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This CX Mini Masterclass covers a roundup of the key insights on CX metrics from previous episodes. Show host and customer experience expert, Julia Ahlfeldt, covers everything from the basic definitions of the most popular metrics to the strategies for putting these to use, plus a step by step guide on where you can go to learn more. Customer experience metrics have always been a hot topic in the industry, so this episode is for new CXers and seasoned experts alike. If you’re interested in an expert-curated guide to customer experience metrics and their role in CX management, then this episode is for you.
THE hot topic
If you get a group of CX professionals together, at some point the conversation will turn to metrics and measures. It’s inevitable. Largely because metrics and measures are the core of how CX teams validate insights, track their progress, and prove their worth the business. So it should come as no surprise that this is a keen area of interest for continued learning and that conversations on the pros and cons of different metrics have been known to stir up emotions.
Given the importance of CX metrics, the topic has been covered quite extensively on the podcast. At least 7 Mini Masterclass episodes to date have featured topics related to CX metric. It was high time for a round up guide to customer experience metrics, and no better way to mark the milestone of the 85th episode.
Kicking off the guide to customer experience metrics
In episode 28, guest expert, CX thought leader and former CEO of the CXPA, Diane Magers, outlines the difference between metrics, measure and business value. These are terms that many CX professionals use interchangeably, but it’s important to clarify what these are and how they apply to customer experience management. No guide to customer experience metrics would be complete without baseline definitions of the key terms. Diane broke down her definitions of each:
- Measures– anything you can count (e.g. number of clients that come into your store, call length, frequency of purchase)
- Metrics– outcomes of something that’s happened, including a customer’s perception of those outcomes (e.g. customer satisfaction, customer effort score)
- Value– the financial levers that you can pull in an organization and/or the resulting financial impact (e.g. cost to serve, revenue, expense, profit per customer)
For more on this, be sure to check out episode 28.
Understanding the “Big 3” metrics
Episode 31 explored 3 of the most common CX metrics out there, Customer Satisfaction or CSAT, Net Promoter Score, otherwise known as NPS and a newer kid on the block Customer Effort Score. Each one has a unique methodology and brings as different type of insights to the table. Be sure to listen to episode 31 if you want an overview of the 3 juggernaut metrics of the CX world.
Episode 33 was a special deep dive into the pros and cons of Net Promoter Score, as it is undoubtedly the most controversial metric of the bunch. NPS was developed by Fred Reicheld, a notable thought leader and management consultant. The metric was introduced to the world through a Harvard Business Review article, so it caught the attention of executives and helped shine the spotlight on CX, but many CX professionals now feel increasingly shackled to a metric that doesn’t explain the full picture of customer experience, which by the way – no single metric will ever be able to do in isolation. There are many well documented issues with the way that NPS is measured and used.
My professional opinion is that NPS has its place as a CX metric, but only in the right context. It is better suited as a dipstick on customer perceptions of a brand across their entire journey and not as performance measure for customer-facing teams. That recommendation only stands if the right methodology is used, which it’s often not. Check out episode 33 for more details.
Interpreting metrics
One metric used in isolation won’t provide the full picture of an organization’s performance or progress towards customer-centricity. There isn’t a singular guide to customer experience metrics, but it is widely acknowledged that CX teams should leverage a variety of metrics to create a full picture of CX. Episode 32 explores how different metrics and measures can be used in concert by classifying them as leading or lagging indicators and then bringing them together to establish a holistic understanding.
Leading indicators are measures that precede or feed into a customer experience. These should indicate whether or not an experience will be successful. E.g. wait time, processing time, product availability, system downtime, product quality. These are all components that might contribute to customer experience. Leading indicators help predict the outcomes of experiences and many of them can be measured and monitored before experiences even happen. They can be used to proactively intervene when experiences start going sideways and make for great CX KPIs (see more on that below).
Lagging indicators follow a customer experience. These should indicate whether or not an experience was successful. Customer retention and the “Big 3” metrics covered in episode 31 are all examples of lagging indicators. They help us understand “how we did” and are important for monitoring progress or for tracking the impact of customer experience efforts over time. When teams use leading and lagging indicators together, it empowers them take charge of delivering good experiences and then monitor the outcomes.
Putting CX metrics to work
A guide to customer experience metrics wouldn’t be complete without some ideas on how to put these CX tools to work. Episodes 53 and 73 do just that.
Metrics can be very helpful for driving organizational alignment around customer centric-goals. Episode 53, looked at CX KPIs as an application for CX metrics and measures. The key is to find metrics or measures that connect a team or individual’s day to day responsibilities to customer outcomes. This is generally easier to do for customer-facing teams than those working behind the scenes, but ideally everyone should be accountable to a KPI or two that connects their work back to the customer mandate. For more detail on establishing CX KPIs and potential pitfalls to look out for, be sure to check out episode 53.
