Measuring Customer Health: Metrics Like Churn Rate, NPS and More
“What gets measured gets managed.” This maxim rings true for monitoring customer health too. Defining and tracking metrics that quantify loyalty, satisfaction and engagement over time is essential.
In this comprehensive guide, we’ll explore major categories of customer health metrics to monitor, including:
- Satisfaction and sentiment
- Engagement and activity
- Loyalty and retention
- Referrals and advocacy
- Profitability and lifetime value
- Underlying drivers and correlations
Consistently measuring performance across these areas spotlights achievements and exposes trouble spots. Let’s dive into KPIs that serve as the pulse of enduring customer relationships.
Tracking Satisfaction and Sentiment
Understanding how happy customers feel with your brand establishes a foundation.
Net Promoter Score (NPS)
Measures willingness to recommend on a 10 or 100-point scale. Highly influential metric.
Customer Satisfaction (CSAT) Scores
Similarly gauges satisfaction levels on a numeric scale through surveys.
Tracks sentiment specifically on product quality and features.
Measures sentiment toward support and services experience.
Gauges the overall bond customers feel with your brand.
Assesses brand image across factors like trust, innovation, and reliability.
Uses AI to categorize and quantify positive, negative and neutral sentiment within customer feedback at scale.
Monitoring Engagement and Activity
Beyond transient satisfaction, usage habits reveal enduring engagement.
Trends key activities like logins, sessions, page views, and features used over time.
Tracks views, clicks, and sign-ups for campaigns, content, and tools.
Support Case Volume
Measures support contacts and inquiries as a proxy for engagement.
Mobile vs. Web Usage
Compares usage across platforms to optimize experiences.
Credits conversions to the final touchpoint and action that prompted them.
Analyzes the accumulated impact of multiple touchpoints across a buyer journey.
Monitors ratings, reviews, and unstructured feedback on digital experiences.
Calculating Loyalty and Retention
Retaining customers demonstrates true loyalty better than claimed sentiment alone.
Customer Churn Rate
Measures the rate at which you completely lose customers in a period. Want to see this decrease over time.
Customer Retention Rate
The inverse metric – the percentage of customers retained over a timeframe. Aim for increase.
Tracks average duration of customer relationships from acquisition to deactivation. Maximizing this demonstrates retention success.
Monitors the percentage of customers clearly dissatisfied based on feedback and at risk of leaving. Work to decrease.
Measures success bringing back churned users who left. Increase indicates effective win-back efforts.
Tracks the percentage of customers purchasing upgraded tiers or additional products. Sign of deepening loyalty.
Quantifying Referrals and Advocacy
Enthusiastic customers drive referral and amplification opportunities.
Measures the percentage of customers who proactively share and recommend your business to others. Want this to steadily grow.
Referral Conversion Rate
Tracks what percentage of referrals successfully convert to new business growth. Strive to increase through referral experience optimization.
Compares the percentage of positive conversations about your brand vs. competitors online. Aim for an increasing trend over competitors.
Calculates customers actively engaging with and sharing your social media, content, and messaging. Shows organic brand reach.
Product Rating Volume
Monitors the number of ratings and reviews users leave on profiles. More demonstrates brand buzz and mindshare.
Average Rating Score
Tracks your overall average star rating across review platforms. Push for higher scores over time through delivering value.
Evaluating Profitability and Lifetime Value
Ultimately the business impact of retention matters most.
Customer Acquisition Cost (CAC)
Compares sales and marketing investment spent to acquire customers. Want this decreasing over time as retention improves.
Customer Lifetime Value (LTV)
Estimates the net profit driven by an average customer throughout your relationship. Goal is to increase this through retention initiatives.
Divides customer lifetime value by customer acquisition cost. Higher ratios demonstrate greater ROI on acquisition due to retention.
Average Order Value
Tracks the average revenue per transaction from repeat customers over time. Increasing indicates greater order sizes as loyalty develops.
Compares profit margins across high value retained customers vs. new customers. Aims to spotlight which segments drive disproportionate gains.
Correlating Metrics to Underlying Drivers
Link metrics to illuminate key relationships and performance drivers. Examples:
- NPS scores vs. churn rate
- Offer engagement vs. conversion rates
- Onboarding completeness vs. retention
- Feature adoption vs. customer lifetime value
- UX friction vs. churn rate
- Referral rates vs. acquisition costs
- Support case volume vs. churn risk
Consistently tracking the right mix of customer health metrics provides early warnings when relationships suffer and validate when they thrive. Keep these tips in mind:
- Monitor both satisfaction and actual behaviors over time
- Measure changes across engagement, loyalty, referrals, and profitability
- Leverage both manual surveys and automated tracking
- Link metrics to illuminate key performance drivers
- Set customer health goals and benchmark metrics
- Share reports broadly to align teams on progress
With comprehensive measurement, you gain visibility into the true pulse of customer relationships – the lifeblood of business success.
- 1 Measuring Customer Health: Metrics Like Churn Rate, NPS and More
- 1.1 Introduction
- 1.2 Tracking Satisfaction and Sentiment
- 1.3 Monitoring Engagement and Activity
- 1.4 Calculating Loyalty and Retention
- 1.5 Quantifying Referrals and Advocacy
- 1.6 Evaluating Profitability and Lifetime Value
- 1.7 Correlating Metrics to Underlying Drivers
- 1.8 Key Takeaways