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Customer Experience Is Gaining Traction. But Are We Measuring It The Right Way? Customer experience may have become mainstream, but there is still a lot of debate going on in regards to how customer experience should be measured.

By Alon Ghelber

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

The vast majority of customers say they prefer to buy from companies that treat them like people rather than numbers. Not just that — they also like buying from companies that care to understand how they use their products and services, according to a recent study by Salesforce.

Thanks to online shopping, it's no surprise that customers are becoming more informed about what alternatives they have when they shop, and that they feel less restricted to being loyal to a specific brand.

Brands can win over consumers with a great customer experience; that's increasingly becoming common knowledge. More specifically, personalization can make a great difference, as it makes the customers feel understood as their unique needs are met.

Related: Your Buyer's Journey is Now Online. Is Your Customer Experience Digital-First Too?

But while talk about customer experience may have become mainstream, there is still a lot of debate going on in regards to how customer experience should be measured. With so many different metrics out there, and many different opinions on which matter the most, there is still a long way to go until we can begin to understand and standardize this concept.

A Brief History of CX Metrics

Before the term "customer experience" was in vogue, there was customer feedback. Starting from the 1990s, several tech companies started tackling customer feedback; at the time, the field was known as "enterprise feedback management" (EFM).

The Net Promoter Score (NPS) first appeared in a 2003 article published in the Harvard Business Review titled "The One Number You Need to Grow." This is still a very common metric to conduct customer experience analysis and measure customer satisfaction. It's calculated by asking customers how likely they are to recommend a product, service, or brand on a scale from 1 to 10.

The NPS didn't come without controversy. In 2019, the Harvard Business Review published an article about a study that showed that customers' behavior often does not line up with their NPS categorization.

In today's CX era (the "age of the customer"), in which customer is king, companies have many ways to personalize their products and cater to their customers; from AI-powered chatbots to virtual assistants, from VoC analytics to personalization tools, brands are trying to be aware of what their customers are saying and to adapt to their demands.

Related: One-on-One Consulting Is the Future of the Beauty Industry

Two of the most popular CX metrics include the Customer Satisfaction Score, which measures the customers' overall satisfaction with the service or product they received, and the Customer Effort Score, which measures how easy the customers found the interaction with your service.

However, the list doesn't end here. There are many other metrics. The Customer Health Score scores customers based on the likelihood they'll generate an outcome; the Customer Churn Rate measures the rate at which customers stop doing business with you; also the Customer Renewal Rate (how many customers cancelled a service vs. how many did not) can give you a sense of the quality of your customer experience.

The Importance of Standardization

If you gathered a group of CX experts and asked them: "What's your favorite CX metric?", you'd get a different answer from each expert. CXBuzz, a news site about customer experience, did exactly that, and gathered the answers from a dozen industry leaders.

Some choose to be more conservative than others; many say that one metric is not enough, and they prefer a combination of several. Others disregard the above-mentioned metrics: "Profit," says one, is the best way to measure customer experience; the other metrics are "nothing more than indicators."

Until every company will measure customer experience differently, this term will be too vague, meaning something different from everyone. We need standards.

Related: The Importance of Learning from the Competition

"Standards provide people and organizations with a basis for mutual understanding, and are used as tools to facilitate communication, measurement, commerce and manufacturing," reads the website of the European Committee for Standardization (CEN). Standards offer an established norm, a framework, a set of rules.

One size does not fit all, it's true. But most industries have worked towards standardization in the past. Maybe it's time for the customer experience industry to begin working on a set of standards and common metrics we can all refer to.

Alon Ghelber

Chief Executive Officer

Alon Ghelber is an Israeli Chief Marketing Officer. He also works as a marketing consultant for several Israeli VCs and is a member of the Forbes Business Council. He is also the founder and manager of the LinkedIn groups “Start Up Jobs in Israel” and “High Tech Café.”

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