In this post by Kustomer VP of Marketing Nelly Rinot, Nelly shares the key reasons why Lifetime Value should be your bottom-line metric for customer experience.
There is a huge number of good metrics to measure your customer service. However, Lifetime Value should always be your top consideration. Here are the top five reasons we’ve determined from our :
- Other metrics are geared around your agents, not your customers: Average Handle Time and First Contact Resolution are two prime examples of valuable metrics that don’t give you the insight you need beyond an operational approach. They make sense for figuring out how cost-effective your service is—how many customers your agents can handle before they’re at capacity. But while productive agents can help more customers faster, they should do more than work as fast as possible to resolve an issue. To deliver a good experience, your first consideration shouldn’t be efficiency—it should be whether your customers are happy.
- CSAT and NPS don’t give you the whole picture: These metrics are a great way to know whether your service is effective on a macro-level. If customers aren’t satisfied, you need to know. However, knowing that they’re unhappy and WHY they’re unhappy are two very different things. CSAT and NPS measure if you are satisfying your customers in the moment, but doesn’t tell you about their behavior after you’ve engaged. Plus, these surveys only capture a tiny, unrepresentative minority of customers. And in most cases, they’re only speaking to the interaction they just had, not their entire experience with your brand.
- Sentiment doesn’t tell you what your customers aren’t saying: Sentiment based on natural language processing is less biased than CSAT and NPS, because it accounts for all the interactions on every channel. That’s a huge step up, but it still won’t answer fundamental questions about your business—you still don’t know what’s going unsaid. Only 1 out of every 26 customers complain if something is wrong with their experience, so even high volume NLP only measures a fraction of what’s going on beneath the surface.
- Other metrics don’t take actions into account: For a total customer view, you need to understand all of your customers’ actions and behaviors on top of all the previous metrics. Other metrics don’t record how often they’ve contacted you for service or support, if their buying behaviors have changed, if they’ve abandoned items in their cart, changed their subscription tier, returned or exchanged a product, or engaged with you on social media. All of these actions will help you understand why your customers will or will not come back to buy again.
- Lifetime Value is the best predictor of your brand’s success: A 5% increase in customer retention can increase a company’s profitability by 75%, according to Bain & Company. Getting customers to keep buying from you is fundamental to growing your business. No matter what else you know about your customers, if you don’t know their Lifetime Value, you don’t know if you’re going to be successful.
Using a variety of customer experience metrics is crucial for getting a better understanding of your business. They all give you an important piece of the bigger picture. However, if they don’t ladder up towards Lifetime Value, then you don’t know how your service, support, and experience are contributing to overall business health. If you aren’t measuring LTV yet, good news—it’s never too late to start.