CX professionals can get so worked up about metrics, because they’re the way that CX teams prove the worth of their efforts to the business. Episode 73 provides some recommendations on how CX leaders can use those metrics and measures to demonstrate the impact that customer experience is having on the business. Customer experience metrics can be used to highlight efficiency gains, quantify the value of referrals and demonstrate how a better understanding of the customer has led to improved business outcomes. Those are just a few of the recommendations covered in episode 73.
Avoiding the common pitfalls
In episode 63, special guest and CX expert Stephanie Thum shared 4 common mistakes with how teams use metrics and what CX leaders can do to avoid these. If you are in the process of setting up a CX metrics framework or are busy reflecting on how you can improve the one currently in place, be sure to check out episode 63. Stephanie covers everything from how to share metrics that you think might make the situation look bad to establishing the right cadence for measurement. Stephanie has become a special ongoing contributor to the show, and ALL of her episodes are well worth a listen!
When CX metrics aren’t enough
If you’ve reached the end of this guide to customer experience metrics and are thinking “I’m applying all of the CX metrics best practices, but my executive team still isn’t listening”, you might just be speaking the wrong language. CX metrics carry weight with CX professionals because we understand their value (and pitfalls!). If you want to your message to resonate with business leaders, consider framing CX performance in terms of business results, aka the ROI of CX. For more on this, including how you can leverage existing CX metrics to demonstrate business impact, be sure to check out my Ultimate Guide to the ROI of Customer Experience.
Transcript
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Welcome to Decoding the Customer, a podcast about customer experience and how to realize customer-centric change in today’s dynamic business world. I’m Julia Ahlfeldt, certified customer experience professional, business advisor, and host of this program. Thanks so much for tuning in. If you’re new to the show, welcome.
If you’re a returning listener, thanks and it’s great to have you back. This episode is part of my CX Mini Masterclass series here on Decoding the Customer. These weekly episodes are published each Thursday and designed to be punchy, bite-size overviews of key customer experience concepts and ideas for how you can help your organization thrive through customer centricity. Whether you’re new to the field of customer experience, are preparing for the CCXP exam, or are a seasoned professional looking to brush up on a few basics, this series will help you improve your knowledge, skills, and performance to stand out as a CX professional and an added note to those who are already CCXPs.
The Customer Experience Professionals Association is now recognizing CX Podcasts listening towards certification renewal credits. So be sure to jot down which episodes you’ve listened to so that you can submit this towards your continued education requirements. This is episode 85, the third episode of May 2020. I can’t believe this show has reached 85 episodes.
It feels like yesterday that I launched the Mini Masterclass series, but it was actually 18 months ago. Time really flies when you’re having fun. And now that we’ve got so many episodes to pull from, I thought I’d try something a little different for today’s show. For this episode, I’m going to do a round up of everything I and my guest expert contributors have covered to date on CX Metrics and Measures.
This is one of the most important topics for CX professionals. And it’s been the focus of at least seven mini masterclasses so far. Today, I’m going to pull together the highlights, key takeaways, and let you know where to go to get more information. If you are looking for a one stop shop overview of CX metrics and guidance on where to learn more, then stay tuned.
As always, if you’re out and about while listening to this, and here’s something that you’d like to remember later, don’t worry about writing it down. You can find an overview of the key concepts that we’ve covered today in the show notes for this episode, which are on my website, juliaahlfeldt.com, or decodingthecustomer.com. I swear, if you get a group of customer experience professionals together, at some point, the conversation will turn to metrics and measures. It’s inevitable, guaranteed.
And why is that? Well, I think it’s because metrics and measures are the core of how customer experience teams validate insights, track their progress, and most importantly, prove their worth to the business. So, it should come as no surprise that this is a keen area of interest for continued learning and that conversations on the pros and cons of different metrics have been known to stir up emotions. This topic has been covered quite extensively on the podcast, and that’s why I’ve picked it as the focus for this roundup.
So, let’s start at the very beginning by defining metrics, measures, and business value. In episode 28, guest expert, CX thought leader, and former CEO of the CXPA, Diane Magers, outlines the difference between metrics, measures, and business value. These are terms that many CX professionals use interchangeably. But it’s important to clarify what these are and how they apply to customer experience management.
Diane broke down her definitions for each. Measures. These are anything that you can count. Number of clients that come into your store, call length, frequency of purchase, stuff like that.
Metrics. Metrics are outcomes of something that’s happened, including a customer’s perception of those outcomes. So this would include things like customer satisfaction, a customer effort score, metrics like that. And finally, value.
Value represents the financial levers that you can pull in an organization and or the resulting financial impact. So this would include cost to serve, revenue, expense, profit per customer, just to name a few examples. For more on this, be sure to go back and check out episode 28. In episode 31, I took a look at three of the most common CX metrics out there.
