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The Ultimate Guide to Measuring the Customer Experience

How companies can measure and improve the customer experience

Organizations are increasingly focused on understanding and improving the customer experience (CX). By investing in CX, companies are 58% more likely to retain customers and 23 times more likely to acquire new ones. It’s no surprise then that 68% of companies plan to conduct customer-focused market research this year — a 17% increase from 2022.

Learn how you can improve your customer experience by understanding what customer experience consists of, challenges and best practices, how to accurately measure and assess it, and how to improve it to meet your customers’ expectations.

What is customer experience?

Customer experience is the perceptions and interactions a customer has with your brand. 

Customer experience is influenced by all aspects at all stages of the customer journey, including awareness, purchase, use, and retention. These aspects include all touchpoints, including in-person, digital, print, and phone interactions and impressions, that can influence customers’ evaluation of your brand.

Better business choices are born from deeper understanding. Learn more about your customers’ needs with in-depth research from Hanover.

Why measuring customer experience is important

Most companies understand the value of providing an exceptional customer experience; however, building an experience that meets customers’ expectations remains a challenge. Today, only 23% of customers are “very satisfied” with their experience.

This disconnect between companies’ intentions and customers’ evaluations is caused by a fundamental gap between the experiences companies think they provide and the experiences their customers actually have. While 87% of companies believe they are providing exceptional customer experiences, only 11% of customers agree.

There is a 76% gap in the perception of excellent customer service between

This shows that companies are not only failing to live up to customer expectations, but they are also unaware of the issue and, therefore, unable to fix it. As a result, they are losing repeat customers. About half of customers stopped using a brand in the past year due to a bad experience.

How do you close this gap and give customers the experience they want?

You need to measure it.

To accurately evaluate customers’ experiences and evaluations of your brand and identify areas for improvement, you need a framework to understand and measure customers’ experience and adapt to customers’ changing preferences and needs.

Organizations that harness customer insights are 23 times more likely to attract new customers
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58% of organizations that incorporate customer analytics see increased retention and stronger loyalty
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U.S. businesses lose $35.3B annually in customer churn caused by avoidable CX issues
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Discover how leading companies collect, leverage, and benefit from customer journey data to build more effective customers experiences.

How to measure the customer experience

There are thousands of elements to the sales and service process that impact customer experience and companies need to understand the ones that matter most for their business.

With so many key variables, painting a clear picture and focusing on what matters most can be difficult and time-consuming. Consequently, many companies only measure a fraction of the customer experience insights they should. The question quickly becomes, how do you see the whole picture, and what insights would that offer?

To gain a complete view of the customer experience, companies should think about customer experience as consisting of three key pillars of insight: who your customers are, what they do, and what they need. Using this three- pillar measurement framework, you can carefully and effectively devote customer experience measurement resources where they’ll have the most impact.

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Identify who customers are

You know the basic customer information (name, title, email, etc.), but to provide a truly exceptional customer experience, you need to go beyond customer contact information and learn who your customers are on personal level. By understanding what trends exist across customer groups in terms of their demographics, habits, and patterns, you can develop a more targeted experience.

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Evaluate customer behavior

Analyzing “what customers do” is critical to discovering why customers make certain decisions in real life and how to get them to take the actions you want.

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Assess customer needs

Customer needs drive customer decisions – including whether they choose you or a competitor. By measuring customer needs and their current satisfaction, you can build processes, products, and services that will keep customers loyal, motivated, and satisfied.

Learn how to develop an effective customer experience that satisfies your customers using in-depth insights.

Customer experience metrics

Metrics to understand your customers

An accurate understanding of your customers allows you to expand your market, categorize customers to create more effective sales, marketing, and service strategies, and identify the most profitable customer groups.

When gathering customer insights, focus on these key metrics:

Identifies new customers in new and adjacent markets.

Groups customers into similar clusters based on meaningful behavioral, psychographic, and demographic characteristics.

Provides rich, archetypal overviews of your core customer segments.

Identifies customers’ expected value over their lifespan.

Learn how customer segmentation can help your organization understand your audience, what motivates them, and how to reach them.

