Guide to Measuring Customer and Employee Experience Management with XM Metrics

Measuring experience management, both for customers (CX) and for employees (EX), is key to the success of any company. And while there are many companies that already measure these types of experiences using various Experience Management (XM) metrics, these are not always the most appropriate.

For this reason, in this article, we tell you what XM metrics exist, in which cases you can use them, how to obtain them and how to interpret them. And we also tell you how you can measure the return on investment (ROI) of your XM efforts.

What is Experience Management (XM)

Before we dive into XM metrics, let's remember what XM is.

Basically, XM is a business strategy that serves to design and improve the experiences of everyone involved in a company: customers, employees, suppliers, etc. For this reason, adopting this strategy is crucial for any company.

However, companies that adopt this strategy usually use metrics such as Net Promoter Score (NPS) or Employee Net Promoter Score (eNPS) to measure it.

These metrics are very useful, but there are many others that can also be used, as the case may be. Not only that, but there are also strategies to measure return on investment (ROI). Keep reading to learn what they are.

Metrics to measure Customer Experience (CX)

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Let's start with the customer experience. To measure CX, you can use the following metrics.

Net Promoter Score (NPS)

NPS is one of the most popular and effective metrics for evaluating customer loyalty to a brand.

To calculate it, simply ask your customers how likely they are to recommend your products or services to others on a scale of 0 to 10.

The results of this question fall into three categories:

• Promoters (9-10): These customers love you. They are loyal and ready to buy your new products or services and recommend them.
• Passives (7-8): They are happy but not thrilled. They might knock on your competitors' door if they see a better offer.
• Detractors (0-6): They are not happy. They can damage your reputation through negative comments and criticism.

To calculate your NPS, subtract the percentage of detractors from the percentage of promoters. What you get is a score that can range from -100 (all are detractors) to +100 (all are promoters).

Many companies use NPS to improve their service or product. A classic example is Apple. Often, they ask their customers to rate the likelihood of recommending their products, using this information to maintain high levels of customer satisfaction and brand loyalty.

Customer Satisfaction (CSAT)

Customer Satisfaction, or CSAT, is a direct and effective XM metric that measures how happy your customers are with what you offer.

To obtain it, after an interaction with your company (it can be a purchase, a customer service consultation or any other point of contact) simply ask them: “How satisfied were you with the service received?”

Customers respond using a scale from 1 to 5, where 1 means “not satisfied” and 5 is “very satisfied”.

This immediate feedback gives you a clear thermometer of how your customers feel about their recent experience. And the best part is that you can act quickly to celebrate successes or correct problems before they get bigger.

Customer Effort Index (CES)

The Customer Effort Index, known as CES, is an XM metric that tells you how much work a customer had to do to get what they wanted from your company. This can include anything from making a purchase to solving a problem.

The idea behind CES is simple: the less effort the customer has to put in, the happier they will be and the more likely they will be to return.

One way to measure CES is through a direct question after an interaction: “How much effort did you personally have to make to solve your problem?” Customers can give their answers on a scale, which usually ranges from “very low effort” to “very high effort”.

Abandonment Rate

The abandonment rate is like a thermometer that measures how loyal your customers are over time. In other words, it tells you the percentage of customers who have decided to stop using your service or cancel their subscription within a specific period.

This figure is vital because keeping a customer is generally much cheaper than acquiring a new one.

To measure it, you can follow the following steps:

1. Define the time period: First, decide the period during which you want to measure the abandonment rate. This could be monthly, quarterly, or annual, depending on your type of business and how your subscriptions or customer interactions fluctuate.
2. Calculate the total number of customers at the beginning of the period: Note how many active customers you had at the beginning of the selected period. This will be your starting number for the calculation.
3. Identify the number of customers who left: During the same period, calculate how many customers canceled their subscription or stopped buying your products or services.
4. Use the formula to calculate the abandonment rate: The formula is quite simple: (Number of Customers Who Left/Total Number of Customers at the Start of the Period) x 100. This will give you the abandonment rate as a percentage.

Metrics to measure Employee Experience (EX)

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The employee experience is also critical to the success of any organization. Some of the most relevant metrics you can use to measure this type of experience are employee engagement and eNPs, but they are not the only ones. Keep reading to see them all.

