5 KPIs for evaluating and optimizing the customer experience

In today's competitive business landscape, delivering exceptional customer experiences is critical to long-term success. Customer Experience Management (CEM) is the practice of strategically managing and enhancing customer interactions to drive loyalty and satisfaction.

To effectively measure and improve CEM, companies rely on key performance indicators (KPIs). In this blog, we examine the five most important KPIs for CEM, explore strategies for measuring customer satisfaction, and present opportunities for improvement.

The five most important KPIs

Customer Experience Management (CEM) is a critical area for companies to build customer relationships and ensure long-term success. Use the following five KPIs to measure your success and identify areas for improvement.

Customer Satisfaction (CSAT)

The CSAT measures the level of customer satisfaction with a particular interaction or experience with a company. It provides valuable feedback on the effectiveness of products, services and support. Companies can measure CSAT by conducting surveys, feedback systems, or ratings and asking customers to reflect their satisfaction on a scale.
To improve CSAT, you should identify issues and areas for improvement, establish mechanisms for regular customer feedback, and ensure continuous communication as well as support throughout the customer journey.
The customer satisfaction survey can be used for project satisfaction, for example. The survey can be sent to different stakeholders in the projects to identify the different perceptions during or after a project. This allows individual measures per stakeholder groups to be defined and implemented.

Net Promoter Score (NPS)

Net Promoter Score is a widely used metric for measuring customer loyalty and satisfaction. By asking customers how likely they are to recommend a product or service to others, companies gain insight into their brand advocacy. To measure NPS, companies can conduct surveys with simple questions such as, «On a scale of 0-10, how likely are you to recommend us to your circle of friends?» The results are divided into promoters (9-10), passives (7-8) and detractors (0-6). To improve NPS, a company must respond and act on customer feedback as promptly as possible. In addition, solve problems efficiently and always try to provide an exceptional customer experience.
The NPS can be further used to measure individual touchpoints. For example, ask NPS questions at the end of a blog post to see how likely the blog is to be forwarded.

Customer Effort Score (CES)

The CES evaluates the simplicity of the customer experience when interacting with a company. It measures the amount of effort the customer has to put in to achieve their desired outcome. Surveys with questions such as «How easy was it to solve your problem?» are often used to measure CES. This KPI can help reduce friction points or even barriers to the customer experience. So to improve CES, you should focus on simplifying processes, improving self-service options, reducing customer effort, and proactively addressing potential customer issues. Streamlining workflows and optimizing support channels can go a long way toward reducing customer effort.
For example, think about the direct buy button on Amazon, which makes ordering quick and easy, increasing conversion rates.

Customer Churn Rate

The customer churn rate measures the rate at which customers end their relationship with a company. This can be an indicator of customer dissatisfaction or better alternatives on the market. By monitoring and reducing the churn rate, companies can maintain a loyal customer base and avoid revenue loss. Customer churn rate can be measured by tracking the number or percentage of customers lost over a period of time. Improving the churn rate involves understanding the reasons for customer churn, implementing effective customer retention strategies, providing personalized experiences, and delivering proactive customer support.

First Contact Resolution (FCR):

FCR measures the percentage of customer problems or inquiries that are resolved during the first interaction. High first contact resolution is an indicator of positive customer interaction. It can be measured by tracking the number or percentage of issues that are resolved without further contact. Improvements can be made by better training of employees (help from call center agents), improving knowledge bases, and optimizing support channels for faster resolution times. This is where chatbots and AI-powered solutions will play a very important role in the future.

With all the KPIs, it is important to note that the specific measurement methods and improvement strategies may vary by industry, company and customer expectations. Regularly collecting and analyzing customer feedback, monitoring trends, and taking action based on insights are key to effectively improving these KPIs.

Once the KPIs are defined, it is then a matter of technical implementation.

Questions? Contact me.

Benjamin Viereck

Business Consultant
BSc Industrial Engineering

Benjamin Viereck