Customer Experience metrics as the ROI of Service Design
“The key to making the case for service design is to focus on how you want the work to change customer behavior, and then measure the potential impact on the business in numbers.”
— Service Design from Insight to Implementation, Polaine, Lovlie, & Reason
A quick reference guide to success metrics common in the customer experience realm—beginning with three categorical groupings to distinguish them by:
- Customer relationship management (CRM) is typically quantitative in nature through tracking market research and point-of-sale transactional data.
- Customer experience management (CEM) is more often qualitative in nature through surveying what customers think about a brand, product, or service.
- Predictive customer analytics involve modeling data to form assumptions around future customer behavior.
EFFICIENCY METRICS
What happened?
A category of metrics tied to the transactional, executional CRM realm. These are often operational and quantitative in nature—answering “what happened?”
- Customer Effort Score (CES): measure of effort involved in a customer getting their issues solved
- Web Metrics: traffic sources, visitor conversions, bounce rate, session duration, etc.
- Contact Center Metrics: ring time, queue time, talk time and wrap-up time, disposition, resolution rate, etc.
- Standard Operating Procedures (SOP): workforce service standards, protocols, code of conduct, etc.
- Demographic Data: customer profile generalities—gender, age, geography and interests
QUALITY OF EXPERIENCE (sentimental, perception metrics)
What did the customer think about what happened?
Metrics common to the CEM realm are typically self-reported throughout the customer lifecycle. These are qualitative in nature answering “what did the customer think?” and are not as closely tied to proof-points of a distinct customer action.
- Net Promoter Score (NPS): customers who not only buy again, but who recommend (aka “Likelihood to recommend”)
- American Customer Satisfaction Index (ACSI): annual survey as U.S. economic indicator including sector, industry and company-level findings
- SERVQUAL / Rater: 5-dimensions believed to represent service quality— reliability, assurance, tangibles, empathy, responsiveness
- Kano Model: 5-catergories of customer preferences—must-be quality, one-dimensional quality, attractive quality, indifferent quality, reverse quality
- Customer Reviews / Word-of-mouth (WOM): A certain “freewill” motivation validates this type of unsolicited, non incentivized feedback. Self-selected, company published content has lost trust to unbiased review platforms (i.e., Google, Yelp, etc.)
20% to 60% of variation in organic growth is accounted for by Net Promoter Score
30% better conversion rate for referral leads, like you get from Promoters
2% increase in customer retention has the same effect as decreasing costs by 10%
EQUITY (predictive, outcome metrics)
What will the customer likely do as a result of what happened?
- Customer Lifetime Value: representation of how much each customer is worth to the business’s net profit—informing investment in customer acquisition
- Brand loyalty: evident through a customer’s repeated purchase of product/service, willingness to pay a higher price, and overall advocacy.
- Customer Loyalty Acid Test: 20 question loyalty survey developed by Bain in 1999
- Customer retention: repurchase intention measurement as an outcome of various drivers—customer satisfaction, delight, switching, relationship management
- Likelihood to buy: (i.e. “propensity to purchase” model) predictive probability that customers will purchase based on a targeted set of demographic characteristics
- Attrition / Churn rate: a measure of customer turnover common to subscriber-based services
Goal Precision
- “objective and key results” (OKR) agile-friendly, shorter goal cycles defined by simple, straightforward objectives and measurables analyzed frequently (monthly vs. annually).
- “key result area” (KRA) “KRAs are not performance measurements, but rather scaffolding to help break down your vision and goal into specific categories that will drive success.” —LBL Strategies
- “key performance indicator” (KPI) metric to evaluate the success of an organization in relation to industry standards or the success of an individual program/initiative. (Sub-categories include: leading, lagging, practical, directional, actionable, etc.)
References
