Why CX is a key metric that determines long-term growth?
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Whether it’s a well-established enterprise or a newly launched start-up looking to scale up operations, Customer Experience (CX) is key to unlocking sustained growth. And this growth could be through new customer acquisition, boosting sales from the existing customer cohort or enhancing retention levels. An effective CX strategy has a considerable financial impact as well and can boost company valuations by an eye-popping 125-400%, according to a KPMG report.
CX will continue to remain a #1 priority
Superior CX and customer service results in customer satisfaction, which translates into customer loyalty and contributes to sustained revenue growth in the long run. A study by CEB Global uncovers the deep impact behind superior CX, reinforcing the idea that CX tangibly contributes to business growth.
- When CX is seamless, the probability of repurchase by the customer is 94% as against 4% in case of poor experience
- If CX is poor, it’s highly probable that 81% of customers would share their bad experiences on social media or with others
A recent McKinsey study finds that organizations leveraging CX have shown a 20% jump in customer satisfaction, a 15% rise in sales conversion, and a 30% reduction in cost-to-serve. These statistics reinforce the significance that CX as a performance indicator has come to occupy.
Decoding CX and its KPIs
Given CX’s growing influence, it is important to understand its key drivers. And based on the outcome of the metrics, customers can be categorized according to loyalty. Customer feedback and loyalty metrics such as customer engagement, renewal trends, and referral rates offer deeper insights into CX.
Organizations can develop strategies to win over dissatisfied customers, convert fence-sitters into loyal customers and further strengthen ties with loyal ones. According to a ‘The State of Customer Experience’ survey conducted in 2018, here are some commonly used metrics to track CX performance:
- Net Promoter Score (NPS): 64.5%
- Customer Satisfaction: 43.6%
- Churn Rate: 42.7%
- Retention Rate: 35.5%
- Customer Lifetime Value (CLV): 28.2%
- Developed own KPI: 20.9%
- Customer Effort Score (CES): 13.6%
NPS is a widely used tool when it comes to ascertaining CX impact. This score has a direct bearing on customer retention. NPS measures customer satisfaction by studying responses to the question- ‘’On a scale of 0 to 10, how likely are you to recommend the product, service or business to a friend, family member or colleague?’’
Based on the responses, the customer profiles may be segmented into brand promoters, passive customers or detractors. For example, a brand advocate customer would give positive reviews and recommend the product to others. NPS scores enable the organization to explore opportunities such as high-value account renewals, cross-selling, and up-selling products to new and existing customers.
Building a customer-centric strategy
There are several other metrics that provide a deep understanding and aim to quantify CX performance. Rather than deploying a standalone metric, it is crucial to adopt a holistic 360-degree review of CX comprising both qualitative and quantitative aspects.
The customer Satisfaction (CSAT) Score is another tool that gauges customer engagement with a product or brand. It is also used to decipher the customer service efficiency and maps the turnaround time, and resolution process after a customer support ticket is raised.
Churn rate and retention rate identify the point up to when the customer moves to a rival brand, discontinues using the product, or disassociates with the brand. Customer Lifetime Value (CLV) estimates the potential revenue earning opportunity from each loyal customer throughout their tenure of being engaged with the brand. CLV is computed based on past and forecasted spending patterns. Customer Effort Score (CES) is yet another score that records the connect that a customer feels with a brand, post-purchase of the product, or after availing of the service. Customer Loyalty Index (CLI) aims to capture a qualitative aspect, namely brand loyalty.
Brand loyalty is commonly reflected either through positive reviews, recommendations, or re-purchase. Based on a study of multiple parameters, organizations can determine the ‘path of least resistance that adds customer value and enhances CX.
A ‘Simpl’ and effective approach to CX
Generally, for a B2B business, losing a customer is more costly as compared to a B2C business. As per a KPMG study, by focussing on delivering robust CX, organizations have the business opportunity to unlock $200Bn value. This holds especially true for the e-commerce space, where hiking investments in CX by 100% can help realise 2x business growth.
As India’s favourite checkout partner, we have a close correlation with e-commerce merchants, especially D2C brands. At Simpl, one of the key metrics of superior CX is a higher customer conversion rate and lower cart abandonment on merchant platforms when they onboard the Simpl checkout network.
We believe a laser-sharp focus on CX at the checkout stage is critical for e-retailers where a contractual relationship with the customer is absent and a multitude of individual transactions are being completed. This means providing the customer with a friction-less, prompt, and convenience-driven shopping experience towards enhancing revenue realisation. An omnichannel approach with data-driven customer insights into past purchase history can help better understand customer expectations and ultimately deliver impactful outcomes.