Guest post by Josh Brown.
As business leaders try to adopt a more data-driven approach to their operations, they face a common challenge. While some areas of the company—like finance and inventory management—can easily be reduced to numbers, others aren’t as obvious.
While it may be a stretch to find one number that summarizes the totality of your customers’ experience, that doesn’t mean you can’t use data at some level to guide business decisions about your customer lifecycle.
Here are four data-driven metrics for managing your customer experience.
1. Net Promoter Score
If you were going to attempt to reduce your customer experience down to a single number, the Net Promoter Score might be as close as you could get. It was developed (and trademarked) by Fred Reichheld, Bain & Company, and Satmetrix Systems and publicized in a 2003 Harvard Business Review article by Reichheld.
If you’ve ever seen a survey that asks “How likely are you to recommend us to a friend?” with a choice between 1 (not likely) and 10 (highly likely), it is measuring Net Promoter Score. The idea is that the more likely people would refer your business to someone close to them, the more satisfied they are with your company.
When measuring Net Promoter Score, it’s also a good idea to get feedback by asking customers to explain their answer in an open-ended text box. (The best online survey tools make it easy to do this.) That way you can see why your best customers love you (and why unsatisfied customers don’t) without providing any leading information.
Both of these pieces of data are key for managing your business.
You’ve probably seen horror stories about companies that unknowingly delete a feature that’s popular among their best customers. You can avoid the inevitable public outrage that follows this type of service change if you analyze your Net Promoter Score data properly. You’ll know what features of your product or service your best customers love based on their open-ended explanations for their high rating, and can then make sure you continue to support them or even expand them.
And on the flip side, if you notice a common thread in the responses that are not likely to refer you, you can then prioritize correcting those problems so that your business improves.
Churn is particularly important for companies that operate on a subscription model (also called continuity programs). However, even if you don’t run a subscription business, you can think of churn in terms of the number of customers that bought from you the previous year that have not bought from you again this year.
There’s a common saying in business that it’s better to sell more to an existing customer than it is to acquire a new one. And while that’s not always the case, as the “Grandfather of Analytics,” Kevin Hillstrom from Mine That Data, explains, for businesses on a continuity model: it absolutely is.
Businesses that rely on subscriptions invest heavily in acquiring new customers in the hopes of recovering that cost over time as the customer makes regular payments.
However if a customer cancels their subscription before the company makes back its money, the business winds up taking a substantial loss.
Churn is a measure of how many customers cancel their subscriptions in a given time period. So if you operate on a monthly basis with a 10% churn rate, that means you can expect 10% of your customers to cancel in a given month.
Decreasing churn by even a few percentage points can result in significant increases in profit. Preventing customers from cancelling means you’ll continue collecting their continuity payments and turn what would have been a loss on your P&L into a gain.
You should test programs designed to reduce churn to see if they can help your business. For example, if you know that lots of customers cancel after 3 months, automate an email sequence to “re-sell” them just before that point to see if it keeps them subscribed. Or empower your customer service team to offer a deal to people who indicate they want to cancel (cable and phone companies do this all the time). The point is to recover a customer before they churn by figuring out the best way to re-engage with them.
3. Number of Support Contacts per Ticket
One of the most important aspects of the customer experience is how your company provides support—especially today, when every person can broadcast their complaints on social media. The last thing you want is for your company’s poor service to go viral, like when someone posted a video of United Airlines employees dragging a passenger off of a plane.
One way your company can identify areas where customers are having trouble and experiencing frustration is to look at your support tickets.
Most customer service platforms will let you track how many times a customer reaches out for support regarding the same issue. Look over your tickets and pull out the ones in which the customer contacted your support team the greatest number of times before a resolution, and see if they have anything in common.
If they do, you’ve just found an aspect of your company’s operations that is causing your customers (and your support staff) a lot of trouble. And sometimes fixing it is as simple as adding a few explanatory sentences in your FAQs to clear up any confusion.
Other fixes may require more significant infrastructure changes, but by analyzing your support tickets you’ll have the data to back up the investment in a larger-scale project.
4. Number of Website Visits Before Purchase
The “curse of knowledge” is one of the biggest obstacles businesses face when communicating with their customers and potential customers. It says that once you’ve learned something, it’s impossible for you to remember what it was like to not know it. And the more sophisticated your understanding of a topic, typically the more “cursed” you are by that knowledge—unless you take deliberate steps to avoid it.
As it relates to business, employees spend eight hours or more each day immersed in the products and services they sell. They are often “cursed” by their intimate knowledge of their company, making it challenging for them to communicate with prospects who may be hearing about the business for the first time.
Unless they’re a communications expert (and sometimes even if they are) the employees responsible for speaking to new customers often fail to communicate in a way that someone without their expertise about the business will understand.
If you operate in an eCommerce environment, one way to judge how effectively you’re communicating is to measure the number of visits a customer makes to your website before purchasing.
It’s unrealistic to expect your customers to purchase on their first visit, as they often want to research your offer elsewhere, or compare prices across different sites.
However, as the number of “visits before purchase” goes up, so does the likelihood that your prospects are confused – or not convinced – by your messaging. You can work with your sales and marketing teams to see if you can improve your conversion rate by finding and fixing problems with your communications, and see if that reduces the number of visits before purchase.
Now that you understand how to use the four metrics covered in this article, you’ll be able to collect the data you need to reexamine your customer experience. These tools can help you identify problem areas that require immediate attention, and can even help protect you from accidentally removing a part of your business customers love.