Perception of Experience Reveals Satisfaction

So what is the best way to measure this?

As businesses increasingly focus on the customer experience, they need to find ways to measure customer satisfaction. This can be tricky, as customer satisfaction is a subjective concept. However, there are a number of metrics that businesses can use to get a better understanding of how their customers feel about their experience.

Customer experience is the interaction between a customer (as previously described) and a company. A customer experience is the total of the individual encounter's components, including service, quality, value, pricing, and product, among others. In certain circumstances, the customer experience is described as the collection of interactions a customer has with a business or other entity. By tracking these and other customer experience metrics, businesses can get a better sense of what areas need improvement and make changes accordingly.

Why Measure Customer Experience?

It's no secret that consumer behaviour is constantly changing. What may have been popular yesterday may not be popular today. This was certainly the case during the COVID-19 pandemic when we rapidly moved online for work, rest, and play. With brands quickly adapting to this new behaviour, collecting and analysing customer experience metrics is more important than ever. This data helps businesses understand what customers like and don't like. It also helps businesses identify any pain points that need to be addressed. In other words, customer experience data is essential for any business that wants to stay ahead of the curve and keep its customers happy.

A consumer intelligence dashboard is a powerful tool that can help you understand how your customers feel about your brand. By collecting data from multiple sources, including surveys, customer support, and social media, you can get a clear picture of customer sentiment. This information can be used to make decisions about your marketing strategy, product development, and customer service. While all data sources are important, social media feedback can be particularly revealing. By monitoring what customers are saying on social media, you can get an insight into their thoughts and feelings about your brand. This information can be used to make changes that will improve customer satisfaction and loyalty.

Key Customer Experience Metrics to Track

When considering metrics, it is essential to recognise that every measure worthy of tracking must be credible, reliable, precise, accurate and actionable. Below, you'll find eight customer experience metrics you should definitely be tracking, beginning with the most basic through to the more advanced.

Net Promoter Score

Net Promoter Score (NPS) is a customer satisfaction metric that measures how likely customers are to recommend a company's products or services to others. The score is calculated by surveying customers and asking them to rate their likelihood of recommending the company on a scale of 0 to 10. Promoters are customers who give a rating of 9 or 10, passives are customers who give a rating of 7 or 8, and detractors are customers who give a rating of 0 to 6. The score is calculated by subtracting the percentage of detractors from the percentage of promoters. Net Promoter Scores can be used to track customer satisfaction over time and to benchmark a company's performance against its competitors. NPS is also used as a predictor of growth, as companies with higher scores tend to grow faster than companies with lower scores.

NPS = % of Promoters - % of Detractors

Net Promoter Score Explained

Net Promoter Score Explained (Source: Nguyen 2019)

However, the Net Promoter Score question does not assess customer experience, customer loyalty, or customer satisfaction, argues Freed (2013). Instead, it evaluates propensity to recommend, which some proponents of the Net Promoter Score argue is a substitute for customer pleasure or brand loyalty. 

Word of Mouth Index (WOMI)

The Word of Mouth Index, on the other hand, does consider all of these factors. The WOMI considers both customer satisfaction and customer loyalty. It also takes into account the reasons why customers may be dissatisfied with a company. This potentially makes the WOMI a more accurate measure of customer sentiment.

The WOMI measure is superior than NPS because it contains more data and more accurately shows the difference between the percentage of consumers who report being extremely inclined to promote or detract through word of mouth.

The Word-of-Mouth Index (WOMI) is a composite formula developed to augment the NPS by adding a second inquiry: Indicate the probability that you will use a company in the future. Typically, a five-point Likert Scale is utilised instead of the 0-10 scale employed by NPS. In addition, the WOMI is expressed as a percentage (0-100 percent) rather than a numeric number like its predecessor.

NPS and WOMI Comparison Metrics

NPS and WOMI Comparison (Source: El-Hinnawi 2014)

Customer Satisfaction

In business, customer satisfaction (CSAT) is a measure of how products and services supplied by a company meet or exceed customer expectations. It is a popular metric because it is relatively easy to measure and provides a clear indication of whether customers are happy or not. The most common way to measure CSAT is to ask customers to rate their satisfaction on a scale of one to five, with five being very satisfied and one being not satisfied. This metric can be used to track customer satisfaction over time and identify areas where improvements need to be made. In addition, CSAT scores can be used to compare the performance of different products or services.

It is seen as a key Performance Indicator within business and is often part of a Customer Relationship Management (CRM) strategy. A primary goal of any organization should be to ensure customers are satisfied with the product or service they have received, otherwise, they may take their business elsewhere. There are a number of ways to measure customer satisfaction, the most common being through the use of surveys. In these surveys, customers are typically asked to rate their level of satisfaction on a scale from one to five, with five being the highest level of satisfaction and one being the lowest. Other methods of measuring customer satisfaction include focus groups, customer complaints and Net Promoter Scores. Regardless of the method used, it is important for businesses to regularly assess levels of customer satisfaction and take steps to improve where necessary.

