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In modern business, focusing on customer experience (CX) is no longer a nice-to-have, but rather a necessity for businesses of all sizes. However, defining a successful customer experience can be difficult because many touch points form the customer journey. By using online surveys, companies can gain quantitative information about the customer experience to actively monitor trends that develop over time. Based on customer feedback, organizations can identify areas for improvement, adjust their strategies accordingly, set better goals for their key performance indicators (KPIs), and strive to deliver the seamless experiences that today’s consumers expect.
Customer experience KPIs
Research shows that CX is now competing with traditional factors such as price and quality in influencing customer loyalty and advocacy. According to Forbes, 77% of consumers consider CX just as important as the main product or service itself. PWC reported that even beloved brands risk losing 32% of their customers after one negative interaction. In addition, poor CX burdens the company with costs. To address this, this article outlines five critical CX KPIs that can be systematically monitored, evaluated, and optimized to help address customer service problems and strengthen a company’s connections with its customer base.
1. % Customer satisfaction score (CSAT)
This KPI measures how customers rate particular interactions with a company, such as getting a response from customer care or processing a return. Users can score their satisfaction with the experience on a scale from “very dissatisfied” to “very satisfied” by responding to an automated questionnaire sent to them. Monitoring the ratings depends on a company’s objectives, but the general rule is that anything above 85% is excellent, and anything below 60% requires rapid attention.
Calculation: CSAT = (Number of Positive Responses / Total Number of Responses) x 100
2. # Net promoter score (NPS)
The NPS, considered the most famous CX KPI, reflects the willingness of consumers to recommend a product to friends and acquaintances. To calculate NPS, a company can conduct a survey of customers from one query: “What is the probability that you will recommend the product to your friends?” The answer is given on a 10-point scale, where 0 is “I will not recommend it in any case” and 10 is “I will definitely recommend.” The respondents can be divided into three groups depending on the scores obtained: promoters, passives, and detractors. The majority of companies consider a score above 80 as excellent, a score between 50 and 80 as very good, and a score below 50 as good.
An extension of the NPS index, the creation of the WoMI was motivated by criticism towards the traditional NPS. Researchers believed that the NPS made the incorrect assumption that if a customer does not recommend a product or service, then they are automatically considered detractors. This led researchers to make adjustments to the KPI in order to better reflect reality. It tracks the recommendation, but from the opposite perspective: “What is the probability that you will discourage people from doing business with the company?” This can be rated on a scale of 0 to 10. Those who choose 9-10 on the scale of “dissuading” are categorized as “true detractors.” The threshold varies from one industry to another. It is better to have a lower score, as the target for most companies is less than 10%. To gain a comprehensive understanding of your company’s position among customers, we suggest employing both approaches to obtain a complete picture.
WoMI = (Number of Promoters – Number of Detractors) / Number of Respondents * 100.
4. Consumer Effort Score (CES)
The CES index, which was developed in 2010, is related to the idea that the more effort the product or service requires from customers, the less likely they are to stay with the company. As cited in an article, research by the Corporate Executive Board (CEB) shows that 94% of customers who have an effortless experience are likely to make repeat purchases. The KPI could be measured by the customer’s response to a statement like: “Thanks to the service/product of company X. I was able to easily cope with my problem.” with a rating scale of 1 to 7. Most companies typically receive CES scores ranging from 5 to 5.5. A score exceeding 6 is generally considered above average.
CES = (Sum of response scores) ÷ (Number of responses)
5. Customer churn rate
Simply put, the churn rate is the number of users who stop any interaction with the company. Depending on the industry, this could mean that customers deleted their account, did not re-buy, or simply decided to switch to a competitor. In its simplest form, customer churn can be calculated by comparing the number of customers lost to the total number of customers. By dividing one metric by another, one can get the customer churn rate as a percentage of the total base. The most common acceptable churn rate is 5-7% annually.
KPIs must be monitored and measured in order to improve CX. To do so effectively, a system that accurately collects data from all channels should be considered. This allows requests to be categorized and common issues to be identified. In-depth interviews with both loyal and dissatisfied customers should be conducted to understand the root cause of any problems, as some of which could be related to support services. Consistency in tracking and improving CX KPIs is the key to ensuring decisions and actions in customer service adapt to changing customer sentiment and meeting their needs.
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The lifecycle of a Key Performance Indicator (KPI) is a dynamic process involving definition, recalibration, and—sometimes—abandonment. From establishment to practical application and ongoing evolution, KPIs undergo several steps to effectively measure performance, and prioritizing data reliability at every stage is crucial to achieving their intended purpose.
The foundation of reliable data
The first stage of the cycle, KPI selection, may seem simple, but it is a complex process intertwined with various interdependencies and calibrations with the organization’s objectives.
