10 Essential Customer KPIs to Measure Business Growth

Customers are the heart of any successful business, and tracking how they interact with your brand is key to sustainable growth. Customer KPIs (Key Performance Indicators) help you measure satisfaction, retention, acquisition, and overall customer value. Below, we break down the top customer KPIs, explain what they measure, provide the formula in plain text, and describe why each one matters.

1. Customer Satisfaction Score (CSAT)

What it is: CSAT measures how satisfied customers are with your product, service, or a specific interaction—usually collected through surveys immediately following customer service interactions or purchases.

Formula: CSAT = (Number of Satisfied Customers ÷ Total Survey Responses) x 100

Why it matters: This KPI gives you a quick snapshot of how well your business is meeting customer expectations. It’s ideal for short-term feedback and tactical decision-making, especially in support and service environments

2. Net Promoter Score (NPS)

What it is: NPS evaluates customer loyalty by asking one key question: “How likely are you to recommend our company/product to a friend or colleague?” Respondents are grouped as Promoters (9–10), Passives (7–8), or Detractors (0–6).

Formula: NPS = % of Promoters - % of Detractors

Why it matters: NPS is widely recognized as a leading indicator of customer advocacy and long-term business growth. It also provides qualitative feedback through open-ended follow-up questions.

3. Customer Retention Rate

What it is: This KPI measures how well your company retains customers over a given period. It's especially crucial for subscription-based or service-oriented businesses.

Formula: Customer Retention Rate = ((Customers at End of Period - New Customers Acquired) ÷ Customers at Start of Period) x 100

Why it matters: Retention is often more cost-effective than acquisition. A high retention rate means your customers are happy, loyal, and more likely to generate repeat business.

4. Customer Churn Rate

What it is: Churn rate is the opposite of retention. It tracks the percentage of customers who leave or cancel within a certain time frame.

Formula: Churn Rate = (Customers Lost During Period ÷ Total Customers at Start of Period) x 100

Why it matters: High churn can point to poor service, product-market misfit, or lack of customer engagement. Reducing churn can significantly improve profitability over time.

5. Customer Acquisition Cost (CAC)

What it is: CAC measures the total cost of acquiring a new customer—including marketing, advertising, sales salaries, tools, and related expenses.

Formula: CAC = Total Sales and Marketing Costs ÷ Number of New Customers Acquired

Why it matters: Knowing your CAC helps you understand how efficiently your business is growing. It should always be considered alongside Customer Lifetime Value (CLV) for sustainable growth.

6. Customer Lifetime Value (CLV or LTV)

What it is: CLV estimates the total revenue you can expect from a customer over the duration of their relationship with your company.

Formula: CLV = Average Purchase Value x Purchase Frequency x Average

Customer Lifespan

Why it matters: CLV helps determine how much you can afford to spend on acquiring customers while staying profitable. It also helps you identify your most valuable customer segments.

7. First Contact Resolution (FCR)

What it is: FCR tracks the percentage of customer service issues resolved during the first interaction, without the need for a follow-up.

Formula: FCR = (Cases Resolved on First Contact ÷ Total Number of Cases) x 100

Why it matters: A high FCR means efficient support and happier customers. It also lowers operating costs by reducing the volume of repeated inquiries.

8. Average Resolution Time

What it is: This KPI measures the average amount of time it takes to resolve a customer support issue, from the moment it's reported to final resolution..

Formula: Average Resolution Time = Total Resolution Time for All Issues ÷ Number of Resolved Issues

Why it matters: Shorter resolution times generally improve customer satisfaction. This metric helps managers identify bottlenecks in the support process.

9. Customer Effort Score (CES)

What it is: CES measures how easy it is for customers to interact with your company—whether it’s making a purchase, resolving an issue, or getting support.

Formula (survey-based): CES = Sum of Effort Ratings ÷ Total Survey Responses

Why it matters: Lower customer effort typically results in higher satisfaction and loyalty. It’s a practical KPI for improving UX, customer service, and onboarding flows.

10. Repeat Purchase Rate

What it is: This KPI measures the percentage of customers who return to make another purchase after their first.

Formula: Repeat Purchase Rate = Number of Returning Customers ÷ Total Number of Customers x 100

Why it matters: Repeat purchases indicate satisfaction and brand trust. This KPI is especially important for e-commerce and retail businesses looking to increase customer lifetime value.

Final Thoughts

Customer KPIs give you valuable insights into how your business is perceived, how effectively you serve your clients, and where you can improve. When monitored consistently, these metrics help build strong customer relationships and long-term profitability.