Customer Metrics Every Business Should Track
“There is only one boss—the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” – Sam Walton, Founder, Walmart
Today’s customers are more demanding than ever before. They are fully empowered and they know it. Customers are picky, cautious of their choices and focused on receiving “value for their money.” They are quicker to leave if unhappy and have a much lower tolerance for error and indifference.
Most companies agree that delivering a high-quality customer experience is essential for growing loyalty and increasing revenue. Loyal customers are more likely to buy more often, try new products and services, and recommend your business to peers and colleagues—thus stimulating priceless word-of-mouth advertising.
Why does the customer experience matter?
Customer experience and loyalty are important drivers of business growth. Companies that have mastered the ability to manage the customer experience are capitalizing on a powerful marketing tactic—one that is able to capture price premiums and points of differentiation which are hard to copy. Customers are more likely to believe what they experience and feel rather than what they read in a marketing message or advertisement.
Business analysts today factor customer experience maturity as a distinguishing measure in understanding competitive performance. The Peppers and Rogers Group reported that “among those companies having strong capabilities and competencies for delivering customer experience excellence, fully 81% report that they outperform the competition.”
Customer experience leaders have reported their customers were almost 15% more likely to buy more products from them, almost 16% less reluctant to switch to a competitor and nearly 17% more likely to recommend the company to a colleague or peer than companies who were lagging in customer experience excellence. These customer metrics are impressive indicators of the power of customer experience management to strengthen the relationship customers have with your business.
What is customer experience management?
Many executives believe that customer experience is all about customer service when in fact it is only one aspect of the experience. The customer experience is comprised of all interactions a customer has with your company—your people, products and processes. To implement a true customer experience management program, you need to manage all aspects of the experience, every interaction, at every touch point. The experience must differentiate your company to create an emotional connection with the customer so they feel passionate about using your product or service.
Every customer has an experience with your business regardless of whether you actively manage it. At any moment, customers are experiencing your company, across the Web, through a call centre, on the phone, via e-mail or through an interaction with your sales or service employees. These experiences collectively define your brand and the bond you have or try to create with your customers.
How does one achieve customer experience excellence?
There are four steps to implementing a customer experience management program:
- Securing Executive Commitment for Customer Experience Management by monetizing the value of investments in customer experience improvements. Building the business case and helping executives understand the ‘economics of customer experience’ is a critical first step in the process.
- Measuring the End-to-End Customer Experience through relationship and transactional surveys to collect a clear articulation of what customers value most, understand the strength of the relationship customers have with your company, and identify the most powerful experience opportunities for improvement at every interaction point.
- Branding the Customer Experience in order to prepare your workforce to deliver the ideal customer experience, consistently and at every interaction point. Ideal customer experience design, initiative prioritization, action planning and employee training and communication are all important components at this stage.
- Managing the Performance of Employees to ensure action plans are linked to employee, operational and financial measures in order to track, reward and promote measurable improvements in customer experience management performance.
What are the customer metrics every business should track?
Building a customer experience management program is a journey. It takes time to align the organizational will and necessary practices to ensure the customer is always at the forefront of your business, especially during difficult economic times.
If today’s customers rule, it stands to reason that monitoring metrics that matter most to your customers and their experiences with your company should be key indicators for your business. Customer satisfaction surveys are simply not robust enough to know how to improve the customer experience.
Few companies have a solid grasp of important customer metrics that help to manage their business. For example, 75% of companies do not know the cost of a new customer; only 50% know their annual customer retention rate and less than 20% know the cost of a complaint or the true costs associated with resolving a complaint or problem. Other metrics such as customer lifetime value, share of wallet, products per customer, average revenue per user, customer loyalty, and on-boarding conversion rates are metrics that enterprising companies around the world are measuring and tracking to deepen the relationship with their customers.
Conclusion
Retaining current customers is one of the most economical and profitable decisions a company can make. Listening to customers to understand their needs and expectations will give companies the data needed to make smart decisions about how to strengthen the relationship with their most profitable customers. Learning how to capitalize on customer insights to guarantee the delivery of a high-quality customer experience will be a key driver in achieving business and financial goals.