Customer Satisfaction: How To Measure and Tips for Improvement

Updated 15 September 2023

Successful businesses make customer satisfaction a priority. They ensure their customers are happy with their products and services. In return, customers reward reliable organisations with their loyalty. The way your customers feel can transform the trajectory of your business and, therefore, its reputation.

In this article, we explore what customer satisfaction is, how to measure it effectively and tips on how to improve customer satisfaction.

What is customer satisfaction?

Customer satisfaction is a measurement that determines how happy (or unhappy) customers are with the products, services and practices of a company. It is an important piece of information to quantify, as it directly impacts whether customers will continue associating with a company financially and emotionally.

Companies seek to gather data on customer satisfaction to improve their customer's engagement with their business. It provides major insight into a company's direction, such as how customers will relate and interact with your brand in the future.

Related: What Is Customer Engagement? (Importance And Strategies)

Who are customers?

Customers include anyone a company provides products, services or experiences. These include direct consumers, suppliers such as manufacturers and clients with a vested interest in the profitability and longevity of an organisation. For example, a car dealership's customers include the consumers who buy their cars, manufacturers that they may sell old parts to and clients, such as investors, who receive dividends on the profits of the company.

Related: The Difference Between Consumer Vs. Customer (With FAQs)

Tools to measure customer satisfaction

It is important to understand customer satisfaction through measurable data such as surveys, sales figures and social media engagement reports. Using these tools, organisations can tailor their products and services to customer needs. Here are some effective tools to help you gather information and feedback about customer satisfaction:

Customer Satisfaction Score (CSAT)

CSAT measures customer satisfaction with a product or service. Businesses usually gather this data through a questionnaire or survey. Respondents rate their answers to each question using either a numerical scale or a nominal range. The final CSAT score is an average based on the results of the survey. Here's an example:

How would you rate your overall satisfaction with the service you received? (Please choose one)

  1. Very satisfied

  2. Satisfied

  3. Neutral

  4. Unsatisfied

  5. Very Unsatisfied

Net Promoter Score (NPS)

NPS measures customer loyalty in order to predict business growth. Businesses ask customers to rate their satisfaction on a scale of 1-10. They then group respondents into three categories based on their answers:

  • Promotes (score 9-10) are loyal customers who fuel growth through word-of-mouth.

  • Passives (score 7-8) are satisfied customers but vulnerable to offers from your competitors.

  • Detractors (score 0-6) are unhappy customers who may impede your growth through negative word-of-mouth.

Here's an example:

On a scale of 1-10, how likely is it you would recommend our products to a friend or colleague?

Customer Effort Score (CES)

CES measures how much effort a customer has to make in order to purchase a product or get a request fulfilled. The idea is that customers are more loyal to a product or service that is easier to use. Here's an example:

On a scale of 1 to 5, rate how easy our company made it for you to solve your issue.

Related: How To Improve Customer Focus Using 8 Key Strategies

How to handle customer grievances

Here are eight steps that you can follow to handle customer grievances:

1. Customer reports an issue

To make it easy for customers to share their grievances, you need to create a platform for customers to share their thoughts and report any issues. Some companies have customer service emails, automated messengers on their website or customer service representatives for people to interact with.

Having this level of transparency is beneficial to your business. It ensures that you pick up on problems before they disrupt other parts of the business. Over the long-term, it allows you to build trust and a solid rapport with your customers.

Related: What Is Customer Service? Definition and Career Advice

2. Investigate the issue

When a customer submits a complaint or reports an issue, it's important to investigate the reason behind the problem immediately. For example, if a customer could not complete a transaction on your online store, your investigation may uncover a server or inventory issue.

Whatever the reason, addressing the concern proactively will help you avoid more disruptions to your customer's experience in the foreseeable future. Taking responsibility will help improve customer satisfaction and keep your reputation intact.

3. Corrective action

Once you have defined the problem, take the necessary steps to work towards a solution. Corrective action requires you to analyse the problem from different perspectives.

First, you need to determine the magnitude of the problem. Ask yourself, does the problem impact other areas of the business or is it just specific to this one customer? Next, create a plan that prevents it from becoming worse. For instance, think about if you can appease the customer with a discount or gift coupon. Finally, determine how to address the current situation.

4. Customer follow-up

Communicate your action plan to your customer. Be patient with them and give explicit instructions for them to follow. Listen carefully to their questions and address their concerns with kindness and respect. Even if you do not solve the problem immediately, they will appreciate your time and tactfulness.

5. Root cause analysis

Once you have dealt with the short-term impact of a problem, your next step should be a root cause analysis. A thorough investigation will help you create a preventative action plan and maintain customer satisfaction.

A popular root cause analysis technique is called the '5 Whys'. It uses a series of questions to break down the successive layers of a problem. Each time you ask why the answer becomes the basis of the next why. It's a simple method that does not need advanced statistical tools to get to the root of a complex problem.


5 Whys Analysis:

Problem: Customer could not log in to their online shopping account.

  1. Why? The customer could not find the 'password reset' link on the login page.

  2. Why? The link was too small. It blended in with the other text on the page.

  3. Why? The link needed to be small to make space for promotional banners.

  4. Why? The login page contained many expired marketing campaigns.

  5. Why? The marketing team was too busy with other projects; therefore, they could not update the login page.

Solution: Improve the appearance and content of the website login page. Provide the marketing team with more support to manage the page effectively, such as distributing their workload to the customer service team.

Related: 8 Types Of Complaints From Customers And Their Resolutions

6. Preventive action

Preventive action aims to correct a potential problem from repeating itself. Corrective action plans are always reactive. That is why prevention is key to customer satisfaction. Here are some examples of preventive action:

  • Training programs for employees to develop their skills

  • Regularly updating company policy and procedures

  • Conducting internal audits

  • Performing regular maintenance of equipment and machinery

  • Establishing emergency plans

7. Verification of effectiveness

Once you implement a solution and establish preventive measures, it is best to reassess your objectives to see if they achieve the intended outcome. Gather data to check if your problem persists or if your intervention was successful. Make sure you use a sufficient amount of data to draw reliable conclusions.

8. Customer survey

While data is a quantifiable tool that allows us to measure the impact of our actions, it cannot read the thoughts and emotions of your customers. A survey or questionnaire is the best method to get human feedback on any changes you have made or intend to make to your business. Ask questions about their experience with your product or service. Be open to constructive criticism to help you improve customer satisfaction.

Related: What Is CRM? With Benefits And How To Develop A Strategy

Tips to improve customer satisfaction

Customer satisfaction is not just a business goal for key decision-makers to work on; you can use your customer service skills to make a difference too. Here's a handful of tips to help you improve customer satisfaction:

Listen to customers

Listening to your customers' feedback will help you define the problem. Model excellent communication skills to show concern and appreciation for them. Be patient and listen carefully. Customers open up to customer service representatives who show genuine care and concern. The more comfortable they feel, the more valuable knowledge you gain about the problem.

Be honest

Customer satisfaction is all about managing expectations. Being honest about your capabilities will prevent misunderstandings and help you address their concerns quickly and efficiently. Remember only to promise what you can deliver.

Understand their needs

People are unique, so taking the time to get to know your customers can greatly improve their satisfaction with your brand. Often we can learn far more from what a customer dislikes than what they do like.

Be proactive

Responding to customer inquiries on time improves customer satisfaction. Going above and beyond your regular duties will also impress clients and boost the reputation of your organisation.

Follow-up with your customers

Even after you find a solution to a problem, it is always best to check if a customer needs any additional assistance. Not only will they appreciate your effort, but it will also allow you to gather valuable information to prevent future problems.

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