10 customer experience KPIs that provide better insight than NPSby
Ten business KPIs, employee-rated items and survey scores that provide much better information on your current customer experience than just an NPS number.
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. First we’ll focus on business KPIs, then we’ll analyse 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.
1. 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 organisation will believe their numbers over yours.
2. 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.
3. 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? Decentralised 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.
4. 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.
Employee-rated and survey items
These business KPIs are some of the most important factors in complementing your existing scores, but they don’t give you everything you need.
Unfortunately, not every important metric can be captured in your systems. Some require employee judgment to rate, for example client risk, number of contacts at the client, and potential. Others require clients to tell you about themselves, such as share of wallet, likelihood to remain a customer, and trust. We’ll discuss these items today.
First, let’s look at employee-rated items:
5. Client risk
While some clients will tell you they’re at risk, that’s not the norm. Many companies capture this in their CRM system, asking account management or customer success teams to evaluate the current state of the relationship, often through a red/yellow/green system. When paired with the KPIs from yesterday, this gives you a very powerful 2×2 matrix. For example, analysing profitability by risk shows you where to focus your leadership efforts.
6. Number of contacts at the client
I’ve never actually seen this scorecarded, but it’s critical. Who hasn’t seen a situation where there was a strong relationship with a company until the central contact left and suddenly put the relationship at risk? The best B2B relationships have multiple deep connections to ensure the relationship stays close. Alternately, incorporate this into the client risk measurement.
Lori Laflin of Cargill and I had a good exchange on LinkedIn after my post from two weeks ago about the importance of segmenting your customers. She called out the importance of factoring in potential when assessing the strategic nature of a client, and I agree. It requires a salesperson’s judgment but is certainly something important to consider in relationships. Combine this with existing revenue and number of products to highlight how strategic each customer is.
Some items can be approximated by employees, but are best when clients tell you themselves, typically through surveys:
8. Share of wallet
This is a traditional B2B measurement, combining revenue with potential into one nifty measurement. It’s calculated by taking the client’s revenue with you and dividing by their (typically self-reported) revenue. We’ve found that clients are typically inaccurate when reporting the actual dollar amount they purchase through you, so we use self-reported data for both their overall orders and their orders through you. If you have data on true share of wallet, then by all means, use it. Assuming you don’t, know that getting the exact dollar amounts is less important than a client’s self-assessment of share of wallet.
This is my favorite B2B measurement. Showcasing unfulfilled (by you) demand drives decision-making: are you losing share because of delivery challenges, because you don’t have the right product mix, or something else? NPS fans can also create a compelling analysis by comparing share of wallet with NPS. They hopefully match up well – if not, perhaps NPS isn’t the right metric. Dominant players in their markets find that they rarely lose customers – but problems can lead to them losing substantial wallet share. Few measurements will get an executive as excited as share of wallet. We all know the research that it’s easier to sell to an existing client than to a new one. Share of wallet shows how well you’re doing at that.
9. Likelihood to remain a customer
Some businesses use likelihood to renew, depending on the nature of their relationships. This is a good complement to NPS or customer satisfaction and showcases risk in a client from their perspective. It’s always interesting to compare this to the sales team’s perceptions of client risk.
This is the ultimate measurement of a customer experience. The wording varies – “[Company] is a supplier that I trust” is common. While the actual score is interesting, changes over time are the most compelling. Some of our clients have found that this is the most predictive measurement of share of wallet.
Measuring the customer experience is hard. It’s even harder when you’re limiting your reporting to just a survey score or two. By bringing in business KPIs, employee-rated items and additional survey scores, you can get a much better picture of your current B2B CX.
Jim sees the world in a special way: through the eyes of customers.
With a lifelong passion for customer experience, Jim founded Heart of the Customer to help companies of all sizes increase customer engagement. Before launching the company, Jim led customer engagement initiatives at Best Buy and UnitedHealth Group. In the process, he...