6 Crucial Customer Experience Metrics for Ecommerce Businesses

Jack Maden
Written by Jack Maden
March 09, 2021

As the saying goes, you can’t manage what you can’t measure. Customer experience, as much as any other aspect of running a successful ecommerce business, must be carefully monitored to ensure the best possible ROI.

For a consumer, taking their business to a competitor is only a few clicks away. Retailers simply can’t afford to cause any amount of friction if they are to grow their customer base and earn loyal advocates. 

CX is a growing focus of organizations looking to win over and retain their customers. Providing consistent and enhanced customer experience across multiple channels is now one of the key trends stimulating market growth and this will only become more important in years to come. In fact, it’s predicted that the customer experience market will be worth an astounding $32.49 billion by 2025.

Companies that do transform digitally and invest in CX are the ones creating highly engaged customers. And these customers are:

  • 6 times more likely to try a new product or service from their preferred brand
  • 4 times more likely to have referred the brand to their friends, family and connections
  • 2 times more likely to make a purchase with their preferred brand, even when a competitor has a better product or price

Furthermore, highly engaged customers:

  • Buy 90% more frequently,
  • Spend 60% more per purchase
  • Bring in 3x the annual value

Now, here are the six metrics you must track to ensure customer experiences are up to par: 

1. Conversion Rate

The conversion rate is the ratio between the number of people that visit your digital property and those that become customers.

Across all segments of ecommerce, the average conversion rate is less than 3%.

Why does it matter for customer experience? Because people commit to purchases when their experience has been flawless. Seeing a sudden drop in your conversion rate is a clear indicator that something has gone wrong in the customer journey.

2. Churn Rate

A business’s churn rate is the percentage of customers that choose to not make a repeat purchase. It’s most commonly associated with businesses that provide products or services on a subscription basis but can also be applied to any retailer that keeps track of who is currently an active customer (whatever your definition for that might be).

There are a wide variety of reasons for customers to no longer want to engage with a particular business, but in general, an increasing churn rate can point to issues with user experience.

In fact, research has found that the majority of customers choose to churn over bad service rather than dissatisfaction with a product. 66% state that they leave because of poor customer service, and 68% state that believing a business is indifferent to them is the key motivator for jumping ship.

3. Customer Lifetime Value (CLV)

Put simply, Customer Lifetime Value is the total revenue you will earn from a customer. Ecommerce businesses spend an enormous amount of money drawing in each new customer, so knowing the CLV can help you justify costs for investing in marketing and customer experience intelligence technology

A high CLV indicates a positive and consistent customer experience that engenders consumer loyalty, so it’s important metric for judging the quality of your digital experience.

Customers that choose to come back time and time again are often also the customers making recommendations to their personal networks, so it pays to keep your regulars happy.

Need to work out your average CLV?

This simple formula for ecommerce businesses can help:

(Annual Revenue Per Customer X Length of Customer Relationship in Years) – Customer Acquisition Cost.

Here’s an example of it at work:
($3000 spend X 10 year relationship) – $5000 acquisition = $25,000)

4. Return Customer Rate

Linking closely to CLV, the return customer rate refers to the ratio of customers that have made more than one purchase to the total number of customers.

There’s plenty of evidence demonstrating the value of return customers. They are the lifeblood of any ecommerce business as they are by far the most profitable.

study by Adobe found that repeat customers (8% of the total number of customers) are responsible for a whopping 40% of a store’s revenue. A study by Bain & Co also determined that repeat customers tend to make larger purchases each time they return. The fifth transaction is 40% larger than the first and the tenth was 80% larger.

“Repeat customers are responsible for 40% of an ecommerce store’s entire revenue”

A high return customer rate for an online store is indicative of a positive, friction-free digital experience on an attractive and secure website or app.

5. Digital Experience Score (DXS®)

The Digital Experience Score (DXS®) is a new, proprietary experience metric developed by Decibel. It uses machine learning algorithms to understand and categorize customer behavior online to determine the quality of a digital experience.

As the only metric that measures a customer’s actual experience of a digital property (rather than its effects or what the customer says about it), DXS® is quickly becoming an essential point of reference for professionals involved in delivering ecommerce CX.

DXS® is comprised of five types of digital experience – navigation, frustration, engagement, technical and form. Data is collected while the customer moves around a website or app and it’s then associated with the context of the content being viewed. From this, the platform determines the individual’s intention and state of mind.

The diagram below demonstrates this at work:

6. Net Promoter Score (NPS)

An ecommerce company’s Net Promoter Score is the percentage of customers that report being likely to recommend it to a friend or colleague. To get your NPS, simply ask your customers, on a 0-10 scale: “How likely is it that you would recommend [brand] to a friend or colleague?”

To get your score, take the percentage of detractors away from your percentage of promoters.

Whilst NPS doesn’t deal exclusively with digital experience, it’s very closely related. A high NPS can be a great indicator of whether customers associate positive feelings with your brand, but there are important limitations. As surveys are self-reported, they rely on the customer having an accurate and balanced view of their experience.

There is a tendency for people to only respond to surveys when they’re feeling an extreme emotion. Either they’ve had a great experience and want to share it, or they’re in a terrible mood after a bad one and want to lash out.

Survey responses are often lower in number than we would like, and when many customers are responding with polarized answers the results aren’t always a true reflection of customer satisfaction across the board.

NPS is still an important metric, and by combining it with objective qualitative data at scale (like the data processed by Decibel) you can use it to guide your customer experience improvement strategy.

Track and measure ecommerce experiences with the right metric

With these six metrics, you can get a clear picture of digital experience across your entire ecommerce website or app. The best teams will use each of these metrics in conjunction with one another, but only one directly measures the experiences across your ecommerce store: Decibel’s Digital Experience Score (DXS®).

Discover where experiences are failing to meet customer expectations, and get actionable insights for improving them: book a demo to finally score your ecommerce experiences!

Topics: Customer Experience, Digital Experience, DXS, Ecommerce, Online Retail
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