20 jul 2023
Kelli is the senior content strategist for Order Protection.
Any eCommerce veteran can tell you: having a killer product or service isn’t enough to survive in this saturated market. It’s important, sure, but it’s not the thing that’s going to set you apart from competitors.
What you need is a customer experience that will keep customers happy and coming back for more.
Not convinced? On average, businesses lose a total of $75 billion annually due to poor customer service. We’re not just talking about a bad review here and there, but a real, lasting impact on your business’s bottom line.
Focusing on creating positive customer experiences can lead to increased customer loyalty, higher retention rates, and ultimately, improved revenue. But how do you measure and improve customer experience effectively? In this article, we'll examine eight key customer experience metrics that your eCommerce brand needs to track to stay ahead of the competition and thrive.
What is the eCommerce customer experience?
To understand the importance of the customer experience (CX) and the different metrics you’ll need to track to ensure yours is optimized for success, you’ll need to know what it encompasses.
The eCommerce customer experience refers to the sum of every touchpoint, engagement, thought, or feeling that occurs or is exchanged between the customer and your brand, from the customer’s perspective. This includes everything from the time a customer first hears of your brand, through the shopping experience, and even once they’ve made a purchase. To visualize it, a standard experience could include:
A customer sees an online ad or comes across your brand through social media
They visit your website, sign up for emails, and ultimately make a purchase
Post-purchase, the customer could write a review, they may need to contact customer support for an issue, or they’ll further engage by making repeat purchases or joining a loyalty program
All of these touchpoints contribute to the customer’s overall experience with your brand, and it’s important to make sure each of these interactions leave a positive impression.
There’s no secret formula to creating an exceptional customer experience, but there are several metrics you can use to track your efforts and identify areas where you can make improvements.
1. Customer effort score (CES)
The customer effort score (CES) measures the ease with which customers can interact with your brand. By asking a simple question such as, "How easy was it to resolve your issue today?" on a scale from 1 to 5, you can gauge customer effort. Lower CES scores indicate a smoother customer experience, while higher scores may signify friction in the customer journey.
Tracking CES allows you to identify pain points and bottlenecks in your processes. By streamlining interactions and reducing customer effort, you can create a seamless experience that fosters customer satisfaction and loyalty.
Why CES is important
CES is a critical metric because it directly measures the ease of interactions and transactions for customers. Modern customers expect a seamless and frictionless experience when interacting with an eCommerce brand. High CES scores may indicate that customers encounter hurdles, such as complex navigation, long wait times, or inefficient support channels.
By tracking CES, you can identify pain points in the customer journey and take proactive measures to reduce customer effort. A smoother experience fosters customer satisfaction and loyalty, increasing the likelihood of repeat purchases and positive word-of-mouth recommendations. Brands that consistently monitor and improve their CES scores gain a competitive edge by differentiating themselves through exceptional customer experiences.
2. Customer satisfaction score (CSAT)
Customer satisfaction score (CSAT) is a fundamental metric that measures how satisfied customers are with a specific interaction, purchase, or overall experience. By regularly collecting feedback through post-interaction surveys or feedback forms, you can calculate CSAT and identify areas that require improvement.
Analyzing CSAT trends over time helps you track the effectiveness of your customer experience improvements. A higher CSAT score correlates with happier customers who are more likely to recommend your brand to others.
Why CSAT is important
CSAT is fundamental for eCommerce brands because it provides direct insight into how satisfied customers are with their experiences. Happy customers are more likely to become loyal, repeat customers and are more inclined to recommend the brand to others. And focusing on customer satisfaction can have a direct impact on revenue—in an analysis of over 10,000 online businesses, customer service platform Gorgias found that raising the CSAT score by just one point can lift overall revenue by 4%.
Conversely, low CSAT scores signal potential areas of improvement, which, if left unaddressed, could result in lost customers and negative reviews.
By regularly collecting and analyzing CSAT data, you can identify patterns in customer satisfaction, enabling your teams to fine-tune their operations and offerings. Implementing customer feedback and resolving issues promptly enhances overall satisfaction and strengthens brand loyalty, resulting in a positive impact on customer retention and long-term success.
3. Mean time to resolution (MTTR)
Mean time to resolution (MTTR) measures the average time it takes for customer issues to be resolved. This metric is crucial for evaluating the efficiency of your customer support team and overall CX effectiveness. The faster you can address and resolve customer problems, the higher the chances of customer satisfaction and loyalty.
Reducing MTTR involves providing your support team with the right tools and resources to handle customer inquiries promptly. Oh Polly, an international women’s clothing brand, was able to significantly improve their MTTR after implementing Order Protection on their US site.
Prior to implementing the service, customers would wait up to two weeks for resolutions while customer service representatives chased down answers from shipping carriers. With Order Protection in place, they were able to reduce their full resolution time by 84% for customer shipping issues, creating a much more streamlined and efficient experience.
Why MTTR is important
MTTR directly affects customer satisfaction and loyalty. Customers expect quick and efficient resolutions to their queries and issues, and a prolonged MTTR may lead to frustration and dissatisfaction.
By closely tracking MTTR, your brand can evaluate the efficiency of your customer support operations and identify areas for improvement. Investing in tools and training for support agents, implementing self-service options, and streamlining support workflows can lead to reduced MTTR and, in turn, heightened customer satisfaction. Satisfied customers are more likely to continue engaging with the brand, leading to increased retention rates and positive customer reviews.
4. Net promoter score (NPS)
Net promoter score (NPS) is a metric that gauges customer loyalty and their likelihood to recommend your brand to others using a scale of 0 to 10. Based on their responses to an NPS survey, customers are classified as promoters (9-10), passives (7-8), or detractors (0-6).
