Excellent customer experiences are a vital aspect for the success and growth of any business. The customer experience is powerful and differentiating factors that can help businesses consolidate their customer base through strong customer loyalty to assist in increasing revenue.
Companies that focus on providing holistic customer experiences can ensure they will build a strong customer base and individualize themselves from their competitors. Top-notch customer experiences can help develop an emotional bond that drives them to buy a company’s product or service on multiple occasions. To get the best ‘value for their money’, customers turn to various mobile apps, social media, online comparison shopping, and customer reviews before making a purchase. Companies must ensure that customers get the same level of customer experience across all touch-points.
There is only one boss—the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.
– Sam Walton, Founder Walmart
Customer experience metrics help to quantify the overall experience in which customers have across all touch-points. It is the key indicator of a company’s success and relationship with their customers. Some of the metrics businesses should track to ensure supreme customer experiences include:
Average Revenue Per User (ARPU)
Average Revenue Per User (ARPU) is a widely used metric across various industries and is derived by dividing the total revenue generated by total number of subscribers. It calculates the amount companies bring in from customers or how much each subscriber buys from the company within a specific time frame. A company can increase the customer experience and ARPU by focusing on up-selling and cross-selling methods, offering bundled packages, and using scalable pricing. ARPU can reveal which layer of customer acquisition you need to improve upon and what methods are needed to improve customer experience.
Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) can be defined as the expected value of profit generated by a business due to the relationship with a customer over time. Customer experience is very much closely related to CLV and is a critical driver because the quality of customer experiences can greatly impact CLV. Every customer interaction during marketing communication, sales contacts, service/product delivery, and customer service can improve the customer experience and then positively impact future buying behaviors.
Customer Experience metrics include: Customer Satisfaction, Recommendation, and Customer Loyalty. These can measure the response or behaviors of customers and the result of their experiences after their interaction with an agent or representative. Businesses must provide a positive customer experience to reap the benefits of increased customer loyalty. In hindsight to this, quality customer experiences will ensure that businesses receive a greater profit, and the likelihood of their customers to recommend product and services to others.
According to the Temkin Group Report published in March 2012 (1), there is a high degree of correlation between customers’ experiences and their likelihood to recommend a company and to consider purchasing more products and services from that company in the future.
Share of Wallet
The Share of Wallet metric can be defined as the share of dollars that customers are spending on a particular brand. Share of Wallet can be used by companies to identify which customers prove to be most loyal. This metric can also be used to increase repurchase options and assist companies in knowing about competitors. A higher share of the wallet metric shows that companies are providing higher customer experiences and are enjoying a greater customer loyalty.
In today’s economy, customers have a wide variety of choices. With competition getting fierce, it is very important to retain customers through excellent customer service. Properly understanding customer’s needs and expectations will help companies gain valuable insight so they are able to make changes in product offerings, and have the ability to deliver high quality customer experience to improve customer relationships.