All of us are customers, and as such, we all have buying experiences (good and bad) that shape our opinion of the company from which we are buying. There have been numerous discussions on how the exchange between buyers and sellers has evolved from creating products to building customer relationships to creating compelling customer experiences. This idea reflects the notion that how customers experience the process of acquiring and using a solution and the exchanges along the way matter. Companies realize today that they are competing on the basis of customer experience. In fact, research suggests thatcustomer experience is a better predictor of loyalty and word of mouth than any other measure.

The Evolution of Measuring Customer Experience

Measuring and improving customer experience is difficult in part because there isn’t a widely agreed-upon definition of what constitutes a customer experience. This lack of definition also creates the potential issue of customer experience devolving into everything. But there has been some great progress on the definition and measurement front.

Before we discuss some ways to measure customer experience, let’s step back and review the thinking to date. With the focus on customer retention in the early 1990s, Frederic Reichheld and others began to research customer loyalty and the association between loyalty and profit. This research led many organizations to adopt the “zero-defect” service philosophy as a way to reduce customer defection. Customer satisfaction emerged as a key measure because the research suggested a strong relationship between satisfaction, recommendation, and business outcomes such as repeat purchase.

SERVQUAL and NPS: Great Measures But NOT for Measuring Customer Experience

Two key tools emerged to measure these concepts: SERVQUAL and the Net Promoter Score (NPS). Using five dimensions, (reliability, assurance, tangibility, empathy and responsiveness) SERVQUAL became a way for companies to benchmark their service quality. A key concept behind SERVQUAL is to assess the gap between expectation and service received. Current thinking suggests that experience is more about how customers assess the value received in relation to their expected outcome of the interaction. SERVQUAL serves as an effective tool for measuring the expectation gaps, but it isn’t necessarily the best tool for measuring and managing customer experience. Why is this? A service encounter may be judged as “good” or “meeting expectations,” but that doesn’t necessarily mean that the customer achieved their desired outcomes. The SERVQUAL tool doesn’t examine the experience before or after the service encounter.

The Net Promoter Score (NPS) came shortly after SERVQUAL.  Reichheld and others claim it is the sole metric a company needs to understand its effectiveness from the customers’ perspective. A tremendous amount has been written about NPS, and many companies trust and leverage this score to their advantage. It is not, however, a measure of experience or the quality of experience.

Four Dimensions for Measuring Customer Experience

Along comes an alternative.  In 2011, Dr. Philipp Klaus and others began to explore alternative ways to measure customer experience that would be based on the cognitive and emotional assessment of value from the customers’ perspective and that captures how well the organization performed on its ability to deliver value customers’ received. They looked at four primary dimensions associated with customer experience quality:

1. Product experience (perception of choices and comparative offers)
2. Outcome focus (ability to achieve their desired outcome)
3. Moments of truth (service expectations and encounters)
4. Peace of mind (confidence in the service provider and perceived expertise of the provider).

By using these 4 dimensions to evaluate customer experience quality, Dr. Phillip Klaus’ research revealed  4 conclusions:

1. Peace of mind has the strongest impact on customer satisfaction, loyalty, and word of mouth.
2. Moments of truth are the next most important attributes to positively impact loyalty and word of mouth.
3. Outcome focus (the customers’ ability to achieve their goals) affects loyalty and word of mouth, but only to a lesser extent than peace of mind.
4. After peace of mind, product experience has the strongest impact on customer satisfaction, but not as much impact as the other three dimensions on loyalty or word of mouth.

This research offers additional insight into how to measure customer experience. It suggests that the peace of mind dimension needs to be incorporated into how you create and calculate your customer experience metric. If you plan to create a measure of customer experience, consider how your organization is set up to deliver on these attributes and how you would measure each of these dimensions.  Contact us to discuss how you can create a customer experience metric. 

FAQ:

(written by Penn of Sintra.ai)

Q1: Why has customer experience become a primary basis of competition?
A: Because how customers experience acquiring and using a solution—and the exchanges along the way—shapes their opinion of the company. Research suggests customer experience is a better predictor of loyalty and word of mouth than any other measure.

Q2: Why is measuring customer experience so difficult?
A: There is no widely agreed-upon definition of “customer experience.” Without definition, customer experience can devolve into “everything,” making measurement and improvement unfocused.

Q3: How did customer experience measurement evolve from the early 1990s?
A: With the rise of customer retention focus, research (e.g., Reichheld) linked loyalty to profit. Organizations adopted “zero-defect” service philosophies to reduce defection, and customer satisfaction became a key measure tied to recommendation and repeat purchase.

Q4: What is SERVQUAL—and why isn’t it sufficient for measuring customer experience?
A: SERVQUAL benchmarks service quality across five dimensions (reliability, assurance, tangibility, empathy, responsiveness) by measuring gaps between expectations and service received. It does not capture the full experience before or after the service encounter, nor whether customers achieved desired outcomes.

Q5: Why isn’t Net Promoter Score (NPS) a true measure of customer experience?
A: NPS is widely used to gauge advocacy and recommendation, but it is not a direct measure of experience or experience quality across the customer journey.

Q6: What alternative framework emerged for measuring customer experience quality?
A: Research led by Dr. Philipp Klaus (2011) proposed measuring customer experience as a cognitive and emotional assessment of value—capturing how well an organization delivers value from the customer’s perspective.

Q7: What are the four dimensions of customer experience quality in this framework?
A: (1) Product experience (perception of choices and comparative offers), (2) outcome focus (ability to achieve desired outcomes), (3) moments of truth (service expectations and encounters), and (4) peace of mind (confidence in provider expertise and service).

Q8: What did the research conclude about which dimensions matter most?
A: Peace of mind has the strongest impact on satisfaction, loyalty, and word of mouth. Moments of truth are next. Outcome focus affects loyalty and word of mouth but less than peace of mind. Product experience strongly impacts satisfaction after peace of mind, but has less impact on loyalty and word of mouth than the other dimensions.

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