Establishing data reliability should start from this initial step, and involving employees as primary sources for KPI selection is an effective approach. Their valuable knowledge about the data generated from their activities enhances the reliability of the selected KPIs. Additionally, considering data availability and reliability as criteria for the selection further enhances overall data trustworthiness.
KPI documentation plays a pivotal role in ensuring reliability. Adopting a standardized documentation form establishes a solid foundation for rigorous and dependable data collection and reporting. This approach provides clear guidelines for defining KPIs, including unambiguous calculation formulas, ensuring that the collected data accurately reflects the intended purpose of each KPI.
Establishing dependable data collection
During the activation of KPIs, data reliability depends on the meticulous consideration of data sources, robust data-gathering methods, and the establishment of a strong governance structure. It is imperative to utilize trusted and verified data sources that are up-to-date, accurate, and aligned with the KPIs being measured. Accountability for KPI data should be established by clearly designating KPI owners and data custodians. Furthermore, adopting a standardized data collection process that incorporates technology-driven solutions significantly enhances accuracy.
Communicating meaningful insights
The analysis and reporting of KPIs are significant in ensuring the correct organization and communication of data to key stakeholders. Errors in data analysis have the potential to result in misleading insights, which can have negative effects on decision-making. Therefore, correctly identifying relevant KPI content and conveying meaningful insights derived from KPI data to various stakeholder groups within the organization is essential.
Continuous improvement
Finally, data reliability can be enhanced through the process of refreshing KPI documentation. This ongoing effort involves recalibrating KPIs after their initial establishment and customizing them for optimal use.
Attention is given to both the content of the KPIs and the standardization of their format. Standardizing KPI content establishes uniform guidelines and criteria for measurement and reporting, ensuring data reliability and consistency. This step refines the measurement and reporting processes, facilitating accurate and dependable data for decision-making purposes.
Monitoring KPI data reliability: The role of the Data Custodian
The Data Custodian is critical in upholding the reliability of data. They actively participate in the design of performance data collection, receipt and storage, processing, analysis, reporting, dissemination, and even archival or deletion of data. They implement measures to validate and verify the accuracy, consistency, and completeness of the data. This involves conducting regular data audits, resolving discrepancies or anomalies, and implementing data cleansing processes to ensure data integrity.
To evaluate the reliability of KPI data, the Data Custodian can monitor % KPIs with reliable data. This metric measures the number of reported KPIs that contain reliable and trustworthy content out of the total number of KPIs reported, according to smartKPIs.com.
In conclusion, to succeed in a data-driven world, organizations must prioritize data reliability along the KPI lifecycle. By implementing the strategies and practices discussed above, organizations can unlock the true potential of their performance measurement systems and empower stakeholders with reliable insights for better decision-making.
Globally, up to 2.78 million workers die annually from occupational accidents and work-related diseases, while another 347 million suffer from non-fatal occupational accidents, according to the United Nations Global Compact.
Dealing with work-related accidents severely impacts corporate management performance by generating direct and indirect costs and repercussions. Some of these are medical costs, losses due to production downtime, loss of productivity, and low employee morale. A company can also be sanctioned by authorities or suffer from reputation damage, which in turn may result in sales reduction.
Thus, occupational safety and health (OSH) is a priority for businesses. OSH is the practice of protecting the safety and health of employees by identifying workplace hazards and implementing initiatives meant to prevent their occurrence. OSH standards and regulations exist at the international and the national levels, and companies are responsible for adopting them.
To support OSH, the International Labour Organization and the United Nations Global Compact identified business practices to improve workplace safety and health, and one of which encourages companies to “enhance the reporting, recording, and notification of occupational injuries and diseases to improve data collection.” Through the improved recording of workplace mortality and morbidity, companies and authorities can evaluate the performance of internal OSH systems, prioritize OSH initiatives, and enhance corrective actions and prevention efforts.
The performance of such initiatives can be tracked with the help of health and safety key performance indicators (KPIs), such as # Lost Time Injury (LTI), # Lost Time Injury Frequency Rate (LTIFR), % Health and safety (H&S) incident type breakdown, % Health, security, and safety training completed, % Compliance OSH regulations, and % Lost day rate.
The healthcare manufacturing industry is a high-risk industry when it comes to occupational safety and health due to the nature of the products and the operating environment. The OSH problems faced by workers in this industry include exposure to chemical and biological substances, exposure to physical hazards, ergonomic affections, and hazardous processes using heavy machinery.
Medtronic and Johnson & Johnson are renowned corporations in the industry and have established a strong presence in the market. Both companies stated their strong commitment to ensuring the well-being of their employees and have implemented comprehensive OSH systems.
Medtronic, a global leader in medical technology, services, and solutions, strongly focuses on health and safety, implementing enterprise-wide standards to reduce hazards and risks and prevent workplace accidents. Their Environmental, Health, and Safety Performance System monitors the recordable incident rate, employee training, and auditing while providing employees with tools to reduce risks and employ safe behaviors.
