Companies obsessed with customer experience (CX) enjoy lower acquisition costs, deeper customer loyalty, reduced sales cycles, higher revenues, and many more benefits than their unobsessed counterparts.<\/p>\n\n\n\n
But not every company achieves rockstar status by investing in CX.<\/p>\n\n\n\n
Why not?<\/p>\n\n\n\n\n\n\n
Some companies apply CX principles too sporadically to be effective. But the main reason is most companies simply fail to rigorously measure CX.<\/p>\n
According to Forrester Research<\/a>, more than 50% of companies don\u2019t currently tie CX activities to revenue.<\/p>\n CX leaders consistently demonstrate the direct relationship between their CX efforts and revenue growth. CX laggards don\u2019t.<\/p>\n Unfortunately, there isn\u2019t a single CX measure that answers all these questions. Different instruments will answer different questions.<\/p>\n Let’s tackle the first and most difficult question in the above list.<\/p>\n What are some ways to correlate CX to revenue? There are 2 ways to go at this: top line (gross revenue) and bottom line (net revenue).<\/p>\n What are the factors that make up your company\u2019s top line revenue?<\/p>\n What factors eat away at your profit that can be solved with a better customer experience?<\/p>\n Here are 3 ideas to get you started:<\/p>\n Believing CX is the right and strategic thing to do isn’t enough. There are standard metrics companies use to measure and tie CX efforts to outcomes.<\/p>\n To measure the impact of CX activities on market share, there are several questions to answer:<\/p>\n Ways to measure market share:<\/strong><\/p>\n There are almost endless<\/a> ways to dig into market share gains or losses: talk to your sales reps, talk to customers, conduct mystery shopping, measure advocacy, social listening, etc.<\/p>\n To track overall CX performance in your field, I recommend the Forrester CX Index. According to their 2015 report<\/a> (paid report), a one-point improvement resulted in $15MM to $175MM additional revenue, depending on the industry. Forrester writes and talks<\/a> extensively how CX leaders consistently outperform CX laggards.<\/p>\n First, calculate your customer lifetime value (CLV).<\/p>\n Increasing CLV doesn\u2019t just mean optimizing retention, average order value, frequency, upsells, and cross-sells. Also consider price elasticity \u2014 the higher the perceived value, the higher the price \u2014\u00a0as a driver of CLV and an outcome of better CX.<\/p>\n Ways to measure CLV:<\/strong><\/p>\n Segmentation! Which groups of customers are the most valuable and generate the most revenue? What do these groups need that you’re not currently providing?<\/p>\n Apply CX research methods to uncover actionable insights about your top customers.<\/p>\n Consider taking a holistic look at customer service beyond your call center or tech support, but all customer touchpoints \u2014 checkout, wayfinding, store cleanliness, employee attitude, delivery time, etc.<\/p>\n Ways to measure customer service:<\/p>\n This list isn\u2019t exhaustive by any means. Your organization will have its own unique measures. For example, Zendesk tracks a \u201cself-service score\u201d \u2014\u00a0the number of users who solve their own issues, rather than create a support ticket.<\/p>\n Wait, isn\u2019t NPS (Net Promoter Score) missing from this list? Nope. NPS doesn\u2019t make the cut for 2 important reasons: it\u2019s not actionable and it doesn\u2019t measure actual customer behavior. Instead, NPS asks people to predict<\/em> their future behavior \u2014\u00a0yikes.<\/p>\n What is the percentage of customers who did not make a repeat purchase?<\/p>\n Ways to measure customer churn:<\/strong><\/p>\n Divide the number of lost customers by number of active customers. Then, interview or survey recently departed customers to find out why they left.<\/p>\n As a big proponent of Gallup\u2019s Q12 employee engagement survey and ongoing research<\/a>, I think it\u2019s clear that happy employees equals happier customers.<\/p>\n Forrester also is interested in the topic of correlating employee engagement with customer experience. Their research<\/a> shows that stellar CX isn\u2019t possible without highly engaged employees.<\/p>\n Ways to measure employee engagement:<\/strong><\/p>\n If you\u2019re not familiar with Gallup Q12, I recommend reading the methodology<\/a> that went into constructing the right questions and how they connect employee engagement to revenue. (Note: requires contact information.)<\/p>\n Now that you are armed with CX metrics, the next challenge will be to prioritize them.<\/p>\n If you don\u2019t have an executive CX steering committee or experience analysts, look for champions within your organization to help you connect CX metrics with top line and bottom line revenue.<\/p>\n\n\nSo, how do you tie CX activities to revenue?<\/strong><\/h2>\n
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Top Line Revenue<\/strong><\/h3>\n
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Bottom Line Revenue<\/strong><\/h3>\n
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How to measure CX<\/strong><\/h2>\n
Market Share<\/strong><\/h3>\n
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Customer Lifetime Value<\/strong><\/h3>\n
Customer Service<\/strong><\/h3>\n
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Customer Churn<\/strong><\/h3>\n
Employee Engagement<\/strong><\/h3>\n
Next Steps<\/strong><\/h2>\n
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