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.

CSAT is Not Enough—8 Metrics to Better Understand Your Customers

This post originally appeared on Business 2 Community.

There are plenty of metrics, scores, and benchmarks to track your customer experience, but some are better than others. From tracking efficiency and keeping down costs, to measuring the effectiveness of your experience and the happiness of your customers, it’s important to track a medley of different metrics so you can have a complete understanding and advance all of your goals. Here are the ones I think are absolutely crucial for delivering memorable, meaningful CX.

  1. Average Handle Time (AHT): Customers want their issues resolved—fast. Every extra minute they’re on the phone detracts from their experience and your bottom line. Some issues require more time to solve than others, but you need to measure AHT to have a working benchmark to figure out the sweet spot for your customers and agents.
  2. First Contact Resolution (FCR): If your customers don’t like waiting, they definitely don’t like having to call back multiple times to resolve an issue. FCR works well for determining the effectiveness of your service and the efficiency of your agents at solving customer issues—bad FCR is a sign that other things are going wrong.
  3. Zero Contact Resolution (ZCR): Even better than resolving your customers’ issues with a single touch is resolving them completely before they even have to contact you. Even good FCR may be misleading, as some customers have probably already tried to get an answer from your site or product manual, meaning that first call or email isn’t really the first touch. Proactive outreach that delights customers represents an even higher quality of experience, and is well worth tracking.
  4. Customer Satisfaction (CSAT): CSAT is extremely important for figuring out how happy your customers are with your service—it’s a crucial piece of information and any customer-centric company needs to have. However, keep in mind that customers are usually just responding to the interaction they just had, not what they think of your brand as a whole. They may be very satisfied with an agent’s service, but still feel like they shouldn’t have had to call in the first place.
  5. Net Promoter Score (NPS): NPS will tell you whether your customers would recommend your business to someone else. This is another great way to learn how happy your customers are with your service, and whether you’re generating positive word-of-mouth. However, like CSAT, it can be misleading. Customers may give you an NPS score of “10”, but only actually recommend you to people they feel are as smart and patient as them to put up with the complex support issues they faced. Also, only a minority of customers will take NPS or CSAT surveys, often only after a highly positive or negative interaction—skewing results even further.
  6. Customer Effort Score (CES): CES shines at helping prioritize the sticking points in your experience and where you can smooth out problems to exponentially improve your customer interactions. Since it asks your customers to rate an experience as a whole and not point fingers at individual agents, the results are much more impartial. You can see how your customers really feel, and make decisions about your CX accordingly.
  7. Sentiment: Using natural language processing to track sentiment across all text-driven channels can give you large-scale, unbiased insight. New analytics technologies makes analyzing almost everything your customers say about your brand a reality. You still won’t know what your customers aren’t saying, but this level of insight is becoming easier to achieve and more accurate as technology continues to improve.
  8. Lifetime Value (LTV): Lifetime Value is the ”Holy Grail” of customer metrics. Once you know how your customers are adding to your bottom line, and how experience plays into that, you can truly orient your business around your customer experience. A 5% increase in customer retention can increase a company’s profitability by 75%, according to Bain & Company—meaning that LTV should really become the crown jewel of your analytics suite.

By analyzing a spectrum of metrics, from granular performance-based ones to big-picture insights into the health of your CX as a whole, you can figure out where and how your experience needs to improve, and how it can lead your business towards explosive growth.

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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