Employee Commitment

Employee engagement is a key measure that reflects how involved and excited employees are with their work and the company they work for.

To obtain this valuable information, you can conduct regular surveys that explore various aspects of the work experience, from satisfaction with daily tasks to a sense of belonging and recognition in the workplace.

A typical question to do this might be: “On a scale of 1 to 10, how would you rate your level of commitment to the company?” From the answers, you can identify areas where commitment is high, as well as opportunities for improvement where it is low.

Implementing changes based on these insights can lead to an overall increase in team satisfaction and productivity.

eNPS (Employee Net Promoter Score)

The Employee Net Promoter Score (eNPS) transfers the concept of NPS to the company's internal environment, as it evaluates the likelihood that employees will recommend their workplace to friends and family.

This index is a popular metric that measures employee loyalty and satisfaction due to its simplicity and effectiveness.

To obtain it, employees are simply asked: “Would you recommend our company as a great place to work?” and they respond on a scale of 0 to 10.

The answers make it possible to classify employees as promoters, passives or detractors, providing a clear vision of organizational health.

A high eNPS suggests a positive work environment, while a low score may indicate underlying problems that need attention.

Turnover rate

The turnover rate tells you what percentage of employees leave the company over a certain period of time. It's a simple way to measure how long workers are staying and how happy they are at their job.

To calculate it, you simply take the number of people who have left the company, divide it by the total number of employees you had at the start, and then multiply that number by 100. This way you get the turnover rate in percentage.

Analyzing this rate can give you important clues. If a lot of employees are leaving your company or a specific department, it could be a sign that something isn't right, such as problems with the way the team is being managed or maybe that employees aren't happy with their work environment.

On the other hand, if very few employees leave, it's likely that you're doing things right and that you've created a place where people want to stay.

Measurable Benefits of XM

Now that you know what XM metrics you can use to measure experience management in your company, let's move on to the good news: the benefits.

Implementing an effective XM program can offer tangible benefits, including:

1. Recovery from bad experiences, improving relationships with customers and employees.
2. Increased retention and loyalty, which generates higher revenues and reduces acquisition and service costs.
3. Improving the lifetime value of customers and employees, driving sustained growth.
4. Reduction of service costs through process optimization and efficiency improvements.
5. Decreased cost of acquiring new customers and talent, leading to a positive reputation, among other benefits.

XM ROI Metrics

Finally, we want to talk to you about how to calculate the return on investment or ROI of your Experience Management (XM) efforts, whether CX or EX. You can do it yourself:

1. Establish key metrics

The first thing is to define which specific CX and EX metrics best align with your business objectives. It can be the NPS for CX or the ENPS for EX, among others.

It's crucial that these metrics not only reflect overall satisfaction, but that they can also be tracked at an individual level for each customer or employee.

2. Identify loyalty behaviors and their impact

The next step is to identify specific behaviors that indicate loyalty and that have a direct financial effect on your company. This can range from repeat purchases to personal recommendations.

Like CX and EX metrics, these behaviors must be measurable at the individual level.

3. Segment and analyze

Then, segment your customers or employees based on their answers or scores on the chosen metrics, from highest to lowest. This will allow you to observe different levels of loyalty and their potential impact on your business.

Through a detailed analysis, either through clustering or regression models, you can understand how these scores relate to identified loyalty behaviors.

4. Calculate the monetary value of the exchange

After identifying how different scores correlate with loyalty behaviors, the final step is to translate these findings into monetary value.

This calculation involves how a 1% increase in your key CX or EX metric could translate into changes in loyalty behaviors and, therefore, a direct financial impact (either increasing revenues or reducing costs).

For example, if you find that improving your NPS by 5% leads to a 10% increase in repeat purchases from a customer segment, you can calculate the dollar value or your local currency of that increase based on the average spending of those customers.

The latest on XM metrics

In short, XM metrics are essential for any company looking to optimize the customer and employee experience. This is because these KPIs provide a solid basis for making strategic decisions, driving continuous improvements and generating a tangible positive impact on the organization.

If you want to start measuring in a better way your Experience Management, you can contact us. We have been helping many of the most renowned companies in Latin America with their CX and EX management for more than a decade. We want to help you. Contact us just today.