The field of customer experience (CX) management is on the rise — and there’s no sign of it stopping. More than 5,000 organizations worldwide now have a dedicated CX leader, nearly half of whom report to the CEO.
This increasing level of CEO oversight shows the importance of CX to the bottom line, hence the need for measurement.
Most large organizations with revenue of more than USD 1 billion have more than 50 CX metrics — some as many as 200 — all owned and managed by different people in different parts of the organization.
Customer retention or loyalty metrics are often owned by someone in marketing, first-call resolution metrics are owned by the customer service department, repeat orders are owned by the finance department and timeliness is owned by the supply chain team or operations.
CX metrics have several uses. They can be used to communicate the rationale for previous investments; validate whether improvements have taken place; set goals and targets for future improvements; or intervene when remedial action is needed.
Gartner defines the five main types of CX metrics and provides best practices for CX leaders when defining them.
5 types of metrics
Although the number of metrics used is large, most fit into five categories.
- Customer satisfaction (CSAT). Most organizations start here. CSATs are the most traditional metric that can involve either the explicit capture of survey questions asking about satisfaction or implicit metrics, such as product review ratings, timeliness of delivery statistics or mystery shopping scores.
- Customer loyalty/retention/churn. These metrics can be retrospective, such as average tenure, or more predictive of the likelihood of a customer remaining a customer. Examples include purchase frequency, use of multiple channels, loyalty program participation,average order size, repeat orders and return rates.
- Advocacy/reputation/brand. These metrics determine the level at which customers would be willing to recommend or endorse the product or organization. Price sensitivity, sentiment scores on social media, trust ratings and event participation are all good examples.
- Quality/operations. This is the most underestimated set of metrics. When a product or service does not meet requirements, the customer experience is poor, no matter what actions are taken to remediate the problem.
- Employee engagement. This fifth set of metrics is included in perhaps only 10% of CX initiatives. A Gartner survey identified employee engagement as a major concern in delivering CX improvements, with 86% of organizations ranking it as having an equal or greater impact than other CX challenges.
Present a consolidated view
Organizations turning to CX management must first define what CX means to the organization and then decide how to measure it. Measuring customer experience has multiple purposes, depending on the maturity of the organization. The purpose might be to move from a measurement “anarchy,” where each team or department measures in isolation, to a state where measuring is an aid to an overall CX performance improvement.
Avoid focusing only on one top-level CX metric, such as CSAT or Net Promoter Score (NPS). Instead, consolidate all the relevant metrics into a CX dashboard, build a hierarchy of metrics, or construct an index that covers as many aspects of employee engagement, quality, satisfaction, loyalty and advocacy as possible, and share it across departments.
Repair and maintenance staff within a field service department, for example, will be able to see the average wait time for customers in the contact center and anticipate irritated customers if wait times are high.
Some metrics used — such as cross-sell, upsell, or cost of sale or campaign response rate — do not measure customer benefit at all. Clarify when a metric is not a CX-specific metric so as not to encourage wrong behavior. An example would be selling a financial product under the misleading belief that it is part of a larger CX initiative.
Although senior executives tend to prefer to use only one or two metrics to summarize the whole of the customer experience, that approach does not show where to focus to effect change. Audit all CX metrics across the whole organization, not just those tracked in the marketing and customer service departments, and then identify how each metric is calculated, who tracks it and who is accountable for its improvement.
The original article by Ed Thompson, distinguished vice president analyst at Gartner, is here. This article has been updated from the original, published on June 13, 2018, to reflect new events, conditions or research. The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CDOTrends. Photo credit: iStockphoto/Prostock-Studio
