What is customer satisfaction?
Customer satisfaction is a measure of how well your company’s products or services fulfil your customer’s needs. It is a metric that quantifies the degree of your customer’s happiness regarding their experience with your company taking into account factors like the availability of your products, the purchasing experience, and the quality of your post-purchase services. Measuring customer satisfaction can help to provide an idea about your customer base’s loyalty and also help to predict the possibility of customer referrals.
Why is it important to measure customer satisfaction?
Customer satisfaction measures can be crucial to your company’s revenue. They can help you identify happy customers who can help you with referrals and unhappy customers who could leave you due to their negative experience. Here are a few reasons why customer satisfaction can contribute to your company’s success.
1. Promotes customer loyalty
Great experiences makes great stories. Keeping your customers satisfied ensures that they spread the good word about you around their friends and family. This helps you retain your original customers while also gaining some new ones. However, unsatisfied customers can hamper this sense of customer loyalty. Social media makes it especially easy for customers to be vocal about their experience with your company. While a positive review of your company’s product or service could go a long way in establishing goodwill, a hostile take can spread like wildfire amongst millions of people.
2. Increases customer lifetime value
Businesses spend considerable resources to attract potential customers. So, once a customer is acquired, it is essential to ensure that your company gets the most out of them. Businesses can retain their customers when they meet and exceed customer expectations. These satisfied customers are more likely to spend more money with your company and thus increase the customer lifetime value.
3. Promotes new customer acquisition
When a company optimises their support and operations for customer satisfaction, it creates a positive experience that attracts new prospective customers. Robust customer services and clear communication satisfy your customer base and help with customer acquisition.
4. Reduces the number of support issues
Customer satisfaction measures enable communication between the company and the customers. This makes the customer feel heard. Also, customer’s feedback helps to highlight the lingering support issues that can be fixed to streamline customer service and experience.
A satisfied customer base is an invaluable asset to a company and helps establish itself as a trustworthy brand. So, companies need to be able to measure customer satisfaction quantifiably.
Ways to measure customer satisfaction
Measuring customer satisfaction ultimately boils down to collecting customer’s feedback using surveys and customer data. It is not just about measuring revenue or growth. There are multiple ways to conduct surveys, with different approaches, sample sizes, and data analysis methods. However, it is vital to stick to a standardised process that you get perfection over time, to ensure the accuracy and legitimacy of your results. Here are a few ways you can measure customer satisfaction.
Key customer satisfaction metrics
1. Customer Satisfaction Score (CSAT)
The CSAT is a numeric representation of your customer base’s satisfaction. You can calculate CSAT by setting a range of numbers for scores, with the lowest number being highly unsatisfied and the highest number representing the utmost level of satisfaction. You can then ask your customers for scores regarding the quality of your product or service and calculate CSAT by dividing the sum of all responses by the number of respondents.
A change in the CSAT score can help you gain immediate feedback regarding a new initiative. However, its results can be biased and imprecise, as customers with lukewarm levels of satisfaction or dissatisfaction may lack the motivation to address the survey questions. While this KPI is a great metric for tracking customer sentiment, it doesn’t help forecast customer behaviour or potential revenue growth.
2. Customer Effort Score (CES)
The CES is a customer-centred metric that tracks the customer effort required to avail your company’s services. Here, a lower score is better as it implies that the customer did not have to put in much effort while dealing with your company. The CES is a great metric to evaluate the customers’ ease of experience. A lower CES helps promote customer loyalty by saving their time and effort.
3. Net Promoter Score (NPS)
The NPS helps track the likelihood of your customer recommending your product or service to their friends and family. The customer’s response can range from a scale of 1 to 10, with 1 being extremely unlikely, to 10 being highly likely. You can then subtract the number of detractors from the number of promotors and calculate the NPS. A high NPS is a positive indicator of customer satisfaction and loyalty but does not guarantee that your customers will recommend your brand without any incentive.
4. Churn Rate
The churn rate is a measure of customer attrition. It helps you to calculate the number of customers lost during a cycle, judging on the basis of sales volume. A high churn rate leads to an immediate loss of revenue. Thus, churn rate is a valuable metric to gauge customer dissatisfaction quantifiably.
These metrics can help you objectively track customer satisfaction levels. So, it is crucial to utilise the correct data collection and analysis practices to collect customer satisfaction data.
How to collect customer satisfaction data?
When customer experiences are spread across multiple platforms, it is important to have different strategies to interact with your customers and gather their feedback. Here are some practical ways to collect customer satisfaction data.
1. Surveys
Surveys are one of the simplest ways of measuring customer satisfaction that can be hosted on different channels.
1. In-app customer surveys
In-app surveys are best implemented when they are presented to your customers while availing your services. They can be included as a post-purchase or a post-service survey. In-app surveys should be brief, precise, and seamlessly integrated into the user experience.
2. Email surveys
Email surveys are a great way to gather detailed customer experience feedback. These surveys allow you to ask insightful questions. Due to their low response rate, they are best suited for long-term customers who are more likely to offer extensive feedback.
3. Voluntary feedback
Offering customers a platform to provide voluntary feedback can be invaluable for learning about your customer’s experience. Dedicating an email address, a comment box, or a phone line to your customers can often elicit detailed responses regarding extraordinarily positive or negative experiences.
2. Web analytics
Web analytics can help to evaluate the efficiency of your sales funnel, track customer habits, and predict future conversions. You can track your website traffic to gain insight into customer behaviour and help in measuring customer satisfaction. Metrics like tracking the time spent on your website, and the bounce rate of your email newsletters, can also help you calibrate your customer service strategy.
3. Social media metrics
A positive social media presence is essential to any brand’s success. Customers these days are more vocal on social media regarding their purchases. So, companies must be active listeners on social media, gathering feedback through customer comments and recommendations. Your customer support team should also interact with your customers on social media. This will help you be aware of your customers’ sentiments and help in measuring customer satisfaction.
These methods can help your company acquire invaluable customer satisfaction data that can be utilised to form an actionable customer service strategy.
Measuring customer satisfaction is a multi-faceted process that requires an honest and detail-oriented approach. A business owes its success to its customer base. Any steps to facilitate communication between the consumer and the company can benefit the company’s goodwill and revenue. Using KPIs to track customer satisfaction can help a company to better understand the consumer sentiments. So, implementing customer satisfaction measures is a great way to ensure that your company keeps your customers happy.