Customer Satisfaction Scale

Customer Satisfaction Scale (Source: Nikolova 2021)

Customer Acquisition

The process of customer acquisition is one of the most important aspects of running a business. acquiring new customers can be a costly endeavour, and it is important to understand all of the factors that go into it. This includes sales, marketing, PR, paid ads, customer experience, data and analysis. By understanding the costs associated with each of these areas, businesses can make more informed decisions about where to allocate their resources. Additionally, by tracking acquisition costs over time, businesses can identify trends and make adjustments accordingly. Ultimately, customer acquisition is a complex but essential process and one that should be given careful consideration by any business looking to grow its customer base.

  • Cac = customer acquisition costs
  • M = number of marketing vehicles needed to acquire one customer
  • C = cost to deploy each vehicle

Customer Lifetime Value

LTV or lifetime value is the metric that determines the net profit a business receives from its customers. It helps in understanding how much a customer is worth to them over their lifetime. In other words, it’s a measure of customer retention and how much they contribute to the business in terms of sales and profit. LTV is different from CAC or customer acquisition costs which only takes into account the costs associated with acquiring new customers. LTV includes not just acquisition costs but also factors in the costs of marketing, sales, manufacturing, and operations. This makes it a more holistic metric to gauge the success of your customer retention strategy. A higher LTV means that your customers are loyal and they remain with your brand for a longer period of time. This also means that your marketing and sales efforts are working efficiently and that you have a healthy business model. Finally, it also indicates that your brand has good equity and that you have a solid foundation to scale up your business.

  • m = constant net margin (profits – retention costs)
  • k = discount rate
  • d = constant defection rate

Retention Rate

A company's customer retention rate (CRR) is a key metric that reflects the percentage of customers who return to make additional purchases over a specified period of time. CRR is an important indicator of business health, as it demonstrates the ability to generate repeat business and maintain customer loyalty. There are a number of factors that can impact CRR, but perhaps the most important is the quality of the customer experience. If consumers have a positive experience with your product or service, they are much more likely to come back for more. Therefore, companies should focus on creating streamlined, positive experiences that excite and engage consumers if they want to see high customer retention rates.

  • Ca = number of active customers at end of time period
  • Cat = number of active customers at start of time period t


Your churn rate indicates how many customers you’ve lost, over a specific time period. It’s calculated by dividing the number of lost customers by the number of customers you started with, at the start of your specified time period. This is considered a lost business value. Churn rates can vary widely from one industry to another, and even from one company to another within the same industry. For example, the churn rate for subscription-based businesses is typically much higher than for businesses that sell physical products. A company’s churn rate can also be affected by factors such as its pricing model, its customer service quality, and the strength of its brand. Therefore, it’s important to compare your churn rate to those of other companies in your industry, in order to get a sense of how well you’re doing. Reducing your churn rate should be a key goal for your business, as it can have a significant impact on your bottom line. There are a number of ways to reduce churn, such as offering discounts or incentives to customers who remain loyal, improving your customer service quality, and making it easier for customers to cancel their subscriptions or return products. 

Customer Churn Rate = # of Customers Terminating within a Timeframe / Number of Customers at the Start of the Timeframe.

  • Cbt = customers at beginning of time period t
  • Cet = customers at end of time period t
  • Cat = customers at beginning of time period t

Average Time Resolution

Average Time Resolution, which measures the amount of time it takes to resolve an issue from start to finish. This includes everything from the customer's first interaction with regard to the issue, to when the problem is finally solved. Obviously, shorter resolution times are better, as they create a more efficient and satisfying customer experience. There are a number of ways to improve average time resolution, such as streamlining communication channels or increasing staff availability. By taking steps to improve this metric, businesses can ensure that their customers are always happy with the level of service they receive.

Total Inquiry Response Time is defined as the sum total of all response times the company had in a given time period. Total # Service Inquiries refers to all inquiries received in the same time period.

Customer Experience Metrics Summary

In today's competitive business landscape, it is more important than ever to create a positive customer experience. A successful customer experience strategy includes multiple CX metrics and feedback from every touch point in the customer journey. This helps you identify the drivers of the experience and highlights the actions to take to personalize customer relationships and create a streamlined customer experience. By taking these steps, you can ensure that your customers have a positive experience with your brand and are more likely to remain loyal in the future.

Although businesses have long been aware of the importance of customer experience, the rise of digital channels has made it more important than ever. In today's connected world, customers expect a seamless, personalized experience when interacting with brands online. To meet these demands, businesses must first understand what customers want and need. The best way to do this is to listen to consumers and activate their voices. A conversational intelligence platform can help businesses build a strong online community and gain valuable insights into customer behaviours and preferences. By understanding the voice of the customer, businesses can create experiences that are tailored to individual needs and that build long-term relationships.

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Posted by Steve King
This article was written by Steve King
I am a marketing and analytics professional with over 15 years experience in strategic marketing development. I am passionate about working with organisations that want to improve their marketing effectiveness and get more from their data; who wish to use its potential to describe what has happened, prescript operational activity and predict business outcomes.