Customer Experience

How to Measure Customer Experience: Key Metrics and Tools

October 1, 2020
12:00 am

The “Mad Men” era of putting out a product or service and relying on advertising to sway customers is long gone. 

According to Salesforce’s 2019 State of the Connected Customer report, 84 percent of consumers place just as much importance on the experience a brand provides as the product or service itself.  

What does this mean for your business?

Positive, customer-centric experiences are essential if you want to meet the needs of customers in today’s climate.

Here’s the good news —

To help your brand stand out among competitors, we’ll be going over: 

  • Why measuring customer experience matters
  • Key customer experience metrics and how to track them
  • Two powerful tools to aid in measuring customer experience 

Let’s dive right in. 

Why Measuring Customer Experience Matters: By the Numbers

Keeping a pulse on how your customers are interacting with your brand can make all the difference between growing revenue and getting left in your competitor’s dust. 

Measuring customer experience is imperative for defining your product or service’s success and improving customer loyalty.

Here’s why: 

  • A 2019 Gartner CEM study found that 75 percent of businesses show customer satisfaction leads to positive business outcomes, such as revenue growth, increased customer retention or increased lifetime value. 
  • Adobe's 2020 Digital Trends report found brands who effectively managed experiences were three times as likely to have exceeded their top company goals in 2019. 
  • The 2018 PwC Experience is Everything report revealed that 65 percent of U.S. customers are more persuaded by positive experiences with brands than great advertising. 

So, it’s important to invest in creating positive customer experiences, and measure how well your efforts are working over time. While there are several experience metrics you can use to monitor customer interactions, we compiled the six most important measurements for any business.

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Key Customer Experience Metrics and How to Track Them

1. Net Promoter Score

The Net Promoter Score (NPS) is arguably the most popular customer experience metric to-date — used to measure customer loyalty and predict business growth

Unlike other metrics focused on discovering a customer’s satisfaction with a specific purchase or interaction, NPS tracks a customer’s overall feeling toward a business.   

NPS is administered through a survey to your customers, asking: “How likely are you to refer [your business] to a coworker, relative, or friend?” Survey responses are usually measured on an 11-point scale, with numbers ranging from 0-10 (zero being not at all likely).

NPS respondents are classified into three distinct groups:

  • Detractors (0-6): Dissatisfied customers who are not likely to recommend your business, have the highest churn rates, and can cause reputational harm 
  • Passives (7-8): Customers who are only pleased for the time being and are most susceptible to your competitors
  • Promoters (9-10): Loyal customers who fuel business growth through continuous referrals and repeat purchases 

How to Track Net Promoter Score

To determine NPS, you’ll need to know: 

  • The number of Promoters (P)
  • The number of Detractors (D)
  • The total number of survey respondents (R)

Once you have the numbers, you can begin calculating NPS by subtracting the number of Detractors from the number of Promoters. Then, divide by the total number of respondents and multiply by 100. 

The equation is listed below:

Net Promoter Score = [(P - D) / R] X 100

NPS formula

NPS is never reported by a percentage — rather, by an integer between -100 and 100. To convert from the percentage, simply drop the symbol (%). 

2. Customer Satisfaction Score

Customer satisfaction score (CSAT) measures customer enjoyment of a specific product, service, or interaction with your brand.  

CSAT is determined by asking a survey question, like, “How would you rate your experience today?” Responses are created in three-point, five-point, or seven-point scales — where “one” represents the worst experience.

Customer Satisfaction Score

Surveys can go out at various stages throughout the customer journey. That way, you can determine the quality of customer experiences at different touchpoints. 

Keep in mind that sending out CSAT questions right after an interaction allows your company to fix issues before they bottleneck business operations. 

How to Track Customer Satisfaction Score

CSAT scores are calculated by dividing the sum of all positive responses by the total number of survey respondents, then multiplying by 100 to get the percentage.  

What defines a positive response depends on the scale you choose. For example, if your CSAT survey includes answers ranging from 1-5, or the five-point scale, positive numbers would be four and five.  

Here’s the calculation:

Customer Satisfaction Score = (Number of Positive Responses / Total Number of Survey Responses) X 100

3. Customer Effort Score

Simply put, customer effort score (CES) is a customer service satisfaction metric that measures how easy it is for a customer to do business with your company. 

CES is determined by a single question survey, typically asking how much customers agree or disagree with a specific statement. 

An example statement may be: “[Company Name] made it easy for me to handle my problem.”

Customer Effort Score

Survey respondents are prompted to select an answer from a seven-point scale ranging from “strongly disagree” (1) to “strongly agree” (7). 

CES became popular after 2010 when Harvard Business Review published Stop Trying to Delight Your Customers. The article explored the idea that a business can increase consumer loyalty by decreasing customer effort. 

2020 research from Gartner confirms this, revealing that 96 percent of consumers with high-effort interactions become less loyal, as opposed to 9 percent of those with low-effort interactions. 

