“Customer experience” has become one of the biggest buzzwords in the business world today, as well as a key competitive differentiator across multiple markets. In fact, according to recent Gartner survey, over two-thirds of marketers claim that their companies compete primarily on the basis of customer experience. By the end of 2020, CX will overtake price and product as the key brand differentiator.

Despite its inarguable importance, many companies still struggle to deliver an exceptional customer experience. Fortunately, we’ve put together this blog post on all things related to the customer experience — key performance indicators, best practices, and more — to help businesses get on track.

Table of Contents

What is Customer Experience?
Customer Experience by the Numbers
10 Ways to Measure the Customer Experience
The 5 Technologies Every Business Needs to Invest in
7 Best Practices for Enhancing the Customer Experience
High-Performance Customer Experience

What is Customer Experience?

Gartner defines customer experience as “the customer’s perceptions and related feelings caused by the one-off and cumulative effect of interaction with a supplier’s employees, systems, channels or products.”

These various opportunities for interaction are also known as touchpoints, and each touchpoint has the potential to either move the consumer further along the customer journey or cause them to disengage entirely. To that end, each and every touchpoint must be optimized so that, when taken collectively, they create an exceptional end-to-end customer experience. Should you succeed in achieving this, your business will be rewarded with higher rates of customer satisfaction, loyalty, and advocacy, better word-of-mouth marketing, increased revenue, and so much more.

Customer Experience by the Numbers

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10 Ways to Measure the Customer Experience

There are a wide range of different key performance indicators (KPIs) organizations can use to gauge the health of their customer experience. These KPIs typically vary from one role to the next — for example, a customer service VP is more likely to be concerned about customer satisfaction and customer churn, whereas an IT leader is likely more focused on the total cost of ownership and customers’ service level agreements.

That said, these are some of the most popular KPIs and metrics that businesses use to evaluate their overall customer experience:

Customer Satisfaction (CSAT) Score

This KPI indicates overall customer satisfaction with everything from your company’s products and services to its customer support. You can determine your company’s CSAT by conducting a survey in which you ask customers to rank their experience on a seven-point scale ranging from “Very Unsatisfactory” to “Very Satisfactory.” Ideally, your CSAT score should fall somewhere between 75% and 85%, though this may vary by industry.

Customer Effort Score (CES)

CES — often used in conjunction with CSAT — refers to the amount of energy customers must expend in order to get an issue resolved, a question answered, or a request fulfilled. Similar to CSAT, you can measure CES by asking customers to rank their experience on a seven-point scale — this time, one that ranges from “Very Difficult” to “Very Easy.”

Average Handle Time (AHT)

AHT refers to the average time it takes for a call center agent to complete a customer interaction. To calculate AHT, divide the sum of your total talk, hold, and follow-up time by the total number of calls answered.

Average Handle Time (AHT) Equation

First Call Resolution (FCR)

FCR is an indication of a call center’s ability to resolve a customer issue or complaint the first time they call in — no follow up necessary. You can calculate FCR by dividing the total number of calls resolved on the first attempt by the total number of first calls.

First Call Resolution (FCR) Equation

Time to Resolution (TTR)

TTR, also known as mean time to resolution (MTTR) and resolution time, refers to the average amount of time it takes a customer service team to resolve a case once it’s been opened. In order to calculate TTR, divide the sum of all times to resolution by the total number of cases resolved.

Time to Resolution (TTR) Equation

Net Promoter Score (NPS)

Created by loyalty marketing expert Fred Reichheld and first published in the Harvard Business Review, NPS evaluates the overall customer experience, customer loyalty, and the potential for business growth. The NPS survey asks customers to rank brands on a 0–10 scale based on how likely they would be to recommend that brand to a friend or colleague, with a 0 being “Not at all likely” and a 10 being “Extremely likely.” Those who offer a score of 9 or 10 are considered “Promoters,” that is, loyal enthusiasts likely to fuel growth. Those who score a 7 or 8 are considered “Passives” (satisfied, but unenthusiastic and more likely to leave), and those who score between 0 and 6 are considered “Detractors” (unhappy customers likely to impede growth).

Customer Churn Rate

Customer churn rate refers to the percentage of customers who discontinue services over a given period of time. A high churn rate is a clear indication of low customer satisfaction and should prompt a serious reevaluation of your organization’s customer experience. To calculate your churn rate, subtract the total number of users at the end of the period from the total number of users at the beginning of the period. Then, divide that sum by the total number of users at the beginning of the period and multiply by 100.

