5 Reasons You Need to Measure Lifetime Value

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 :

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

What Are the Modern Metrics for Omnichannel Communication?

In our latest webinar with StellaService, we had a deep discussion about the state of modern service. The changes we’re both seeing are undeniable, but now it’s easier than ever to make sense of this omnichannel world with new, stronger metrics.

The bottom line: To succeed in an omnichannel world, you need to prioritize building lifetime value with every interaction. Here’s how to make that happen:

Service Channels Have Fragmented

There’s no use fighting it: customer service has changed. The rise of ecommerce is driving the spread of service channels over mobile, email, chat, social, and more. More interactions means rising customer expectations. To meet them, you need skilled agents who can move with the customer from channel to channel, always pushing the journey forward.

New technologies like chatbots and self-help modules are reducing the numbers of basic service inquiries. This means that agents need to be even more prepared to solve complex, emotionally nuanced problems. However, as agents have taken on more complex service tasks, their turnover rate has increased—reaching 24% for some organizations.

To be successful, agents must be empowered and ready to deliver consultative service driven by a connected experience—and have the training and tools to do so. They need to have all the information about the product or service they’re offering, and have full insight into the back-end to know product availability and other details. They need more context about customers than ever—how often they’ve reached out over different channels, whether their previous issues have been resolved, and how they’ve felt about previous interactions. And, they need to able to engage over multiple channels at the same time, switching from email to chat to phone with ease. Having a single timeline, where the whole history of customer interactions appears, is the only way agents can take an informed approach to building lifetime value.

Going from Service to Experience Requires New Metrics

With these changes in mind, to understand the value your service is bringing to your customers, you’re going to need new metrics. Average Handle Time (AHT) can give you insight into your overall efficiency, but it’s only valuable if you’re approaching your service organization as a cost-center, rather than a revenue driver. If you’re treating your service as a tool to build relationships with customers, then metrics like Customer Satisfaction surveys and QA reports have more value, but these only give you limited context and insight into how your customers really feel about their experience. What’s the right number to measure?

StellaService and Kustomer both tackle this issue from two different sides—which is why we make such great partners. StellaService Connect motivates agents and prompts a response from customers with a gamified post-engagement survey that focuses on the performance of specific agents. They even allow happy customers to tip agents for job well-done, reinforcing the positive experience. By delivering real-time feedback on performance across every channel, StellaService delivers metrics that drive measurable change. Companies like Williams-Sonoma and Swanson Health Products that use StellaService to create a better environment within their customer service organization see a measurable drop in attrition.

Kustomer’s focus is on increasing Customer Lifetime Value (LTV) and promoting First Contact Resolution—helping agents follow the customer across channels during the same conversation. Agents are empowered to connect with a customer over chat, then call them over the phone if needed, then follow up over email with next steps. This ensures that the customer journey is always progressing, meaning shoppers never have to repeat themselves or start over. From the agent’s perspective, omnichannel can increase First Contact Resolution. However your organization needs to be focusing on FCR and ultimately LTV rather than Average Handle Time, as it will take more time to deliver high-touch, conversational service.

Omnichannel Promotes Success

A fully-enabled omnichannel strategy reaps real rewards for your business. 50% of all customer interactions happen during a multi-event, multi-channel journey, so being prepared to deliver great service over multiple channels is a bare necessity. And it shows. Companies with strong omnichannel strategies retain an average of 89% of their customers, versus 33% for companies with weak strategies. A good omnichannel experience is therefore crucial for bolstering your bottom line, as a 5% increase in customer retention can increase a company’s profitability by 75%. In fact, companies see an increase in customer retention of 2-3% just by switching to Kustomer.

To make sense of this omnichannel world, you need to focus on Lifetime Value. To increase lifetime value, you need to understand and motivate your agents, and empower them to deliver a great experience over every channel at once. Together, StellaService and Kustomer help you do both.

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