Customer satisfaction is crucial for business today.
Well, today, customers have a huge variety of options and possibilities to choose from. If your customers aren’t happy with your brand, they will leave you for your competitors. It’s easier than ever to lose customers to your rivals, and acquiring new customers is much more expensive and complicated than retaining them.
So, let’s jump into the customer satisfaction topic.
Why is customer satisfaction important? What is the main reason why brands should care about customer satisfaction?
“Almost every business has what I call a “leaky bucket.” Most businesses are so focused on sales and bringing in new customers that they forget about the fact that the existing customers are the ones that fund their paychecks. Without existing customers, there is no business, so it’s critical to ensure they are satisfied – thereby plugging the “leak”.” Dan Gingiss, Chief Experience Officer
“It’s good that brands have discovered little ROI in trying to “blow their customers’ minds” with an over-the-top experience. The vast majority of the time, simple Satisfaction…when done effectively and consistently…will foster tremendous loyalty.” Nate Brown, Chief Experience Officer, Officium Labs
“For me, the most important aspect of Satisfaction is understanding whether you succeeded in delivering according to your customers’ expectations. Expectation gaps are one of the biggest drivers of churn, so understanding how the customer perceives your products, services, locations, and processes is crucial to your success.” Mary Drumond, CMO at Worthix
Definition of Customer Satisfaction
Customer Satisfaction is a metric used to quantify the degree to which clients are satisfied with your services, products, and customer experience, in general. Simply put, it measures how a customer feels about a brand interaction.
Customer Satisfaction Importance
1. Satisfied customers are loyal customers.
Loyal customers are your most valuable assets. These customers stay with your brand for a long time and keep purchasing from you more and more. 10-30% of eCommerce revenues come from up-sell and cross-sell recommendations. (Forrester).
Satisfied and loyal customers not only buy more, but they also became your brand ambassadors. They will talk about your company to their family, friends, and social media. And 83% of customers trust the product or service recommendations of friends and family. Word-of-mouth marketing helps to bring more new clients absolutely for free.
Increasing customer retention rates by five percent can increase profits anywhere from 25-95%.
“Customer satisfaction is a primary component of customer loyalty. Customer loyalty helps brands build wallet-share over the long run. Especially during and post-pandemic, retailers need to provide the best possible experience to each consumer who either lands on their website, picks up curbside orders, or who can safely visit the brick & mortar store.” Richard Shapiro, Founder & President, The Center For Client Retention
“Satisfied customers spend more, express more loyalty, and when expectations are consistently met or exceeded, satisfied customers tell others. Positive word-of-mouth marketing can drive more customers to find your brand.” Jeannie Walters, Customer experience speaker and CEO, Experience Investigators
“To answer this, let’s look at the behaviour of satisfied customers – what do they do? The first thing they do is buy from you again, and sometimes they buy other things from you as well. So satisfied customers equal more sales. Sometimes, they’ll tell their friends and family about you, which leads to them buying from you too. So satisfied customers lead to more sales from referrals. And when satisfied customers see offers from your competitors, they ignore them because they’re happy with you.” Ben Motteram, Founding Principal at CXpert
2. People are willing to pay more for a better experience
Clients say that excellent customer experience is more important than price, and they are willing to spend more with customer-friendly brands. 8 in 10 consumers (81%) say that they are eager to spend more with an organization for better customer experience. And a repeat customer pays 67% more than a new customer.
3. Customer Satisfaction gives you a competitive advantage
Think about Sephora, Amazon, Trader Joe’s, Zappos, and other customer-centric companies. These companies provide fantastic customer experience, which makes them stand out from the competition and be the industry leaders. Customers love these companies, and they are more likely to choose them over competitors. So it is not the lower prices, closer locations, or other factors that make these companies so popular. It’s an excellent customer experience that makes them stand out from the crowd.
What advantage does it give to have a great customer satisfaction rate?
