2 ways to measure customer experience performance


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Is your customer experience making you money? Is it costing you money? Do you know?

I am often asked about how to measure the effectiveness, or return on investment (ROI), for customer experience. In just the last week, I heard these three questions:

  • What are the leading indicators or measures we can use to know our customer experience efforts are on track?
  • Other than revenue, can we tie a stronger customer experience to financial performance?
  • How can we know each customer touch point contributes to performance?

I’ve discussed here before that any customer experience must be measured in value for customers and value for the organization. So how do you choose the measures that demonstrate the payoff for customer experience in your organization?

I’ve found two kinds of metrics to create a clear and actionable snapshot of the payoff for using customer experience as an operating strategy to drive performance. You will need just a few metrics to show up on your company’s top scorecard, and more detailed measures to guide day-to-day decisions and actions.

The first are those that measure the effectiveness of the customer experience itself.

What happens and what do customers feel at each step of the experience? Every experience begins with a person who would trade something of value to solve a need, and we know solved needs for customers = performance for your organization. So measures of customer experience effectiveness must show if and how well your organization is moving customers to solved needs.

Used best, these metrics are defined from the customer’s point of view. They can be as specific as first call resolution, “one right answer” enquiries experienced when researching options or helping themselves with your online tools, or satisfaction with an interaction surveyed directly after it is completed.

Some of the most effective metrics in this group are those that can measure the effectiveness of specific touch points AND of the customer experience overall. These include customer effort, access, speed, or emotional impact.

The second kind of metrics ties experience to financial performance.

Chances are that your organization already measures many of these things, but hasn’t tapped in to the clarity of priority, or the opportunity to be gained when examined in alignment with each and every step of the customer experience.

Measure the ratio of dollars invested for each qualified lead or each revenue dollar – key financial measures of your success at the early steps of the customer experience.

You’ll want to measure close ratio and average order size – which demonstrate your success at the “buy” or purchase step.

This example, taken from Domino, includes key performance indicators for the step where customers are using your product or service to solve the need that triggered them to act (and you are out to prove your promise): loyalty and retention rates, cost to serve, and share of wallet are here.

Choosing wisely is key, but choosing to measure is most important.

Choosing which specific metrics are most potent for your organization’s experience is more discussion than we can cover in a single post, but one guiding principle applies here. Think about the top 3-5 drivers of your target customer experience. In a nutshell, your customer experience must be….personal? Fast? Predictable? Controlled by the customer? Use these “must have to solve the need” markers to make your choices.

These two types of metrics work no matter where you are in your customer experience journey. They work whether or not your organization has achieved clarity and alignment on the need your organization is out to solve for its customers or the ideal (target) experience that will solve that need better than anyone else. In other words, you should always use these two types of metrics – whether you are measuring baseline performance before embarking on a customer experience strategy or monitoring value for customers and your organization along the way.

So is your customer experience making or costing your organization money? Is it making or costing your customers what they value? How do you use these two kinds of metrics to create clarity, make smart decisions across teams, and operationalize the change you want?

Republished with author's permission from original post.

Linda Ireland
Linda Ireland is co-owner and partner of Aveus LLC, a global strategy and operational change firm that helps leaders find money in the business performance chain while improving customer experiences. As author of Domino: How to Use Customer Experience to Tip Everything in Your Business toward Better Financial Performance, Linda built on work done at Aveus and aims to deliver real-life, actionable, how-to help for leaders of any organization.


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