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Are Your Customer Experience KPIs Fit for Today?

5 minute read
Phil Britt avatar
What key performance indicators (KPIs) matter in today's digital world?

An MIT Sloan/Google report last year pointed out that our current key performance indicators (KPIs) for customer experience are no longer accurate for today’s digital environment.

Most KPIs today focus on compliance, not commitment, the report said, so they are “key in name only, rather than being indicators that companies can use to truly improve performance."

We asked some marketing professionals what they identify as the KPIs making a difference in their organizations.

3 Customer Experience KPIs to Track

“We know that great customer experiences lead to increased revenue,” said Alyssa Hanson, marketing manager for customer experience management solution provider Intouch Insight. “Happy customers are loyal customers, and loyal customers are more likely to share their positive experiences and recommend their favorite brands to people they know. But when it comes to making the connection between improved CX and revenue growth, CX pros often struggle to prove the value of their programs.”

There are as many as 16 top KPIs companies should be tracking today, according to Hanson. Among the top ones:

Customer Lifetime Value (CLV)

CLV projects the amount of business a customer will generate over his or her lifetime. The figure is computed by multiplying the dollar value of the average sale per customer times the number of times a customer purchases per month, divided by churn rate. According to Hanson, businesses with 40 percent repeat customers generate nearly 50 percent more revenue than similar businesses with 10 percent repeat customers.

“That’s why nurturing customer relationships by finding ways to add value to their experiences is a critical element of increasing business revenue,” Hanson said. “In fact, improving the customer experience is said to be the best tactic for increasing customer lifetime value. To show the connection between revenue growth and CX initiatives, companies need to explore the value they already have and use it as a benchmark to guide strategy by determining what tactics need to be implemented to improve customer value."

Related Article: Hack Customer Churn for Continued Business Growth

Customer Acquisition Costs

Word-of-mouth is the least expensive and most effective way of acquiring new customers, Hanson said. Delivering a great CX is an extremely powerful word of mouth tool for influencing people to buy a new product or service.

Hanson mentioned a study put out by American Express, which showed, on average, one happy customer could equal nine referrals.

Net Promoter Score (NPS)

Net promoter score is determined based on a customer's response to one question: whether or not they would recommend a company’s product or service, on a scale of 1-10. NPS scores can range from negative 100 (if every customer is a detractor) to 100 (if every customer is a promoter). Promoters have scores of 9 or 10, while detractors are in the 0-6 range. Scores of 7 and 8 are seen as passive.

The best way to maintain a healthy NPS score, is to invest in customers to keep them happy and to find ways to turn passives and detractors into promoters, Hanson said.

Learning Opportunities

Related Article: Customer Experience Measurements: Back to Basics

NPS Loses Its Luster

However, some marketers said that NPS is not as effective a measurement as it once was.

NPS is often a lagging indicator of customer loyalty, said Koren Stucki, vice president of strategic consulting and analyst relations at Clarabridge, provider of a customer feedback platform. “Customer effort and sentiment are becoming invaluable metrics in the CX leader’s toolkit as they look for ways to take their programs to the next level. Specifically, understanding customer effort helps organizations find points of high friction, confusion and channel hopping. Sentiment similarly reveals critical pain points, as well as moments of truth which can help organizations prioritize their focus.”

Similarly, customer sentiment is a KPI that enables companies to understand how customers’ perceive interactions with the company, illuminating any disconnects between the consumer and the brand, Stucki added.

Stucki and Ben Tang, director of data science analytics at customer analytics provider  Glassbox Digital, said another important KPI for CX is time spent on an element of a product page, which potentially is an indicator of the struggle a customer goes through when filling out a form or going thru the checkout process. The more friction a customer experiences on the website or during the order process, the more likely the customer is to go to a competitor.

Similarly, according to Tang, companies should pay attention to error rates — which are negative KPIs. Rates for in-line user errors, application errors, http errors, and others could all impact the customer’s decision to move forward in the purchase funnel. 

Related Article: How Does Your Customer Experience Measure Up?

Leverage AI in KPIs

Using artificial intelligence (AI) can help boost organizations up to the next level of KPIs, according to Chris Connolly, strategic solutions director for contact center solution provider Genesys. With AI's predictive capabilities, companies can analyze historical and real-time customer and employee performance data at a more granular level. This increases the opportunities for businesses to intervene in an interaction at the right moment, which can reduce customer efforts, prevent customer churn and increase customer satisfaction all in one.

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