As revealed by the KPIs’ results for the last four years, Medtronic’s EHS system achieved notable progress in enhancing workplace safety. Three of the indicators have shown a decreasing trend compared to previous years. Only the % Employee injury incident rate has slightly raised due to an increase in slips, trips, and falls, as stated in the company’s ESG Report.
To address the issue, the company launched a comprehensive awareness campaign across all its sites and took measures to improve outdoor walking surfaces and lighting where deficiencies were detected.
As part of the ongoing initiatives that supported continuous improvement, Medtronic implemented a companywide hazard reporting tool, which allows employees to report potential risks and near-miss incidents. This enables the company to take timely mitigating measures and reduce the likelihood of incidents. Johnson & Johnson, a popular healthcare company that produces a wide range of medical devices, pharmaceuticals, and consumer packaged goods, has implemented thorough safety programs, risk assessments, and training for its employees.
Johnson & Johnson’s OSH system incorporates a global data management system with digital tools, predictive analytics, and visualization tools to track the OSH KPIs, gain deeper insights into their performance, and identify potential risks early.
Using leading indicators facilitates a proactive avoidance of workplace injuries. Examples of leading KPIs the company uses include # Corrective and Preventive Actions (CAPA) resulting from program evaluations, internal audits, and # Near misses.
The company’s recent focus was to prioritize resources and risk mitigation efforts to prevent those incidents that could lead to life-threatening or life-altering outcomes. By following the hierarchy of controls, with an emphasis on eliminating, substituting, or engineering controls rather than relying on administrative controls, the company was able to reduce indicators of fatalities and serious injuries.
Despite this, the other two KPIs showed a slight increase in 2021, contrary to the downward trend seen in previous years.
KPIs Drive Occupational Safety and Health Performance
There is no one correct formula for employee safety. Starting from the authorities’ standards and recommendations, companies should develop OSH systems tailored to their needs. Business practices focused on employees’ participation in risk identification, periodic audits, OSH training, safe behavior stimulation, and awareness activities could help create a preventive and safety culture.
As shown by the examples of Medtronic and Johnson & Johnson, top-tier companies operating in a high-risk sector, regardless of the chosen initiatives, effective systems enhance the recording and reporting of OSH KPIs.
Monitoring the leading indicators to proactively identify potential risks and implement mitigation measures and lagging indicators to understand the current deficiencies and apply corrective actions can determine the success of an OSH system in creating a safer, healthier, and more efficient workplace.
People have been working from home even before the pandemic, but their number significantly increased when the health crisis led to lockdowns and travel restrictions. Companies were forced to send their employees home to work remotely to comply with social distancing measures and keep the workforce healthy. Statista shows that before the pandemic, only 17% of US employees worked remotely for five days or more weekly. However, the number grew to 44% during the outbreak in 2020.
When the pandemic subsided and governments eased travel restrictions, some companies asked their workforce to return to the office while others offered the hybrid set-up. However, most employees still prefer remote work.
A poll conducted by Pew Research Center with 5,889 workers in America in January 2022 found that 61% of those who work from home said they avoid going to work by choice and 38% claim their office is closed. It represents a shift from October 2020, when 64% of people worked from home because their office was closed and 36% did so voluntarily.
In spite of that, 50% of leaders in information worker roles want to pursue getting employees back to the office full-time next year, based on Microsoft’s Work Trend Index 2022 report. Still, 52% of respondents say they highly consider becoming remote or hybrid in the year ahead and 80% claim that since remote or hybrid work arrangements were implemented, their productivity has increased.
According to the popular job site Flexjobs, one of the benefits of working from home is it increases “productivity and performance” as employees encounter fewer interruptions, have a quieter work environment, and have increased workplace comfort, resulting in more focused time.
In a research conducted in Latin America, they explored the relationship between remote work, work stress, and work-life during pandemic times. Researchers found out that by having flexible work schedules, the employees’ engagement and productivity levels increased because they could work at their most productive time. Privacy also plays a big role in employees’ efficiency. However, the productivity level is negatively affected when the worker is constantly interrupted by children or adults that need assistance.
A case study published in the Journal of Occupational and Environmental Medicine investigated the impact of family-work conflict, social isolation, distracting environment, job autonomy, and self-leadership on employees’ productiveness, work engagement, and stress experienced when working from home during the pandemic. The authors discovered that excellent self-leadership skills and autonomy positively impact the time assessment in a WFH scenario.
Results from a qualitative study by Danielle Tinneveld of Radboud University also show that productivity tracking facilitates the identification of process bottlenecks. The affected staff gets less anxious and annoyed when these difficulties are resolved, and overall production efficiency improves.
