How to Calculate Customer Experience

Investing to improve your business’s customer experience (CX) can be the difference between its success and its failure.

When companies take the time to strategically plan and improve their customer experience, it pays huge dividends. Forrester Research stated there was $1.3 billion in additional revenue for companies that improved their CX from below average to above average.

The return on investment that comes from improved customer experience is directly related to increased customer loyalty – each customer buys more, you lose fewer customers, and your customers are more willing to spread good news about your business.

We’ve all done it. I know I have.

I’ve tweeted about how easy it was to sign-up for a free trial, posted a photo of a nasty hotel room on TripAdvisor, and complained on Facebook while waiting on hold. 

Reaping the benefits that come from improved customer experience depends on your ability to measure and test your investments in CX, otherwise you won’t know which investments are working and which are not.

It’s like management guru Peter Drucker once said:

“What gets measured gets managed.”

When you start measuring CX, you’ll notice something - your investments not only produce a return because they generate new business or bigger sales, but also because they save you money.

When you start to measure customer experience, it requires a change in focus - you need to step back from traditional product-centric measures of performance and start focusing on the basic functions of your business by identifying customer beliefs and touchpoints.

One of the toughest steps I had to take was getting used to tracking fuzzier (but no less important) qualitative metrics as well as quantitative analytics. 

Ultimately, there are four steps you need to take if you want to be able to measure your customer experience.

Step 1 - Get Into Your Customer’s Brain

The first (and most important step) is getting to know and understand your customer. This helps you set aside your biases and beliefs about your product and move towards understanding their perspective.

It’s how you ‘walk a mile in their shoes.’

I’m sure you already know your customers - you have demographic information on what they like to read. But many businesses still fail to understand them.

Whenever I try to understand my customers, I ask a few questions:

  • Since I know what they read, why do they choose to read those blog posts or ebooks?
  • What problems are my customers trying to solve?
  • What questions do they need answered?
  • What kind of information did they need, but were unable to find?
  • What will it take to earn a few word-of-mouth mentions from them?
  • Are my customers and their behaviors changing?

The Drudge Report is horribly ugly, aesthetically unappealing, and many people dislike it on principle, but it continues to exist and prosper because of the degree to which it understands its customers. 

Drudge provides:

  • Information relevant to its audience
  • Multiple perspectives on different stories
  • Stories that its readers are interested in, but might not have known about
  • Up-to-date information
  • Exclusive stories that other media outlets haven’t covered
  • Practical, interesting content that’s great fodder for a conversation over drinks

Even if you dislike the Drudge Report, you need to be willing to learn a lesson or two from it.

Step 2 - Identify points of contact

Measuring customer experience depends on identifying each point of contact your customer has with your business. A touchpoint can be virtual (a website or newsletter signup form) or one that occurs in the real world (customer service kiosk or the behaviour of your staff at the cash register).

Each contact your customers make with your product, whether it’s through onboarding or messaging and how well you live up to their expectations will determine how long someone sticks around. Did you delight them? Surprise them? Did they leave very quickly?

Touchpoint metrics

Touchpoint metrics are specific to customer experience - they are developed to measure the attributes of each point of contact someone makes with your brand and how they relate to your businesses goals and weight for every specific action.

For example, if I needed to take my car in to be serviced or repaired at the dealership, my first touchpoint would likely be either a sales person in the building, a receptionist or someone at the service desk.

When I make my way to the service desk, there are going to be a series of things that I’m looking for - the staff should be courteous, they should be able to quickly identify my problem, and, probably most importantly, I don’t want it to take forever.

The smart business would measure all of these factors, but it would also measure additional business goals that wouldn’t necessarily be on my list.

If I’m taking my car in for an oil change, the dealership could measure the percentage of people coming in for an oil change who select the upgraded package with premium oil and top of the line filters. 

By monitoring how well you meet customers’ expectations and how effectively you are achieving business goals at each touchpoint, you will be able to know if and how you are impressing customers. You’ll also know what business functions are performing and which are holding you back.

Step 3 - Develop solutions

Now you know what you are doing well and what you are doing poorly. It’s time to develop solutions that can potentially address these problem areas.

If you measure touchpoint metrics for customer or technical support and notice people are waiting too long on hold, have to make multiple calls to solve their problems or that your sales reps aren’t up selling successfully, you can theorize potential solutions to those problems.

I would think:

  • If people aren’t signing up to my email newsletter, I might need to change the content or improve my call-to-action
  • If a landing page has a high bounce rate, it would make sense to test different headlines
  • If people aren’t downloading my ebook, maybe its addressing a problem my customers don’t have
  • If people are switching from free accounts to premium accounts at a desirable rate, can I segment my list more appropriately?

Again, until you test and measure these ideas they are only theories - possible solutions to the problems plaguing your customer experience.

Step 4 - Measure solution metrics

Solution metrics, qualitative and quantitative metrics that measure the effectiveness of your solutions, work to complement touchpoint metrics. I use solution metrics to help understand why my touchpoint metrics are changing.

When I use solution metrics, I narrow my focus to the problem areas I identified with my touchpoint metrics. I ask myself one question: Are the problem areas improving or worsening after I implemented my solution.

In real terms, that means:

  • Have I increased the number of subscribers to my newsletter?
  • Has one particular headline helped reduce my bounce rates?
  • Is my new ebook getting more downloads than my old ebook?
  • My segmenting my email list and personalizing offers, are more people converting from free to premium accounts?

Using solution metrics, you can test your ideas to see which effectively address the problems you identified and which fail to do so.

Once you know which solutions are effective and which aren’t, you’ll know where to focus your business’s resources so you can see the biggest improvement in customer experience. 

Hypothesize, test and measure, and adjust accordingly - it’s an age-old strategy that could see your business convert more people into paying, happier customers. 

Your customer experience

I’d really like to hear from you in two perspectives in response to this post:

  1. As a customer, what are the factors that are important determinants of how well you rate your experience with a business?
  2. As a business owner, what metrics do you most frequently track? What challenges do you find when trying to track qualitative data?
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