One of the reasons customer experience is often relegated to the sidelines is that companies struggle to understand the value of delivering the experience itself. How much better could a company perform if the customer experience improved from good to great?
A recent HBR post by Whitney Johnson made me think about how customer experience professionals can measure the value they provide. We aren’t sales people, though we impact revenue. We aren’t marketers, yet our frequent customer interaction shapes the brand (for better or worse). Here are 3 ways to define the impact of customer experience on company success.
- Renewal Rates – When customers continue to purchase a subscription (in the case of SaaS) or maintenance (in more conventional software license models) they are literally voting with their wallets. An improvement in renewal rates increases the customer lifetime value and translates directly to profitability.
- Satisfaction or Loyalty Scores – All companies should measure customer perception of their organization, its products, and services. Whether the measure is a customer satisfaction (CSAT) or loyalty through a measure like NetPromoter Scores, it is imperative to track changes in customer feedback. Even the rate of response is something to measure since a decrease in response rate could signify a weakening loyalty to your company and its products.
- Referral Rates – When customers stake their reputation on your products/services you have achieved a level of loyalty that helps your sales team in future prospecting. This premise is so important that companies will go to great lengths to ensure their first customers are true fanatics.
A word of caution… these measures cannot be used in isolation and must be used together.
- High renewal rates with low satisfaction measures indicate that you have customers firmly in your grasp, but that customers want to escape as soon as possible.
- High satisfaction rates coupled with low renewal rates may signify that your products/services are becoming less relevant in the marketplace.
The pivot point is that when customers tell us and others about their satisfaction and follow-up by renewing services/products, then we can be confident we are adding value. Measuring the attributes above is a good start to gaining insight into the size and scope of the value.
What measures have you found useful to use when trying to quantify value?