Metrics to evaluate customer behavior

Many companies already have access to a major customer experience resource: customer usage data. By analyzing existing data (online behaviors and transaction history, for example) and combining it with other research approaches, like surveys, you can reveal how and why your customers buy from you.

Here are some of the most popular metrics to measure customer behavior:

Uncovers gaps and flaws in your products and services by comparing how customers actually use and perceive your offering.

Evaluates how customers interact with your offerings and key inflection points from initial interest to purchase.

Maps how customers interact with a brand throughout their entire lifecycle, from awareness to consideration, purchase, and retention.

Explores the rationale behind specific purchases to reveal key purchase drivers and bring visibility to the “why” behind a sale.

Digs past the customer churn rate and identify trends in dropped versus loyal customers.

Harness valuable customer insights by building a customer journey map that gives you a clear picture of buyers’ interaction with your company.

Metrics to assess customer needs ​

By understanding customers’ needs, you can identify their biggest pain points and expectations as well as their perception and satisfaction with your offerings.

To assess customers needs, collect the following insights:

Gather direct feedback from customers on your brand’s value, including how they see its most critical attributes.

Uncover strengths and weaknesses and identify positive and negative perceptions of your brand, product, or service that could help or hinder your brand’s desired outcomes.

Collect direct feedback on customers’ needs, concerns, and goals and identify what drives customers to a brand and their expectations.

Identify the key elements of your customers’ experience with your brand, including the extent to which your products or services address their needs as well as any unmet needs..

Identify the factors that affect your customers’ satisfaction and influence their intent to purchase again.

Gauge customers’ loyalty and their likelihood to recommend your offerings to others.

Exceed customers’ growing expectations by evaluating and adjusting to the four core metrics of customer satisfaction.

Customer experience research methods

There are many methods to measure the customer experience. Because of the breadth and complexity of the data, successful companies take an integrated approach. They use different research methods such as surveys, interviews, and data analysis in combination to gain a comprehensive view of the customer experience.

Here are four key research approaches all companies should employ when measuring customer experience:

Customer attitude indicators are a popular starting point for companies measuring the customer experience. The Net Promoter Score (NPS)®, one of the most well-known customer attitude indicators, measures customers' likelihood to recommend a company to others. This makes it a good indicator of the effectiveness of customer experience and an early warning signal of customer dissatisfaction.

Surveys allow companies to investigate the key drivers and causal linkages behind customer satisfaction. Surveys can be used to gather data on almost every aspect of customer experience, including attitudes, brand expectations, and customer satisfaction.

Analyzing customer data gives an overview of customer experience. It combines multiple data sets to validate assumptions, challenge preconceptions, and help build cases internally. Luckily, many companies already have access to a major customer experience resource: customer usage data. Delivery times, product quality ratings, customer demographics, online behavior, and transaction information can all paint a valuable picture of customer behaviors.

Qualitative research, in the form of in-depth interviews or ethnographic studies, can add much-needed context to quantitative measurement approaches. Whereas data analysis and surveys can track what customers did, qualitative research is crucial for determining why customers did it.

Identify customer needs and pain points to retain customers, build customer loyalty, and attract new customers through a VOC analysis.

Common pitfalls of measuring customer experience

Challenges and solutions for common CX mistakes

Pitfall 1: Capturing only part of the customer experience.

Failing to capture all relevant aspects of customer experience means executives’ assessment of their customer experience will be incorrect. As a result, the root of customers' dissatisfaction with their brand will remain unnoticed and unresolved.

How to avoid it: The best way for companies to capture the entire customer experience is by understanding the complete customer journey through the customer journey mapping process. Journey maps are based on the customer lifecycle and map out all the ways customers interact with a product or service they’re seeking, including companies offering the products or services.

Research can provide a greater understanding of customer goals and needs during each stage of their lifecycle. This includes what questions they are trying to answer and what actions they intend to take to get the answers. This research will also help identify the current state of customer experience and uncover areas for improvement.

Pitfall 2: Thinking that what worked for another company will work for them

Learning from the success of others is important; however, each customer-brand relationship is unique. Therefore, the definition of a successful customer experience will vary from company to company.

