Customer centricity is not just about offering excellent customer service – it also means delivering a great experience through awareness of the purchasing and post-purchase process. It's a strategy that's based on always putting your customer first, so monitoring customer metrics is vital.
Not every company will have the same customer metrics to measure customer-centricity. However, the three most crucial customer-centric metrics that should be carefully monitored are attrition, satisfaction, and customer lifetime value.
1. Attrition - Acquiring new customers is becoming more and more difficult, which is why it is crucial to protect your company’s core. Businesses with a high retention rate grow faster. With that said, more organizations are investing in keeping existing customers instead of trying to find new ones. The key to success is to understand why people leave and why people remain loyal customers.
To calculate the attrition or churn rate, simply measure the number of customers who left divided by the number of total customers during the same period.
2. Satisfaction - Are your customers happy? It is important to measure "happiness" beyond the basis of satisfaction metrics. The Net Promoter Score (NPS) is an industry-standard to take a pulse on customer happiness beyond satisfaction. It focuses on uncovering customer loyalty by asking them one simple question: their likelihood to recommend your offering to a friend or colleague, based on a ten-digit scale.
The answers to the NPS likelihood question is then segmented based on predefined criteria: Promoters (9-10), Passive Customers (7-8), and Detractors (0-6). The more Promoters your company has, the healthier your business is considered. The NPS is simple to implement and is an industry-standard that is readily used by board members and prospective investors.
3. Customer Lifetime Value - If you're investing in long-term relationships, you can calculate the "health" of the relationship through the customer lifetime value (CLV). This indicator measures the amount of revenue a customer contributes for the duration they have been a customer. It should start with their first purchase and end when they stop doing business with you.
Calculating the CLV helps companies understand why it makes sense to invest in retaining their customers. To calculate the CLV, simply add up the total revenue you have earned and multiply that with the length of the business relationship; then, deduct the initial marketing cost per acquisition.
By being customer-centric, you must anticipate customers' needs so you can delight them with solutions they may not have thought of, but will immediately fall in love with. Thus, a customer-centric company monitors loyalty and satisfaction to deliver the best possible experience to their customers, while at the same time, working towards established growth goals.
The shift towards becoming a truly customer-centric organization is both complicated and lengthy, but it can have a significant benefit for both employees and their customers. Being a customer-centric organization is the path towards unlocking the true potential of customer value and your business growth.
DuartePino is a management advisory firm that combines in-depth customer knowledge with practical expertise in marketing to help clients create sustainable business growth. We can provide your organization with a fresh perspective, a proven process that invests in the outcome, and the tools for successful execution. From Fractional CMOs to business advisory services, contact us to learn how our team can help with growth strategies for your organization.