How Employees Can Track Their Productivity at Home
On a remote workday, people have to manage work and non-work-related tasks. To be productive, they have to master the art of time planning. Effective time management involves planning each activity in a time frame, considering priorities such as urgent work tasks and eating breaks. Individuals should fit their activities into 16 hours to get 8 hours of sleep each day to achieve great productivity. By monitoring the duration of their tasks, they can observe which actions can be improved.
To see if their time management strategy is effective, remote workers can use key performance indicators (KPIs). Some KPIs they can consider are:
By monitoring the percentage of tasks performed as planned, individuals can see if they reached their target or not. By knowing the percentage of time spent working, people have insights into the free time left for non-work-related tasks, such as going on a walk, relaxing, cooking, eating, and other housework activities (washing clothes and dishes, drying clothes, cleaning floors).
It’s a different story for employees whose companies have return-to-office schemes. Their organizations should rethink their performance management system to consider the new ways of working that employees gained during the pandemic. Evaluating the relevance of KPIs has become important now more than ever. To better understand KPIs, its nature, characteristics, and implementation, enroll now to The KPI Institute’s Certified KPI Professional and Practitioner course.
When implementing a Performance Management System (PMS) based on Key Performance Indicators (KPIs), the organization needs to create a favorable context to plan, organize, coordinate, communicate, and control performance. Such endeavor implies multiple initiatives, resources, and most of all, employee engagement. However, challenges are inevitable. These challenges often arise from the mechanisms and relations by which the KPI Measurement Framework and KPI-related processes are controlled and directed.
As such, unclear definitions and overlap of roles and responsibilities and lack of ownership, commitment, or clarity in terms of target achievement accountability are some of the most common challenges that may endanger the achievement of strategic business objectives and goals. The root cause of these dysfunctions is that KPI governance structure has never been clearly defined or described.
KPI governance structure
There are multiple parties involved in governing and managing KPI-related processes, and all play a specific role in promoting, supporting, designing, implementing, and maintaining the KPI measurement framework. A typical KPI governance structure includes the following components:
Performance Manager – Responsible for supervising the entire process
PMO specialists – Support the persons involved in the process, analyze data and check it for accuracy
KPI owner – Responsible for KPI target achievement
Data custodian – Responsible for KPI results collection/ data collection
KPI owners and data custodians have two of the most operational KPI governance roles within the organization. While the data custodians are responsible for ensuring that high-quality KPI data is gathered and communicated to all interested stakeholders, the KPI owners are mainly responsible for the KPIs under their management, making sure that they are viable and measurable.
KPI owners’ role and responsibilities
Within a standard Data Governance Framework, a data owner is in charge of ensuring that processes are followed to guarantee the collection, security, and quality of data. Frequently in a senior or high-level leadership position, a data owner has a role in planning the data, supervising access to it, ensuring data security, and defining a repository to contextualize the data.
Similarly, a KPI owner is responsible for overseeing the process, function, or initiative that the KPI is monitoring. That person has access to the data, knowledge of how that domain functions, and, most of all, is empowered to make decisions on improving operations.
In a nutshell, the KPI owner is responsible for reaching KPI targets through the following actions:
Monitoring (looking at) the measure over time
Interpreting its trends and patterns and seeking causes for them
Communicating this information to people affected by that performance area
Initiating action to improve performance in that area
Following up to be sure that actions have the desired effect on performance
Data custodians’ role and responsibilities
Within a KPI governance framework, data custodians are involved in the design of performance data collection, receipt and storage, process, analysis, reporting, publication, dissemination, and archival or deletion of data. The daily processing and management of performance data are therefore under the control of appointed data custodians. The person assigned with such a role must demonstrate high levels of data literacy as well as skills in data management software systems and tools.
Other required competencies for a data custodian are as follows:
The ability to intuitively identify and recognize any variance from the data quality dimensions
Focused on the improvement and automation of the process
Can competently apply the behaviors and skills of managing change
Uses change as an opportunity to advance business objectives
Works to minimize complexities, contradictions, and paradoxes or reduce their impact
Unifies leadership support for direction and smoothens the process of change
We may say that the data custodians are the guarantors of a sound performance data gathering process. Because of that, the profile of such an individual should also cover an analytical mind, experience in measuring and reporting metrics/ KPIs, information technology skills (basic Microsoft Excel or more advanced data analysis tools, depending on the data architecture`s level of automation), and a strong sense of integrity and ethics.
While some companies may hire specialized professionals, such as data analysts, other organizations may assign the data custodian roles to the existing employees.
Conclusion
Building a strong KPI governance team is a key part of the KPI-related processes and functionalities and of successfully overcoming the inherent challenges of implementing a PMS. Once the right people are on board, they need to be guided towards making the right decisions and focusing on the correct issues, ultimately making sure that information is being governed for a purpose that aligns with business objectives.
