- Customer Retention
Using Referrals to Increase Customer Lifetime Value
Sadie Goodwin | Oct 25, 2023
Nov 10, 2022
Director of Marketing
These last few years have shed a spotlight on the pressures brands face to constantly deliver first-rate customer experiences. Even in the most challenging circumstances, consumers expect the businesses they buy from to meet their expectations for things like speed, convenience, and availability—even when uncontrollable factors like supply chain disruptions make it challenging to do so.
This is something that has especially impacted ecommerce brands as the industry continues to grow exponentially. The ever-increasing number of merchants selling online and doing so while pushing the boundaries of CX has caused shoppers’ expectations to swell. For example, as features like two-day, next-day, and even same-day delivery become more commonplace, 85% of online shoppers now say they wouldn’t order from an online store again after one bad delivery experience.
This also highlights the skyrocketing value of loyalty in today’s often unforgiving environment. The ability to attract and retain customers has never been more important—nor has it been more difficult to achieve as consumer patience dwindles. This is why it’s become absolutely vital for merchants to deploy a continuous monitoring and measurement program to better manage the customer experience and thus, drive loyalty.
This blog will explore the benefits of CX monitoring and measurement, and explain how you can implement a program based on direct customer feedback and utilizing industry best practice frameworks such as NPS, CES, or CSAT.
A small number of customers hold the power to generate a large amount of revenue through repeat business, referrals, and positive word of mouth. The old business adage is that about 20% of your customers produce 80% of your sales. Of course, we marketing folks have been touting this stat for so long we’ve forgotten where it originated. But there is more recent data to support the overarching argument. For example, research from financial modeling expert and VC Josh Chapman, found that focusing on customer retention can increase revenue over an 18-24 months period by as much as 80%, reduce customer acquisition costs by over 30%, and increase total customers by 1.5x.
Clearly, improving customer retention brings financial rewards. A key component in achieving all this is ensuring that the quality of your customer experience meets the ever-changing needs and expectations of your shoppers. This is why CX monitoring and measurement is so crucial, as the insights gathered empower you to take informed actions that optimize the customer experience as needed.
As management luminary Peter Drucker once stated, “If you can’t measure it, you can’t manage it.” And if you fail to measure the quality of your CX, you risk forfeiting the undeniably consequential bottom-line benefits that come with it. With a good understanding of why it’s important to continuously track CX quality, let’s take a look at how you can deploy an effective program.
There are three CX frameworks for merchants to accurately measure customer satisfaction and loyalty levels and to identify the specific drivers of both customer frustration and happiness. These are the Net Promoter Score (NPS); Customer Effort Score (CES); and Customer Satisfaction Score (CSAT). Let’s dive into what these mean.
NPS measures the loyalty of customers to your brand. It’s based on a single survey question asking respondents to rate the likelihood that they would recommend your company, product, or service to a friend or colleague. It classifies those who choose a rating of nine or 10 as “promoters”, “passives” as those who rate either seven or eight, and “detractors” as those who provide a rating below six.
NPS is a valuable metric as it’s simple, easy to compare, and acts as a measure of brand performance rather than as feedback on an individual transaction. Moreover, it allows you to find your most loyal customers and use them as the model for how to build your product.
CES measures how much effort customers have to put in to interact with your business. These interactions can include how much effort it takes to use your product or service or how easy it was for them to have a problem solved by your customer service team.
CES is an important framework to follow as it helps you identify points of friction in the buyer’s journey, and where you can improve things to create a more effortless experience. Considering recent data found that a whopping 76% will stop doing business with a brand after just one bad customer experience, it’s critical that you learn to identify, and close, CX gaps quickly.
CSAT measures happiness with a product, service, or support interaction through a customer satisfaction survey that asks: “How satisfied were you with [company]?” It’s one of the most heavily benchmarked customer experience metrics outside of NPS. It’s extremely easy to calculate: The sum of all positive responses is divided by the total responses collected, then multiplied by 100.
Measuring CSAT is beneficial as the outcome leaves you with the overall percentage of satisfied customers at your business. If for some reason the experience isn’t satisfactory, you can pinpoint why this is the case and take action to remedy the experience.
We recently launched our newest customer intelligence solution, Okendo Surveys, to help you collect the exact actionable customer data you need to enhance your customer experience. Leveraging Surveys’ Customer Experience Management features, you can deploy a continuous CX monitoring and measurement program using direct customer feedback, as well as the frameworks outlined above.
Not only do we make this possible, but we ensure that our powerful research tools make deploying a CX monitoring and measurement program easy and fast. For example, our pre-built survey templates are designed with best practices in mind—accelerating time-to-insight. Moreover, you can choose from 10 different question types including NPS, CSAT, CES, single and multi-select questions, and free text. This means you can seamlessly and quickly use these insights to optimize the customer experience throughout the online buying journey.
We recently partnered with Feastables, a mission-driven snacking brand rooted in gamified experiences, to accurately measure their NPS. With Okendo Surveys’ one-step install, Feastables built their continuous NPS program in just minutes and deployed their NPS survey to thousands of customers throughout key points in their customer journey. Utilizing multiple distribution channels, advanced audience targeting, and powerful reporting, Feastables achieved a 72% survey completion rate and identified over 2,000 brand promoters.
“Okendo Surveys has been a game-changer for our client Feastables, empowering them to take data-informed actions to optimize their customer experience and increase shopper engagement,” says digital consultancy, Sharma Brands. “In this increasingly competitive environment, the fact that they can so easily leverage Okendo Surveys’ multiple distribution channels, advanced audience targeting, and powerful reporting capabilities to increase customer loyalty and lifetime value, gives them an immediate competitive advantage.”
The ability to optimize CX, improve customer retention rates, and increase the lifetime value of a customer has never been more valuable—especially in the face of rising acquisition costs and cut-throat competition. Indeed, returning customers have an enormous impact on your bottom line and boost your reputation to expand your business.
It’s understandable to feel overwhelmed by your customers’ fluctuating needs and expectations for an effortless experience. By deploying a continuous CX monitoring and measurement program using a solution like Okendo Surveys, you can arm yourself with the tools you need to stay ahead of your shoppers’ shifting needs and deliver a customer experience that keeps them coming back for more.
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