General CX

CX Metrics Part 3: Process metrics and efficiency

Learn how business process metrics tie into the customer experience. This article, the third in our CX metrics series, gives examples of key process metrics and explains what they can tell you about the efficiency of your business.

What are process metrics, and what can they tell you about efficiency? And how does this all impact your customer experience? Now that we’ve discussed sales metrics and their effect on CX, we’ll focus on business process metrics and answer these questions.

First up, what is a process metric? As you might guess, it’s a metric that measures a business process (or one part of a process). For example, suppose you want to understand the efficiency of your shipping department. You might look at shipping transit times, order fulfillment times, number of delays, and number of repeat vs. first-time shipments.

As to why you should care about process metrics – well, that’s pretty self-explanatory. These metrics (also called key performance indicators, or KPIs) allow you to track and measure the various parts of your organization. You can see which areas need improvement and which are running smoothly. This will help you direct your time (and money) most effectively. So, let’s examine some of the key process metrics and their tie to customer experience.

Examples of process metrics

Before we consider our selected process metrics, let’s touch on the wide variety of KPIs available to the business world.

If you can think of a business process, there’s probably a way to benchmark and measure it. And while some metrics can be used by just about any organization that wants to monitor their efficiency, others are limited to one industry or one vertical. 

For those reasons, we won’t be making an extensive list of possible business metrics. Instead, we’ll focus on the ones that have been most useful to our clients.

1. Order fulfillment time measures the time that elapses between the customer placing an order and receiving that order. This encompasses everything from picking the order until the order is delivered to the customer, including shipping and transit times.
2. Order cycle time measures the time that elapses between the customer placing an order and the shipping of that order. This can be useful in determining the efficiency of your internal order fulfillment process.
3. Delivery time tracks how long it takes for the order to be delivered to the customer.
4. Timeliness (aka on-time shipping) tracks how many orders are delivered on time in a given period.
5. Number of delays indicates how many delays occur in a process. This can be averaged to help you understand the overall efficiency of that process. 
6. Return rate indicates the number of returned orders compared to all orders placed. Product return rate measures the return rate for a specific product. This can be measured for various channels, including in-store, online, and warehouse orders.
7. Cost of Goods Sold (COGS) tracks how much money is spent on making (or buying) the goods sold by the company. This includes both direct costs (materials, manufacturing costs, shipping/transportation costs) and indirect costs (warehousing, distribution, etc.). As a rule, COGS is used to monitor the expenses of making an item for sale.
8. Cost of Sales (COS, also known as cost of revenue (COR)) indicates how much it costs the company to make a sale. This includes not only the cost of the item(s) being sold but also that part of the business’ overhead that’s attributed to creating that item. COS includes all the costs associated with this product/service, both direct and indirect.

Process metrics and the customer experience

Business process metrics have a direct correlation to understanding the customer experience; they highlight convoluted and inefficient areas that can drag your CX down. Who hasn’t chafed at slow order fulfillment times, incorrect orders, or defective products? 

Analyzing the examples of process metrics included in this article will help you streamline the inner workings of your organization, which makes it easier to delight your customers. And, of course, these metrics are also essential to gauging the financial performance and overall health of your company.

Next week, we’ll talk about another important set of metrics and their effect on the customer experience. Join us as we delve into the fascinating world of usability metrics!