What is Customer Satisfaction and Why It’s Important
Customer Satisfaction can be a factor that makes or breaks your business.
After all, a business with unhappy customers is less likely to succeed in the long run.
But you might be wondering what customer satisfaction is, why it is so important, and how to measure it.
Today, we’ll break it all down.
What is Customer Satisfaction?
In its most simple definition, Customer Satisfaction is a metric that refers to the degree to which the customer expectations have been met.
Meet your customer expectations and your customer will be satisfied. Exceed their expectations and they will be delighted.
You could also miss the mark when meeting customer expectations, resulting in low Customer Satisfaction scores and displeased customers.
Both scenarios can end up having a significant impact on your business, even financially.
5 Reasons Why Customer Satisfaction is Important
The impacts of Customer Satisfaction on your business can be both significant and lasting.
Specially when you consider the effects that Customer Satisfaction scores have on Customer Retention and Customer Loyalty.
Customer Satisfaction can end up affecting your bottom line.
- Satisfied customers are more likely to stay as one of your customers and more likely to advocate for your business.
- They are also more likely to post positive reviews and testimonials of your business online and on social media.
- With higher customer retention, also comes higher customer revenue as it is generally cheaper to retain a customer than to acquire new ones. Research found that your loyal top 10% spend 3x more per order than your lower 90% of customers!
- With more positive reviews and loud advocates for your brands, your acquisition costs can also be reduced.
- On the other hand, low customer satisfaction can result in low customer retention, negative reviews, and a negative brand image.
How to Measure Customer Satisfaction
Customer Satisfaction Score (CSAT Score)
Customer Satisfaction can be measured in many different ways. The most common being the Customer Satisfaction Score or CSAT Score.
CSAT is determined by surveying your customers and asking them to rate their experience with your business in a binary (from 1 to 5) or non-binary scale (Highly Dissatisfied to Highly Satisfied).
After collecting all the responses, the average scores are calculated in order to find your overall CSAT score.
Net Promoter Score (NPS)
Another popular metric used to get a sense of your Customer Satisfaction is the Net Promoter Score or NPS.
Net Promoter Score (NPS) measures how likely your customers are to recommend your business to others based on their experience. This score is calculated by asking customers how likely they are to recommend your business to a friend or colleague in a scale of 1 to 10.
Customers are then categorized based on their answers. Promoters answer between 9-10. Passives answer between 7-8. Detractors answer 6 and lower.
You will count the number of customers in each category and run this formula:
NPS = Number of Promoters - Number of Detractors / Total Number of Responses
A high NPS indicates a large number of happy customers who will gladly recommend your business to others. A low score might indicate issues in customer satisfaction across your organization.
How to Increase your Customer Satisfaction
Increasing Customer Satisfaction at your company should be a high priority for your business.
And this point, you might be wondering how to do so.
First, we recommend measuring your current Customer Service scores to get a grasp of where your customers currently stand.
Then, we recommend learning about the Customer Journey in order to get a clearer view of all the touchpoints between your customers and your business. Check out our guide on The Customer Journey and how to map it.
Lastly, we recommend checking out our guide on Customer Service Standards to implement at your business, which will help you guide your path to success and better Customer Satisfaction!