SERVQUAL measures service quality and has been around since the 1980s. The original model used 22 questions to measure five service factors (reliability, assurance, tangibles, empathy, and responsiveness). First, respondents are asked about what expectations they may have for businesses in the industry and then they are asked about the service quality they have experienced from specific businesses in the industry. This allows a clear comparison of service quality between competing businesses.
Rarely will a customer complain when dissatisfied; the Centre for Entrepreneurial Management and Innovation reported that 96% of unhappy customers won’t complain, but 91% will never return.
These KPIs are valuable for helping reduce the cost of unhappy customers and improve efforts for acquisition and retention. Look for ways to improve each score and you will keep reducing the problem areas that are costing your company money.