Customer Satisfaction or CSAT, Net Promoter Score, otherwise known as NPS, and a newer kid on the block, Customer Effort Score. Each one has a unique methodology and brings a different type of insight to the table. Be sure to listen to episode 31 if you want an overview of the three juggernaut metrics of the CX world. In episode 33, I specifically took on Net Promoter Score, looking at the pros and cons of this metric, as it is undoubtedly the most controversial of the bunch.
NPS was developed by Fred Reicheld, a notable thought leader and management consultant. NPS was introduced to the world through the Harvard Business Review. So it caught the attention of executives and helped shine the spotlight on customer experience. But many CX professionals now feel increasingly shackled to a metric that doesn’t explain the full picture of customer experience, which by the way, no single metric will ever do in isolation.
There are many well-documented issues with the way that Net Promoter Score is measured and used. My personal professional opinion is that NPS has its place as a CX metric, but only in the right context. It’s really better suited as a dipstick on customer perceptions of a brand across the entire journey, and not, I repeat, not, as a measure for customer-facing teams. And that only stands if the right methodology is used to measure Net Promoter Score, which all too often it’s not.
Check out episode 33 for more details. Since we know that one metric in isolation won’t give us the full picture of an organization’s performance or progress towards customer centricity, I dedicated episode 32 to exploring how different metrics and measures can be used in concert by classifying them as leading and lagging indicators, and then bringing those together to establish a holistic understanding of customer experience. Leading indicators are measures that precede or feed into customer experience. These should indicate whether or not an experience will be successful.
It would include things like wait time, processing time, product availability, system downtime, product quality. All of these are components that might contribute to customer experience. Leading indicators help predict the outcomes of experiences, and many of them can be measured and monitored before experiences happen. They can be used to proactively intervene when experiences start going sideways, and they make for great customer experience KPIs.
More on that in just a minute. Lagging indicators follow a customer experience. These should indicate whether or not an experience was successful. Customer retention and the big three metrics covered in Episode 31 are all examples of lagging indicators.
They help us understand how we did, and they’re important for monitoring progress or for tracking the impact of customer experience over time. When teams use leading and lagging indicators together, it empowers them to take charge of delivering good experiences, and then monitor the outcomes. In Episode 53, I looked at CX KPIs as another application for CX metrics and measures. Metrics can be very helpful for driving organizational alignment around customer-centric goals.
The key is to find metrics or measures that connect a team or individual’s day-to-day responsibilities to customer outcomes. This is generally a lot easier to do for customer-facing teams than those working behind the scenes. But ideally, everyone should have a KPI or two that connects their work back to the customer mandate. For more detail on establishing CX KPIs and the potential pitfalls to look out for, be sure to check out Episode 53.
My next and penultimate episode in this roundup also includes practical tips on how to use metrics. In Episode 63, special guest and CX expert Stephanie Thum shared four common mistakes with how teams use metrics and how you can avoid these. If you’re in the process of setting up a CX metrics framework or are busy reflecting on how you can improve the one you’ve currently got in place, be sure to check out Episode 63. Stephanie covers everything from how to share metrics that you think might make a situation look bad to establishing the right cadence for measurement.
Stephanie has become a regular contributor on the show. Her insights are fantastic, and I definitely recommend you check out her episodes. Finally, in Episode 73, I provided some recommendations on how you can use those metrics and measures to demonstrate the impact that customer experience is having on the business. This is what it’s all about, right?
And why CX professionals can get so worked up about metrics? Because they’re the way that we prove our worth to the business. So customer experience professionals need to use those numbers to highlight things like efficiency gains, quantify the value of referrals, and to demonstrate how a better understanding of the customer has led to improve business outcomes. So there you have it, a comprehensive roundup of the Mini Masterclass episodes that have been dedicated to CX metrics and measures.
And a bit of a listener guide to anyone looking to learn more on this topic. If you’re looking for help measuring customer experience or demonstrating the business value of CX efforts, please get in touch. I’d be happy to explore how I can help. You can reach me via email, tweet, or LinkedIn message.
My handle is at Julia Ahlfeldt, and my full contact details are also listed on my website, juliaahlfeldt.com or decodingthecustomer.com. I hope that you’re enjoying the show. Please share with others who might be interested, or head on over to iTunes and rate the podcast. This helps others find the show.
I’ll be back next week with another episode. I’ll see you then.
Want to keep learning about CX?
If you’d like to checkout more of these CX Mini Masterclasses or listen to my longer format CX expert interviews, check out the full listing of episodes for this CX podcast.
Decoding the Customer is a series of customer experience podcasts created and produced by Julia Ahlfeldt, CCXP. Julia is a customer experience strategist, speaker and business advisor. She is a Certified Customer Experience Professional and one of the top experts in customer experience management. To find out more about how Julia can help your business achieve its CX goals, check out her customer experience advisory consulting services (including journey mapping, CX strategy development, experience innovation, leadership workshops and CX ROI measurement) or get in touch via email.