NPS is calculated by taking the percentage of customers who gave a 9 or 10 rating and subtracting the percentage who gave a rating between 0 and 6. The resulting score ranges from -100 to +100.
A high NPS indicates a strong base of loyal customers who act as brand advocates, attracting new customers through word-of-mouth. Industry-wide, 50 is considered a good result, with the average settling around 17. Oh Polly was able to raise their NPS from 17.1 to 53.1 after making several improvements to their overall customer experience, including implementing shipping protection.
Why NPS is important
NPS is a crucial CX metric because it provides a clear measure of customer loyalty and brand advocacy. A high NPS indicates a strong base of satisfied customers who are not only more likely to remain loyal but also serve as ambassadors for the brand. Customers who are willing to recommend a brand to others are valuable promoters and can significantly impact business growth through word-of-mouth marketing.
By understanding your promoters and addressing the concerns of detractors, you can build stronger relationships with your customers and enhance overall customer loyalty, leading to increased customer retention and sustainable growth.
5. Customer lifetime value (CLV)
Customer lifetime value (CLV) quantifies the total value a customer brings to your business over their lifetime. By understanding CLV, you can allocate resources effectively and prioritize high-value customers.
Improving CLV is closely tied to delivering outstanding customer experiences. The tactics you might employ to increase your CLV often lead to improvements across the board—in customer support, products, pricing, and incentives for the customer that can boost loyalty and retention. A loyal customer who repeatedly makes purchases and advocates for your brand has a significantly higher CLV than a one-time buyer.
Why CLV is important
CLV is crucial for eCommerce brands because it quantifies the long-term value each customer brings to the business. Understanding CLV helps in allocating resources effectively, identifying high-value customers, and prioritizing retention efforts.
By tracking CLV, eCommerce brands can tailor their marketing strategies to focus on customers with higher potential for long-term engagement. Investing in personalized experiences, loyalty programs, and excellent customer service can increase CLV and generate higher returns on investment. Brands that prioritize CLV over short-term gains build stronger customer relationships and foster customer loyalty, resulting in sustainable growth and a more resilient business model.
6. Customer retention rate
Customer retention rate is a crucial metric for eCommerce brands as it measures the ability to retain existing customers over a specific period. While acquiring new customers is important, retaining existing customers is equally—if not more—valuable for long-term success. High customer retention rates signify that customers are satisfied with their experiences and find value in the brand's products and services, leading them to remain loyal over time.
Why customer retention rate is important
We’ve covered this in a few previous articles, but it bears repeating: acquiring new customers is far more expensive than retaining existing customers, often involving substantial marketing expenses. By focusing on customer retention, eCommerce brands can decrease the need for aggressive acquisition campaigns and allocate resources more efficiently.
Existing customers are not only less expensive than new ones, but they can actually bring in more revenue as well. Customers who have a positive experience and continue to engage with the brand over time have a higher CLV. Loyal customers tend to make more frequent purchases, spend more per transaction, and are more likely to recommend the brand to others, contributing to increased revenue and profitability.
Plus, a high customer retention rate provides stability and predictability for the business. A loyal customer base generates consistent revenue, reducing revenue fluctuations and providing a solid foundation for growth and expansion.
7. Customer churn rate
On the flipside of customer retention is customer churn. The customer churn rate is the percentage of customers who stop engaging with your brand over a specific period. High churn rates can be detrimental to eCommerce businesses, leading to lost revenue and increased customer acquisition costs.
Benchmarking customer churn in eCommerce can be tricky, because this metric is always industry-specific. For example, cosmetics and skin care items are naturally low-churn because customers will return to buy more once their supplies run out. But with other items, say, mattresses or furniture, there’s a higher churn rate because the nature of the products is longer-lasting and customers won’t need to make future purchases for years.
Shopify did identify a few reference points across all eCommerce industries:
For subscription-based businesses, the average monthly churn rate is 5%
For single-purchase businesses, 75% churn is considered average
Tracking customer churn enables you to identify patterns and reasons behind customer attrition. By proactively addressing these issues, you can reduce churn and improve customer retention.
Why customer churn rate is important
Customer churn rate is a critical metric for eCommerce brands as it directly impacts revenue and business sustainability. High churn rates indicate a significant loss of customers, requiring constant and costly efforts to acquire new ones.
Tracking customer churn allows brands to identify reasons behind customer attrition and implement strategies to improve customer retention. By understanding the factors contributing to churn, such as product issues, poor customer service, or unaddressed concerns, brands can take targeted actions to retain customers. Reducing churn leads to higher customer lifetime value, increased revenue, and a more stable business model.
8. Conversion/cart abandonment rate
The conversion rate and cart abandonment rate are intertwined metrics that impact eCommerce success. The conversion rate measures the percentage of website visitors who complete a desired action, such as making a purchase, while the cart abandonment rate reflects the percentage of customers who leave the website without completing a purchase.
A seamless customer experience, from browsing to checkout, can significantly influence conversion rates and reduce cart abandonment.
Why conversion and cart abandonment rate are important
Conversion rates and cart abandonment rates are crucial metrics because they directly impact sales and revenue. A high conversion rate signifies that the website and checkout processes effectively convert visitors into customers, while a high cart abandonment rate indicates potential barriers to completing a purchase.
By tracking conversion and cart abandonment rates, you can pinpoint issues that may be hindering conversions and look for ways to optimize the user experience. Simplifying the checkout process, providing transparent pricing, and addressing common objections can lead to increased conversions and reduced cart abandonment. A streamlined customer journey not only boosts revenue but also enhances overall customer satisfaction and loyalty.
Tracking and optimizing these eight key customer experience metrics is vital for any eCommerce brand looking to thrive in today's competitive landscape. By understanding customer preferences, pain points, and expectations, you can tailor your CX strategy to create meaningful, long-lasting relationships with your customers.