How to avoid it: With so much riding on effective customer experiences, companies can’t afford to base initiatives on the latest trend or on gut feelings. The best way to avoid this pitfall is to back up customer experience strategies with market research. Before making any moves, gain insight into your customers perception of your brand, their satisfaction with your offerings, and their needs. This will allow you to build strategies that address their values and expectations.
Pitfall 3: Not leveraging all of the research tools at their disposal

The science around understanding and maximizing the customer experience has evolved, and there are many tools available to manage and measure customer experience. However, these tools only work if companies actually use them.

Too often, companies fall into the trap of only measuring the parts of the customer experience with the tools they have readily available or evaluating different aspects of the customer experience in silos.

How to avoid it: The most successful companies understand there is no silver bullet to customer experience. They look beyond the information they have readily available and use outside resources to dig into the underlying issues that most impact customer experience through multiple different measurement approaches.

These include surveys to understand customer actions and opinions, data analysis to uncover key actions customers take, and qualitative measurements to find out the reasons behind their choice. Only by looking at the customer experience through the lens of all three can companies begin to see a complete picture of their customer experience and design actionable plans to improve it.

Identify customer needs and pain points to retain customers, build customer loyalty, and attract new customers through a voice of customer analysis.

How do companies use CX insights?

Customer experience metrics and insights have value beyond increasing customer satisfaction. A thorough understanding of customers’ perceptions and expectations allows companies to develop more effective offerings, build new products, drive sales, expand their market share, and strengthen their competitive advantage.

Companies use customer experience insights to:

Identify gaps in customer experience

Great customer service leads 89% of customers to purchase again and 95% to recommend it to others.

Increase customer satisfaction and loyalty

Buyers with a high-quality experience are 2.7 times more likely to keep doing business with a brand than those without.

Develop targeted advertising and marketing programs

93% of companies use CX insights to crystallize the elements consumers value most and ensure these attributes are emphasized in campaigns.

Identify a need for new or improved offerings

90% of executives said identifying customer needs is the most important stage of new product development.

Drive additional sales

91% of companies use customer behavioral data to align their strategies to reach out at the right phase of the customer journey.

Identify and leverage a competitive advantage

89% of companies use insights into customer needs and expectations to distinguish their offerings and bolster competitive advantages.

Learn how Manitou assessed customers’ brand awareness, purchase intent, and the product attributes they find most important to enhance their offering to meet customer expectations.

What do customers consider good customer experience?

Customers have high expectations for customer experience, but what does “good customer experience” actually look like?

Below are some results of recent research into customers’ expectations. While there are many potential aspects for a “good customer experience,” not all will apply to your company. To find what matters most for your customers, you will need to conduct targeted customer research. 

Consumers expect good customer service

Customers are 4 times more likely to stick with a brand when their problems are solved quickly (Forrester)

77% of customers say they view brands more positively if they provide self-service options for customers looking for support (Vanilla Forums)

46% of consumers will abandon a brand if employees are not knowledgeable (PwC)

90% of B2B buyers will turn to a competitor if a supplier’s digital channel can’t keep up with their needs (Avionos)

66% of customers expect companies to understand their unique needs and expectations. (Salesforce)

84% of customers say being treated like a person instead of a number is very important to winning their business. (Salesforce)

Find out how Betterworks was able to optimize its marketing messaging and demonstrate the value of its offering by gathering customer insights.

Betterworks succeeds with customer insights

How to improve customer experience

Whether you’re looking to pinpoint gaps or identify potential opportunities, use this checklist to guide you as you gather data to measure and optimize your customer experience.

Identify who your customers are

  • Assess your total customer base
  • Categorize your customers into actionable segments and personas
  • Identify the most profitable customer groups

Evaluate customer behavior

  • Understand how customers interact with your products
  • Map and evaluate the customer journey
  • Uncover what influences customers’ decisions

Understand customer needs

  • Identify how your products are perceived
  • Evaluate how your marketing and positioning resonate with customers
  • Uncover customers’ biggest needs and challenges
  • Understand how customers evaluate your product

Learn how to collect, measure, and implement cx data to build an experience customers want.

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