April 2019 | Point of View

Key performance indicators for measuring customer experience value

Key performance indicators for measuring customer experience value

It's no secret that an enterprise-wide customer experience (CX) transformation is a substantial investment for an organization to make. To make lasting improvements to people, process, and technology, it requires years of work and potentially millions of dollars to execute.

As few organizations can commit to those figures up front, these transformations are often conducted in phases, requiring CX leaders to demonstrate success early and often to ensure continuous funding.

According to a Confirmit study, only 20% of companies scored their ability to see return on CX investments at a 9–10. No organization will continue to fund initiatives without some empirical proof that these transformation activities result in actual positive business outcomes. 

Measuring the success of large-scale transformation efforts is often easier said than done. However, if you aren't quantifying the value of your CX activities, you won't have the business case necessary for ongoing funding or the support of key stakeholders.

To avoid this all too common pitfall, organizations must develop a robust measurement framework upfront that helps tie CX improvements to business outcomes at each step of the way. But where do you begin? What are the most impactful key performance indicators (KPI) to focus on? 

Successful Organizations Follow These Four Steps

  • Establish a CX value framework

  • Integrate the framework with planning and portfolio development

  • Establish an iterative transformation program

  • Define metrics that enable you to measure clear improvements in CX value

The framework is what will keep your transformation on track and connected to the value that you hope to achieve by making a change. To develop this robust framework, an organization must have the following:

Voice of the Customer and Employee Program: 

Organizations must have an ability to collect customer and employee perception data to measure the success of your customer and employee experience improvement initiatives. Leveraging VoC/VoE platforms (e.g. Medallia or Qualtrics) to collect this information is critical to measuring your overall success.

Data and Analytics: 

Organizations will need a lot of data (operational, experiential, and financial) and some analytic capability to show the true impact of their CX transformation. This requires working across the organization to collect the appropriate data and transform it into quantifiable metrics, especially if they lack any sort of available data strategy or governance. Leveraging some business analytics capability—through an internal team or tools—is critical to analyze the data and quantify the impact of CX on your business outcomes.

Comprehensive Dashboard and/or Customer Insights Reports:

Organizations will need a medium to collect and distribute insights and data. Real-time, comprehensive dashboards or data visualization tools allow an organization to know where it currently stands within its CX efforts at a moment's notice.

"Hallway Metrics" and an Ability to Tell a Story: 

It's not good enough to measure for measuring's sake. CX leaders must be able to use the data to tell a compelling story throughout the organization (and sometimes externally) to demonstrate the efforts it is making in its transformation. Highlight success stories with quantifiable data to create organization-wide excitement about progress and how they will benefit.

Don't Forget Your CEO$

We suggest leveraging a customer-focused, balanced scorecard to highlight the benefits delivered through CX, with key KPIs for each section. An acronym to remember these KPIs is CEO$—a helpful reminder of the different metrics the C-suite will be paying attention to in terms of dollars spent and earned as a result of CX transformation.

  • Customer Experience (C): This measure is an early warning sign on how well you are delivering the experience and, ultimately, if you are providing value that meets the needs of your customers. The metrics should include CX components (overall customer relationship, the interaction, or the customer journey) and the business problem you're solving. These would include your typical CX metrics like NPS, satisfaction, and customer effort.

  • Employee Experience and Culture (E): This measure ensures a focus on employees and internal culture to successfully deliver a great customer experience through empowerment and engagement. This can be captured through metrics like employee engagement benchmark scores or employee retention rate.

  • Operational Efficiency (O): This measure highlights the organization's ability to deliver the experience while improving operational efficiency. These metrics will vary based on the CX-focused initiatives executed. For example, in an initiative focused on improving the servicing experience within the contact center the focus might be on First Contact Resolution and Average Handle Time.

  • Business/Financial Outcomes of CX ($): This measure demonstrates the economic benefit that your CX transformation is delivering to the organization. This is typically thought of as increasing revenue or decreasing cost, but goes beyond these basic general outcomes. It could be reducing customer churn, which can be validated by highlighting customer retention and revenue saved metrics.

Explore our latest perspectives