“Consumers don’t care about customer satisfaction rates. They want a great customer experience independent of how the company measures it. Brand loyalty is comprised of factors such as the quality of the brand, pricing, and the accessibility and competency of the customer service department. Having good benchmarking data is also critical for any brand if they want to know how they score compared to their competitors.” Richard Shapiro, Founder & President, The Center For Client Retention
“The satisfaction number itself offers no advantage, but that’s not the goal. The goal is to enhance the customer journey to cause not only that consumer to return but also to act as an ambassador for you in the greatest marketing strategy of all time: word of mouth.” Nate Brown, Chief Experience Officer, Officium Labs
“In some industries, a 1 % increase in retention rates can mean millions of dollars in revenue. Happier customers mean they will stay longer as a customer, and the brand won’t have to spend additional dollars on acquiring them.” Jeannie Walters, Customer experience speaker and CEO, Experience Investigators
“It’s a great thermometer to understand whether you’re hitting the mark or not with your customers. But why you are hitting it or not is a deeper, more important question to ask.” Mary Drumond, CMO at Worthix
How to Measure Customer Satisfaction
Before measuring customer satisfaction, define your goals.
What metrics do we want to track? Why are we doing this?
Choose the customer satisfaction metric
When the goals are defined, you have to focus on choosing the customer satisfaction metric to track. We’ll cover the metrics a little bit further in the article.
Customize your survey’s layout and questions. Then, think about what customer action will trigger the survey (end of live chat, completed a purchase, exit intent, etc.) and select the medium (email, site, pop-up, etc.).
Conduct the survey and afterward, analyze collected data and make improvements based on the information that you have discovered.
Okay, now let’s discuss the primary customer satisfaction metrics that you can track:
1. Customer Satisfaction Score (CSAT)
CSAT measures customers’ satisfaction with the product or service you provide. CSAT is the average satisfaction score that your clients give based on the experience they had with your brand. CSAT is very simple and easy to implement metric and usually takes no time and effort for customers to fill in.
Usually, CSAT is measured using a 1 to 7 point scale or a 1 to 5 scale (where 1 – very unsatisfied and 5 – very satisfied). Answers can be binary (yes or no, a happy face or a sad face), or expressed on a rating scale.
2. Net Promoter Score (NPS)
NPS helps to measure customer loyalty and predict growth on a scale of 0-10.
NPS usually consists of 2 small questions that help rate brand, service, or product. NPS is very simple for customers to answer and easy for you to track.
The rating question like: “How likely are you to recommend this brand to a friend or colleague?”
The “why” question like “Why did you give that score?”
The scoring system divides all responders into 3 groups:
Typically loyal and enthusiastic customers that are likely to recommend you.
Currently satisfied but easily tempted by your competition.
Unhappy customers, a high likelihood of negative word of mouth, high churn rate.
“72% of consumers who have a positive experience will share it with six or more people (SuperOffice)”
3. Customer Effort Score (CES)
Customer Effort Score (CES) measures clients’ efforts to complete a single action like contacting support, finding what they were looking for, or ordering the product.
CES typically answers, “How easy was it to solve your problem with our company today?” and has a 5- or 7-point scale system where 1: Very Difficult and 5 or 7: Very Easy.
The less effort required, the better the CES—and the higher the customer satisfaction.
CES data is collected by surveying customers after a single action with a business. For example, after the customer completes a purchase or after the customer receives help from the support team.
“94% of customers who reported low effort said they would likely purchase a product again. (Harvard Business Review)”
Churn Rate shows the total number of clients that have stopped using your services or buying your products. It’s the number or percentage of lost customers within a specific time.
As with NPS, measuring Churn Rate is essential because it helps retain existing customers and identify the problem spots.
Customer Retention Rate measures how your business retains customers. The Retention Rate links to Churn Rate: the higher retention rate goes, the lower the churn rate is.
For example, you had 1500 customers, and in a month, you acquired 300 more customers. Some of them dropped off, and by the end of the month, you have 1650 customers. So, ((1650-300)/1500)*100= 90% retention rate.
6. Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) sometimes referred to as lifetime value (LTV) is an estimated profit that a company can acquire from one customer over the time of their business relationship. The longer a client stays with your company, the greater their lifetime value becomes.