Customer Churn Rate (CCR) Equation

Customer Retention Rate

Customer retention rate refers to the percentage of customers that a business retains over a given period of time. Customer retention rate is closely related to customer churn rate. For example, if your custom churn rate is 25%, that means you retained 75% of customers — therefore, you have a 75% customer retention rate. To determine your customer retention rate independently, subtract the total number of new customers acquired during a given period of time from the total number of customers at the end of that period. Then, divide that sum by the total number of customers at the start of that period and multiply by 100.

Customer Retention Rate (CRR) Equation

Customer Lifetime Value (CLTV)

CLTV is a prediction of the net profit an individual customer will bring to your company over the course of your relationship (or, alternatively, over a defined period of time). In order to calculate CLTV, you must first calculate lifetime value (LTV); in order to do so, multiply the average value of a sale by the number of transactions and the retention time period. Once you have the LTV, multiply it by profit margin to determine CLTV.

Customer Lifetime Value (CLTV) Equation

Customer Equity

Customer equity is a measurement of the total combined lifetime value of all of your company’s customers.

The 5 Technologies Every Business Needs to Invest in

Every successful customer experience strategy starts with a solid technological foundation. Here are the five tools and technologies an organization needs in order to craft an exceptional customer experience:

1. Customer Relationship Management (CRM) System

A CRM system is the bread and butter of any customer experience strategy, and the most vital tool within any organization’s customer experience arsenal. At the risk of stating the obvious, a CRM system is a centralized repository for customer data that enables businesses to gain a better understanding of who their customers are, how they think, and what they want. By implementing a CRM system, an organization can consolidate data that would be otherwise spread out across many disparate systems, thereby providing them with a 360-degree view of the customer and enabling them to reimagine and redefine the customer experience.

Certain CRMs offer a robust feature set and variety of system integrations for additional extensibility, so it’s best practice for organizations to carefully consider their needs and evaluate their options before choosing a platform.

2. Website [with Self-Service Portals]

It goes without saying that every business should have a website that consumers can use to learn more about what it does, what products it offers, and who they can contact for more information. The key distinction here is a website with self-service portals.

Self-service has become a leading trend in the customer service and support sector in recent years. According to research from the HBR, across all industries, 81% of customers attempt to handle matters on their own before contacting a live customer service representative. According to another survey from Microsoft, 77% of consumers report to having used a self-service portal — in fact, 73% of consumers actively want to use self-service technology. It’s easy to understand why: Self-service options and fast, easy to use, and convenient, making them ideal for resolving low-level issues.

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And customers aren’t the only ones who benefit: By offering self-service options, such as an easily accessible knowledge base and chatbot capabilities, organizations can alleviate the burden placed on call centers, thereby reducing response times, as well as overall spending.

3. Master Data Management (MDM)

Most organizations generate massive quantities of data on a daily, let alone monthly or yearly, basis. Staying on top of all of that data and determining which of it is relevant to enhancing the customer experience requires the assistance of an MDM tool. Master data management refers to the discipline by which businesses ensure accuracy, uniformity, and consistency across all data assets; to that end, an MDM solution is any technology designed to support that effort. MDM solutions are generally used to implement and enforce data entry protocols, remove duplicate data, enrich master data records with information from external data sources, and so on. As far as customer experience is concerned, an MDM solution can bolster a company’s CRM system by ensuring that any data that lives in the CRM is clean and up to date.

4. Data Analytics

Speaking of data, once an organization’s customer data is clean and consolidated, the next step is to run advanced analytics and reporting on each data set. Data analytics software enables businesses to generate meaningful insights from static data about everything from customer preferences to buying habits, making it possible for them to anticipate customers’ needs and contextualize the customer journey.

5. Artificial Intelligence (AI)

A more recent entry into the canon of customer experience technologies, AI is well on its way to become a CX staple. There are a wide variety of applications for AI in the realm of customer experience, including intelligent chatbots, personalized product recommendations and marketing campaigns, smart email content curation, automated segmentation, and so on. Once an emerging technology, AI is now mainstream and expected to dominate the customer experience landscape for years to come — in fact, according to one prediction, AI will power 95% of all customer interactions by the year 2025.

