Business

Video: Top 3 KPIs for customer-centric companies

By 03/12/2019 No Comments

You may argue that some metrics are more important in customer-centric organizations than others. But this is our Top three! Remember that you have to connect these KPIs to the on-target earnings (OTE) of your employees because that would help them focus on these important metrics. On the contrary, if you evaluate the performance of your Sales director only on revenues, he will not care much of other more customer-centric KPIs.

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Amongst the customer-centric metrics, the most important and representative is Customer Lifetime Value. It’s also called CLV and measures how much profit your customers will generate during their relationship with your company. It shows how healthy your customer base is, and how likely is your company to grow in the future. This metric is so important in a customer-centric culture because it’s deeply connected to the key concept of customer-centricity, which is building relationships that last long. We could say that the CLV measures how good is your relationship expertise, and therefore it’s the first metric you need to implement. For those who want to learn how to calculate this metric, this is an interesting link.

The second essential KPI for customer-centric companies is Customer Satisfaction, also called CSAT. Many brands are moving away from NPS, and we would say wisely, and are adopting customer satisfaction instead. What is it? The most common form of CSAT is the star rating, like the one that you find on Google, Amazon or Tripadvisor. It’s a very simple metric, that’s why customers love it! At the same time, it gives you a clear view of how customers like the experience with your brand and its products and services. The scale usually goes from one to five…but be careful because the satisfaction level is not linear. This means that if your average score is from 1 to 3.5, you’ll have very unhappy customers. If it’s between 3.5 and 3.9 they are somewhat satisfied. Between 4 and 4.4 you would have a very good score, but only if you hit between 4.4 and 4.8 you would have very satisfied customers. Be aware that scores of 4.9 and 5 are usually considered unrealistic by your future customers, therefore, even if you reach these numbers, you would not generate extra revenue compared to lower scores

The last KPI for customer-centric companies is also crucial to determine the health of your business. We’re talking about Churn rate. Customer churn rate reveals how many of your customers have stopped using your products or services. Generally, the churn rate represents the percentage of lost customers within a specified period of time. It can also be expressed in monetary value, representing the amount of revenue lost due to the loss of customers. Following the customer churn rate is critical because usually, it is much cheaper  to retain existing customers than to acquire new ones.

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