Here’s how to find CLV. You need to calculate:
1. Avg. Purchase Value – company’s total revenue in a time period / #purchases over the course of that same time
2. Avg. Purchase Frequency Rate – #of purchases over the course of time / #unique customers who made purchases during that time period.
3. Customer Value – Avg. Purchase Value x Avg. Purchase Frequency Rate
4. Avg. Customer Lifespan – average out of years a customer continues purchasing from you.
5. Customer Lifetime Value – Customer Value x Avg. Customer Lifespan
What are the first steps in measuring customer satisfaction? What metrics should the brand track to efficiently measure customer satisfaction?
“Brands should look at both quantitative (NPS, CSAT, CES, etc.) and qualitative (reviews, social media posts, focus groups, etc.) to get a complete picture of customer satisfaction. It is important to look at both what the company is doing well and what it is not doing well.” Dan Gingiss, Chief Experience Officer
“The first step to designing a customer satisfaction measurement process is to segment the customer experience into several components and measure them appropriately. Some of the specific items to be measured should be how well did the company welcomes the consumer to the brand, listen to their underlying needs, appear knowledgeable, and lastly, demonstrate customer appreciation.” Richard Shapiro, Founder & President, The Center For Client Retention
“The first place to measure customer satisfaction is in the Customer Service environment. The customer has just experienced a problem. We need to ensure we get them back on track. Understanding their level of Satisfaction after a support ticket is a great best practice, and allows the organization to go deeper into anyone dissatisfied.” Nate Brown, Chief Experience Officer, Officium Labs
“The number one way to understand customers is to gather feedback consistently. Asking customers for specific feedback and watching the CSAT score can enlighten organizations to where there is the disappointment they need to address.” Jeannie Walters, Customer experience speaker and CEO, Experience Investigators
“NPS is good as a long-term relationship metric, while CSAT and CES are good for transactional measurements. Customer churn rate and retention or renewal rates are good for understanding exactly how loyal your customers are.” Jeannie Walters, Customer experience speaker and CEO, Experience Investigators
“If you want to measure satisfaction, start with a journey map to understand what the customer undergoes in their experiences with you. Map out pain points, perceptions, high friction moments, and; set up touch-points to engage and survey customers along the course of their journey.” Mary Drumond, CMO at Worthix
“My first question to any company that comes to me saying they want to measure customer satisfaction is: why do you want to do it? If it’s just to put another number on a dashboard for executives, I advise them not to do it. Firms need to be clear on the financial benefits of having satisfied customers and be prepared to make the necessary changes to their people, processes, and systems to improve customer satisfaction.” Ben Motteram, Founding Principal at CXpert
“Customer Effort Score: customers value TIME above all else. CES is likely to have a far greater correlation to loyalty than either CSAT or NPS. I highly recommend measuring this in the Customer Service touchpoint. CLV or Customer Lifetime Value is another great measurement to use. Remember, we always want to show the true ROI of customer experience work.” Nate Brown, Chief Experience Officer, Officium Labs
Ways to measure customer satisfaction
There are a few ways to conduct customer satisfaction surveys. Let’s have a look at them.
1. Follow up message – send a request for feedback after the customer has completed an action. For example, after a client purchased on your site.
“We survey our clients at post-purchase and after specific periods of time.” Mary Drumond, CMO at Worthix
2. Chatbot – a bot can ask your clients customer satisfaction questions in a form of natural and engaging conversation.
“Chatbots certainly have their place when measuring customer satisfaction. I would use them with high volume touchpoint quantitative data.”Ben Motteram, Founding Principal at CXpert
3. Pop-ups – create a pop-up to collect feedback right on the website.
4. Widgets – use widgets to send feedback surveys while a customer is on your website.
5. Customer Interview – conduct a customer interview to collect feedback. Some customers will be happy to share their thoughts about your brand, or sometimes you may offer them an incentive for their feedback.
6. Feedback form – send a survey via email to collect customer feedback. Here are the best practices for email surveys: How to create survey invitation emails that get more responses.
