The Key Customer Metrics You Should be Monitoring

Every business needs constant evaluation to stay on top of their game. As a businessperson, you must pay attention to certain metrics and ensure they’re always at a desired level. Otherwise, you might easily fall behind the competition and lose sales.

This article will walk you through some key customer metrics you should continually monitor. They include:

1. Customer Lifetime Value (CLV)

CLV is the average revenue you expect from a customer over their life span with your business. It indicates the average amount a customer is expected to spend on your business over their lifetime.

You can calculate your CLV by multiplying your average purchase value, purchase frequency, and customer life span. Imagine you run an online clothing store. Customers spend an average of $30 each time they shop, visit the online store an average of two times each month, and typically take 1 year before they stop ordering products.

Your CLV in the above case is $30 x 2 (times each month) x 12 months, making $720. A high CLV indicates good product-market fit and high brand value. The CLV determines how much you will spend on marketing to get a new customer.

2. Monthly Recurring Revenue (MRR)

MRR is the predictable monthly revenue your business generates. It indicates how much customers spend each month on your products. You calculate MRR by multiplying your number of monthly active customers and your average revenue per customer.

For example, if your fitness content app has 500 monthly active customers and the average subscription revenue per customer is $5, your MRR is $5×500, making $2,500. MRR helps you predict your company’s revenue and create more accurate budgets. It helps business owners forecast the future and understand their company’s progress.

Annual Recurring Revenue (ARR) is another critical metric. You can get this metric by simply multiplying your MRR by 12.

3. Net Promoter Score (NPS)

NPS evaluates customer loyalty and satisfaction. It shows how likely people are willing to recommend your product to their social circles. Evaluating NPS involves asking customers directly via an online form. This form asks them how likely they are to recommend your product on a scale of 1 to 10.

Your NPS is the percentage of promoters minus the percentage of detractors obtained from the survey form. A high NPS indicates high customer satisfaction, and a low NPS indicates low satisfaction, requiring business adjustments to improve.

4. Customer Satisfaction Score

The customer satisfaction score is similar to NPS, as you also get it via a customer survey. The difference is that instead of asking customers their likelihood of recommending your brand, you simply ask them to rate their experience on a scale of Very Dissatisfied to Very Satisfied.

You usually give customers the satisfaction survey immediately after interacting with your support team. Customers are more likely to give their honest opinion at this time.

Your customer satisfaction score is measured by the (Number of positive scores/Number of total scores) X 100. A high score means you’re doing well, and a low score signals needing adjustments to keep customers happier.

5. Average Ticket Time

Customer service is a vital consideration for every business. The average ticket time measures the average active time your support team takes to resolve a complaint. For example, you have 5 full-time staff working 40 hours each (200 hours in total), and they resolve 50 tickets weekly; your average ticket time is 200/50 = 4 hours.

The higher your average ticket time, the better your customer service. Good customer service leads to more sales in the long term.

Final Words

We have described some of the critical customer metrics every business should monitor. Monitoring these metrics and constantly making adjustments to score higher helps build a resilient business in the long term.

At 6Sigma, we offer Six Sigma courses that teach businesspeople and employees to constantly evaluate essential metrics and make the required adjustments to drive their organizations forward. Contact us today to see how we can help.