Measuring Customer Experience’s (CX) business impact is hard. It’s one of the biggest challenges in passing the CCXP exam. One reason is that CX pros are very customer-focused; we’re confident that if we just focus on customer needs, the ROI will take care of itself. Unfortunately, our business partners aren’t always so confident.
Heart of the Customer has identified ten metrics and measurements you need to focus on to show the strategic value of your customer experience. You may already track some of these, and if so, you’re ahead of your peers.
We’ve broken them into three categories: Business KPIs, Employee-Rated Items, and Survey Scores. Not all will make sense for every company, but most will provide much better information on your current customer experience than just an NPS number. Today, we’ll focus on Business KPIs. Tomorrow we’ll analyze the others.
Four critical measurements are client profitability, complaints per [revenue], number of products used, and out-of-policy orders. Some are easier to track than others, but all measure an aspect of customer impact.
Client profitability. I wrote about this two weeks ago. Your peers likely consider this the most important factor to measure, but it’s difficult. The ideal (and often unattainable) measurement is to go beyond gross margin to factor in things like cost to service (based on number of calls and/or specific customer service representatives for an account), expedited shipping costs, cost of any management interventions, etc. While you may not be able to capture every factor, get as close as you can to show the real value each customer offers your company.
Don’t try to do this alone – ask your finance partners to help. They won’t just be better at it – the rest of the organization will believe their numbers over yours.
Complaints per [revenue]
This has several benefits. First, you can see which companies are more difficult to serve, which is obviously important when considering discounts or other special benefits. High costs to serve can also be a red flag, and can be missed if you don’t measure profitability. If a client has a high number of complaints, consider why that is true. Are they really just a difficult customer? Or perhaps you’re not set up appropriately to support them – your product isn’t an ideal fit, or past hiccups have led your or their service team to be easily agitated. Although I’m not a fan of “customer training,” since it typically means you have a bad CX, that may be a last resort.
The high number of complaints isn’t good for either party. It may be time to reconsider your service model, your offerings, or whether it actually makes sense to keep them as a customer. Divide complaints by revenue to show their true impact. Your million-dollar client will have more complaints than a $50,000 customer. Factoring in revenue gives a more relevant comparison than straight counts.
Number of products used. This obviously varies by type of business. Assuming you offer multiple products that can meet a client’s needs, include this in your scorecard – how many customers are using at least half of your products? Decentralized companies may have a harder time collecting this data, but a customer using products from multiple divisions clearly offers more value than one focusing their orders with just one division. Showing the number of products they use helps with both pricing and when factoring customer relationship models.
Out of policy orders. Clients who consistently order outside of lead time windows drive up costs, and this probably isn’t on your radar. Once you discover these, investigate why this is happening, and whether this non-compliance needs to be addressed. One of our clients discovered a small number of clients consistently ordered outside of the allowed window, which led to significant internal cost, late deliveries, and a continual need to provide status updates. By discovering which clients were most having this problem most frequently, they were able to setup a process. They worked directly with this small set of clients to understand the reason behind the orders, and came to accommodations that reduced the last-minute orders, lowering costs (and headaches) for both companies.
These business KPIs are some of the most important factors in complementing your existing scores, but they don’t give you everything you need. Tomorrow we’ll talk about other measurements where the data isn’t available.