8. Exit intent feedback form – ask your customers for feedback when they are trying to leave your website or abandon their order. Check out the best practices for exit-intent surveys here: Website Exit Survey: Get Feedback Before Your Visitors Leave.
9. Monitor other sites – there are plenty of different reviewing/rating platforms and sites like TripAdvisor, Capterra, G2, Clutch, Yelp, etc. Monitor these platforms to hear what customers are saying about your products.
10. Live chat feedback – ask for feedback right after live chat interaction.
How does your brand track customer satisfaction? What ways and tools does your brand use to understand customer satisfaction, and why?
“We primarily recommend follow-up email surveys for those consumers who buy online. It’s the most comprehensive mechanism for capturing great data. For brick & mortar, on-site platforms that can capture instant feedback based on the associate/consumer interaction are great. Measuring metrics such as brand loyalty, frequency of store visits, repeat purchases, etc. are important as well.” Richard Shapiro, Founder & President, The Center For Client Retention
“In the past, when I was managing the CX program of a large corporation, we used customer surveys.” Ben Motteram, Founding Principal at CXpert
“SurveyMonkey is a great and easy tool to use to gauge customer satisfaction. I also like Worthix. But the simplest method is just to have 1:1 conversations with your customers to learn about their needs, desires, and expectations.” Dan Gingiss, Chief Experience Officer
“We’ve used several different methods, often tied into whatever CRM our customer is using. The key here is again, CONVENIENCE for the customer. Email-based surveys for most brands have dropped below 3%. It just is not working. However, push notification or a text to a cell phone may be just the ticket for the quick feedback you are looking for.” Nate Brown, Chief Experience Officer, Officium Labs
“Chatbots can be very helpful in serving the customer in real-time when humans aren’t as available. They can also provide simple information to help the customer achieve a goal. Following up with a CSAT or CES transactional feedback touchpoint can help brands see if the chatbots are serving customers the way they want.” Jeannie Walters, Customer experience speaker and CEO, Experience Investigators
Tips for improving customer satisfaction from experts
“Start with understanding your customer and their goals. It’s challenging to provide a great experience if you don’t know who you’re serving. Use tools like personas, customer journey mapping, service blueprinting, and customer advisory boards to create the right experience. And track metrics consistently to identify patterns and trends to address.” Jeannie Walters, Customer experience speaker and CEO, Experience Investigators
“First, you have to learn what things would truly improve your CSAT. This can only be done by expanding your Voice of Customer capabilities. Don’t jump in and start making changes based on assumptions. Learn from your customers about what things will make their lives better and easier.” Nate Brown, Chief Experience Officer, Officium Labs
“Listen to your customers, talk to your customers, and don’t be afraid of complaints. People who complain do so because they care; they want you to make it right. If they didn’t care, they would just leave for your competition. Always be willing to listen to complaints and look at them as an opportunity for continuous improvement.” Dan Gingiss, Chief Experience Officer
“Satisfaction doesn’t translate into loyalty. It helps, of course. Nobody likes to be mistreated or disrespected. Customer Satisfaction is a very first step on a long road towards customer-centricity. Suppose you want to truly understand what motivates your customers to buy, re-buy or continue to subscribe to your products/services. In that case, you need to go deeper than Customer Satisfaction alone.” Mary Drumond, CMO at Worthix
“Understand the drivers of your customers’ satisfaction and then work towards one or both of two things: eliminating the things that negatively impact those drivers or promoting the things that positively impact them.” Ben Motteram, Founding Principal at CXpert
“Generating repeat purchases is comprised of three primary components; hope, trust, and intimacy. Hope is achieved by making the customer feel welcomed. This is especially valid for online sites. It’s critical to engage the customer before trying to sell them. Trust is developed by the competency of your sales associates and the accuracy of your site. Return policies also factor into the level of trust. Lastly, brands must show consumers they care about them after the sale. Sending daily promotions does not demonstrate appreciation. Having a friendly and accessible customer service department and access to a human when AI doesn’t work makes customers want to continue to do business with your brand over others.” Richard Shapiro, Founder & President, The Center For Client Retention