That same research also found that 94 percent of customers with low-effort experiences plan on repurchasing, compared to just 4 percent who have high-effort experiences.

How to Track Customer Effort Score

To track your brand’s CES, start by adding together all of the customer effort scores you have available through your surveys. Once you have the sum, divide it by the total number of survey responses. 

The equation looks like this:

Customer effort score = Sum of All Customer Effort Scores / Total Number of Survey Responses

Formula of Customer Effort Score

As an example, let’s say you receive a total of 10 responses. From those responses, you’d add up the selected number from each survey: 

1 + 1 + 9 + 8 + 8 + 8 + 9 + 2 + 5 + 9 = 60

CES = 60 / 10 

So, your CES would be six. 

Any CES above five or six is considered a good score. 

4. Customer Churn Rate

The frequency at which customers stop doing business with your brand is known as customer churn rate or attrition rate. This metric measures the percentage of customers who leave over a specific period of time. Brands can use this knowledge to pinpoint the issues that make customers leave and reduce customer loss. 

Every company can expect some attrition. However, a high customer churn rate leads to revenue loss and should be dealt with. For example, if you’re noticing a high customer churn rate, consider setting up a brainstorming meeting to analyze customer experience pain points. 

How to Track Customer Churn Rate

To track the customer churn rate, first, you’ll need to know: the number of customers at the start of a period (S) and the number of customers at the end of a period (E).

Once you’ve selected a specified amount of time, and have the required numbers, plug them into the equation below: 

Customer Churn Rate = (S-E) / S

Formula of Customer Churn Rate

5. Customer Retention Rate

While customer churn rate and customer retention rate sound similar and are often confused, they’re not the same metric. Customer retention rate measures the percentage of recurring, or repeat, customers over a given period.  

So, a higher retention rate would conversely mean a lower churn rate. 

Repeat customers are invaluable and significantly more cost-effective for your business. In 2014, Harvard Business Review reported on research from Bain & Company, which proved that a 5 percent increase in customer retention rates grows profits by 25-90 percent.

How to Track Customer Retention Rate

Before you can track your customer retention rate, you’ll need to have:

  • The number of customers at the start of a time frame (S)
  • The number of customers at the end of a time frame (E)
  • The number of new customers gained during that time frame (N)

After you’ve compiled the information, you can use this calculation:

Customer Retention Rate = [(E-N) / S] X 100

Formula to Track Customer Retention Rate

6. Customer Lifetime Value

Customer Lifetime Value (CLV) is a customer experience measurement that predicts the total revenue anticipated from a single customer throughout the entire business relationship. 

CLV allows your company to track the value of your consumers over time. In doing so, businesses can determine whether products and services meet the needs of their customers. 

A high CLV generates more profit, whereas a low CLV indicates that you need to assess  the customer experience you offer.  

How to Track Customer Lifetime Value

One of the simplest ways to measure CLV is by multiplying your average retention rate by the average number of purchases. Then, multiply the product by the average deal total. 

Here’s what the formula looks like: 

Customer Lifetime Value = (Average Customer Retention Rate) X (Average Number of Purchases) X (Average Deal Total)

Formula to Track Customer Retention Rate

Powerful Tools for Measuring Customer Experience

Customer experience tools are essential for understanding how customers view and interact with your brand. They also improve internal workflows by creating streamlined processes to measure customer experience management (CEM)

CEM is a collection of business processes for tracking and analyzing customer experiences throughout the buyer journey. The goal is to understand brand value better and ensure customer expectations are maintained throughout your digital marketing efforts. 

Two powerful tools for measuring customer experience and the success of your CEM systems are: HubSpot Customer Feedback and Acquire Analytics. 

HubSpot Customer Feedback

HubSpot Customer Feedback is a part of the HubSpot Service Hub. The tool makes it easy to create and send customer experience surveys — such as NPS, CSAT, and CES. 

HubSpot Customer Feedback

All feedback is tracked in a single dashboard for easy viewing and comparison. You can even automate marketing emails or internal notifications to trigger after feedback responses are received. 

Acquire Analytics

Acquire Analytics is just one robust capability of Acquire’s all-in-one customer engagement platform.  

Acquire Analytics

With detailed digital consumer insights, Acquire Analytics allows you to broaden your knowledge of your brand’s complete customer experience.

A few noteworthy features of Acquire Analytics include:

  • Complete customer profiles that you can use for personalized communication
  • Issue segmentation by priority to ensure internal teams are held accountable  
  • Custom reports to measure any specific experience metrics 
  • Functionality to address customer support issues in real-time 

Final Thoughts: Measuring Customer Experience: Key Metrics and Tools for 2020

To grow a successful business in today’s market, creating positive customer experiences is a must. People expect more from brands than ever before. 

The good news is that positive interactions can lead to revenue growth and increased customer retention and loyalty.  

By measuring customer experience using the six key metrics above, your business will be well on its way to increasing overall satisfaction among consumers. 

For powerful customer experience features that don't break the bank, learn more about HubSpot’s free suite of service tools. 


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