a young  woman looking  very happy, arms outstretched, confetti  falling around her
PHOTO: Carlos David

Customer experience practitioners can choose from a wide variety of key performance indicators to determine the success (or lack thereof) of their efforts. So how can they determine which of these measurements are the most useful for their business?

Define Objectives First

"Too often we see organizations define their objectives and KPIs related to CX and marketing through the wrong lens," said Jeremy Korst, president of GBH Insights. "Before you can set KPIs, you first need to make sure you have a singular, cohesive and articulated brand position and a specific set of target customers that is embraced throughout the organization — not just in marketing! A successful brand can’t be everything to everyone."

Once you are crystal clear about who your target customers are, the next step is to define your strategy around how you will reach and serve those customers effectively, and equally important how you will measure success, Korst added.

He warned that objective setting can go awry when cross-functional organizations fail to recognize the interdependency that each plays in creating an optimal journey for these target customers. Thus, KPI setting needs to begin with a common understanding of who are your target customers — and who are not — and the collective tactics required to attract and retain them. That is, it is key to ensure organization-wide understanding that each customer has differential value to the brand.

“Since not all customers are equal in the eyes of a given brand, organizations need to ensure KPIs focus on targets that prioritize the brand’s target customers,” Korst said. “Broad, simple measures like lower CPMs or CPAs, higher website visits, increased lead generation or higher sales volume can create unintended consequences downstream if executed in a vacuum, such as sales team dissatisfaction with 'low quality' marketing leads, customer dissatisfaction or higher customer churn due to targeting the wrong customers in the first place.”

Related Article: Where Does Customer Experience End and Digital Marketing Begin?

Don't Forget the Tried But True: NPS

"I would generally recommend Net Promoter Score (NPS), Customer Lifetime Value (CLV), or Average Basket Value (ABV) as a starting point," said Antonia Hock,  global head of The Ritz-Carlton Leadership Center. “But you might also consider a metric like number of positive scores on a post-shipping survey. Any great measurement strategy will include historical benchmarks, so I recommend starting with a measurement that is already in place as an organizational standard.”

The NPS score enables companies to prioritize CX investments, learn about the overall health of their business and make changes across a business to drive engagement and improvement, Hock explained. She argues the simplicity and power of NPS acts as a strong symbol for the overall customer experience that a business provides.

“Recently, I engaged with a large retailer that had made sweeping changes to their shipping process for online purchases, and they saw some significant drops in their NPS after deploying their changes,” Hock said. “Specifically, they added some extra steps that their online customers hated. The NPS allowed them to quickly receive the feedback and rethink their shipping strategy. If they had not been a strong user and a consumer of NPS data this shipping challenge could have quickly caused customers to switch to competitors and ultimately erode their revenue.”

Related Article: How to Measure Customer Experience Beyond Net Promoter Score

Follow Drucker’s Advice

"Peter Drucker’s ideas around the importance of measurement apply broadly across business and should include customer experience, particularly when thinking about digital business experiences," said Michelle Berryman, Capgemini principal of interactive strategy, digital customer experience. "Although every industry, product-line and service are different, there are still common themes from which KPIs can be drawn."

The most important KPIs, according to Berryman, are:

  • Customer acquisition cost
  • Customer retention rate
  • Customer lifetime value
  • Engagement cadence
  • Conversion rate — including up-sell/cross-sell
  • Customer support
  • Customer satisfaction

“In almost every industry, it is less expensive and time consuming to retain customers than to acquire them,” Berryman explained. “Delivering great experiences leads to both, however. When customer satisfaction is high, studies have shown that word-of-mouth referrals can bring in new customers while simultaneously retaining existing customers.

Customer support channels offer another way to measure experience — and costs,  Berryman added. “Ideally, customers should rarely need to access support channels, but when they do, their support experience should be overwhelmingly positive. They should interact with friendly, knowledgeable personnel who are able to quickly resolve issues without escalation or call back. After all, staffing call centers can be expensive and customer satisfaction often hinges on the quality and timeliness of the response.”

Related Article: 6 Key Performance Indicators Not Directly Tied to Revenue

Other KPI Basics

“One of the common KPI derailments that I see is trying to measure too many things,” said Hock, who cites other common roadblocks to the successful deployment of meaningful KPIs:

Being too broad: Focusing on too many customer segments or trying to solve for too many pain points. This is tempting because businesses equate bigger, broader plans with more impact, but often in CX, it’s best to have a disciplined and more narrow focus.

Lack of realistic measurement or timelines: Often businesses have poorly designed measurement strategies or overly ambitious timelines for implementation or results.

Timing of strategy testing: Many plans go from strategy and planning straight to implementation. The best plans allow for time and commitment to testing several strategies, allowing for adjustment time or course correction, and then a move to implementation with the best final option.