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7 Best Practices for Enhancing the Customer Experience

Much like Rome, an exceptional customer experience isn’t built in a day — it requires a sustained effort and the flexibility to adapt to the latest trends and changing consumer expectations. Here are some best practices every business should keep in mind when crafting its customer experience strategy:

  • Map the customer journey. Before an organization can develop a customer experience strategy, it must first familiarize itself with all of the various touchpoints along the customer journey. By mapping the customer journey, businesses can better understand a consumer’s frame of mind when they become aware of a problem, research different solutions, compare options, or decide to make a purchase. When we say “map the customer journey,” we mean that quite literally — best practice dictates that businesses should create a physical map of the customer journey and outline what the customer is doing, what their motivations are, what they’re feeling, what questions they have, and what obstacles they face at each stage.
  • Know your customers. Personalization is proven to enhance the customer experience, with 91% of consumers saying that they’re more likely to shop with brands that provide personalized offers and recommendations. Therefore, marketing campaigns and sales tactics should never be one-size-fits-all — organizations need to tailor promotional materials to the individual. The most efficient way to do this is through a combination of customer segmentation and AI. Using its CRM system, a company can segment customers into discrete groups based on shared characteristics; for an even more granular view of the individual, it can build out profiles based on a customer’s purchase history and preferences. These capabilities provide organizations with a better understanding of who their customers are and what they want out of the customer experience. Armed with this information, the company can target customers with campaigns tailored to their specific interests or use AI to generate automated, customized recommendations.
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  • Define your vision. It’s far easier for a company to create a cohesive and consistent omnichannel customer experience when it has a clear idea of what that experience should look and feel like. This typically involves:
    • Highlighting what about the existing customer experience works well, and what doesn’t
    • Defining goals, objectives, and markers for success
    • Determining which KPIs and metrics to monitor
    • Choosing which customer segments to prioritize
    • Identifying customer expectations
    • Researching relevant industry and market trends
    • Articulating how each touchpoint or interaction should make the consumer feel
    By defining their vision of the customer experience, businesses can develop a framework on which to execute.
  • Implement a Voice of the Customer (VoC) program. VoC refers to the process by which businesses capture customer perceptions in order to gain firsthand perspective into what the customer experience is like. VoC enables organizations to better understand how their target audience perceives their brand, provides insight into what customers want, and promotes customer engagement. For additional information on what VoC is and how to implement a VoC program, we recommend reading our blog post on the subject.
  • Connect with customers on an emotional level. Emotional connection is well on its way to overtaking customer satisfaction as the key determinant of customer value. According to a study from HBR, fully connected customers are 52% more valuable, on average, than those who are just highly satisfied.
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    In order to establish a meaningful emotional connection, HBR recommends that organizations measure and target consumers’ “emotional motivators” — that is, the feelings that drive customers’ behavior. HBR outlines the following 10 high-impact emotional motivators, which businesses can leverage to strengthen customer relationships and enhance the customer experience:
    Motivator Chart
  • Optimize the employee experience. A company’s employees are, perhaps, the most integral component of delivering an exceptional customer experience, so it’s vital that the employee experience be exceptional, as well. To that end, organizations must make every effort to engage their employees so that they feel connected with their work, colleagues, customers, and purpose; this means empowering their employees with the right tools and technology so that they can get the job done and focus on what’s important.
  • Built customer-centricity into your company culture. A customer experience worth talking about starts at the top. In order to motivate everyone to do their very best, business leaders must model a customer-first mindset to their employees. Leadership must also be mindful to incorporate customer-centricity into their company’s guiding principles and to make those principles a key component of new hire training and retraining efforts. In doing so, organizations can create a customer-centric culture that is reflected in the customer experience.
  • Deliver a consistent experience. From brick-and-mortar to desktop computer to mobile device, customers use more channels to shop and interact with brands than ever before. Each of these channels represents a touchpoint within the larger customer journey, so it’s imperative that the user experience be consistent and integrated across them — that is, that the customer receive the same level of care, attention, personalization, and service regardless whether they shop in-store, online, or over the phone.

High-Performance Customer Experience

Here at Hitachi Solutions, we’re committed to helping clients across all industries develop and execute upon winning customer experience strategies. We’ve identified eight key focus areas designed to give our clients a competitive advantage:

Customer Experience Marketecture Chart

Contact Hitachi Solutions today to learn more about these focus areas and to start developing a customer experience strategy that will earn customer loyalty and boost your bottom line.