How to measure customer satisfaction - Metrics and Tips

Customer satisfaction - the holy grail of business success. If you're not reaching out to your customers for their feedback on your products and services, you're not doing things right. Without happy and loyal customers, your business is at risk of failure. And the only way to get this feedback is to be proactive in collecting it...

What is customer satisfaction?

Don't be afraid to shine a light on the truths about your business that only your customers can share. By welcoming customer feedback and being honest about their pain points and business flaws, you'll be able to get a good understanding of your customer satisfaction levels and get to work improving them. There's always room for improvement, but you'll only know how much work you need to do by talking directly to your customers.

Our own research of 2,000 shoppers showed that at least 30% of customers would switch to a competitor after just one bad experience with a brand, and Hubspot's research took this further - suggesting that 80% of customers will switch companies after one poor service experience.

These are significant stats that businesses should not ignore. Knowing where to start with measuring and analysing customer satisfaction can feel overwhelming, so we've pulled together this guide on the most important customer satisfaction metrics to focus on.

Net Promoter Score (NPS)

Net Promoter Score is often the go-to metric for customer satisfaction. It represents an index that ranges from -100 to 100 which reflects the willingness of customers to recommend a particular service or product. It's all about how much your customers trust your brand, and whether they'd risk their reputation by recommending you to a friend or colleague.

The effective use and analysis of NPS can help you to increase customer spending and retention rates. You can supplement the NPS survey with a final, open-ended question to gain an extra layer of insight from your customers. NPS is also great for benchmarking internally for continuous improvement and as well as against your competitors.

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Customer Satisfaction Score (CSAT)

Another popular customer satisfaction metric is the Customer Satisfaction Score (CSAT). This metric looks at how happy your customers are and asks them to rate their satisfaction on a scale of either 1-5, 1-7 or 1-10. Tailor the range you use to where your customers live, as cultural differences can impact how people rate their satisfaction. The CSAT measurement is calculated by dividing your number of happy customers by your total number of customers - and try to use an odd number for this to avoid 'neutral' feedback.

Customer Effort Score (CES)

If you're more interested in how easy your customers find interacting with your business, the Customer Effort Score is a tried and tested metric to use. It assumes that the easier a task is to complete, the more satisfied your customers will be. It's great for identifying pain points or complexities in your products and services that could lead to lost business further down the line.

Customer Churn Rate

We couldn't write this article without mentioning a business' best friend - churn rate. Churn rate is the percentage of customers lost over a specified period of time. It costs 5-25x times as much to attract a new customer than to keep an existing one, so keeping a close eye on your churn rate for fluctuations and trends is extremely important. If there is a spike or an ongoing rise in the churn rate, you can use the date data to identify what the causes may be. Was there a product update that impacted customer satisfaction? Did an internal process change which had a negative knock-on effect? The only way to fully know the answer to these questions is to start and keep measuring churn rate.

'Things Gone Wrong'

There is a sure-fire way of getting straight to the heart of customer satisfaction, and that is by monitoring and analysing customer complaints. The ‘Things Gone Wrong’ metric compared the number of complaints to 100, 1,000 or even 1,000,000 units of survey responses or units sold. The worst-case scenario is that for every response given or product sold, you get 1 or more complaints.

Other ways to measure customer satisfaction

The metrics listed above are essential tools that all businesses should be using and analysing to improve customer satisfaction. They're not the only places to look though. Online review forums are always brimming with customer feedback - both good and bad. Our Smart Themes sentiment analysis tool can help you to delve into your online reviews and better understand the positive and negative themes that are emerging, so that you can take your findings forward and create a customer satisfaction action plan.

Media monitoring is another great way for businesses to keep their ears to the ground when it comes to customer satisfaction. Social media connects friends, families and colleagues together in such a way that recommendations and complaints are regularly shared. Brands with social media presences are open to very public praise or contempt, depending on the experience of the customer who is communicating with them. The rise of influencers has seen the power of word-of-mouth and influencer recommendations soar, with bad reviews or complaints spreading like wildfire.

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Due to this, you should be proactive in monitoring for both positive and negative mentions of your business online, with the resource in place to handle online complaints quickly. Giving a fast response which is empathetic, helpful and reaches a resolution for the customer is the best way of holding your hands up to the fact that something did go wrong, but it's fixed and won't happen again.

If you're struggling to engage your customers with the traditional customer satisfaction metrics, try incentivising them to give feedback. A survey launched by email and entering respondents into a prize draw can lead to increased response rates and engagement. This does run the risk of attracting feedback from people who are only interested in the prize draw, but can also provide the spark needed to nudge unhappy customers towards sharing their experiences.

This works especially well if you support the campaign with messaging that shows your customers that you value their feedback, you are genuinely interested in their experiences, and that you will listen to what they say and make the necessary improvements going forward. Don't forget to keep them in the loop when it comes to launching the updates too - this gives you a great opportunity to re-connect with your customers.

If you're struggling to stand out in a saturated market and feel like your customers are already over-inundated by marketing messages, a great way to capture their attention and get great feedback is by using SMS. You can deliver personalised text messages and optimise delivery times so that they arrive when your customers are most likely to read them, phone in hand and ready to tell all about their most recent experience with your business.

Another way to guarantee fast feedback on your customers' satisfaction is by adding a live chat feature to your website. This gives your customers the chance to express their concerns or complaints with little to no waiting time - and we all know that there is nothing worse than feeling angry or frustrated and being kept on hold for hours in a telephone queue. Giving customers the chance to speak to you in their moment of dissatisfaction can, in the long term, improve their overall satisfaction with your business.

Don't forget your most important resource - your sales team, account managers and customer service colleagues. Their on-the-ground experience with customers is invaluable, so encourage regular opportunities for staff to share cross-team insights, concerns and observations.

Conclusion

As you can see from our recommendations above, there are lots of ways for businesses to measure and analyse customer satisfaction. Some are more traditional, and some are perfectly aligned with the fast, digital pace of the modern world. You can try some of the above tips or all of them, but the one thing to avoid is doing nothing at all. Opening the line of communication between your business and your customers, and showing them that their feedback - good or bad - is appreciated and listened to, is the first stepping stone in improved customer satisfaction.

Yes, you might have some hard realities to face. What if your customer satisfaction levels are terrible and you're at risk of losing all of your customers? What if the feature or update you championed is the biggest source of dissatisfaction? It is better to face this information head-on, using it as a benchmark for improvement and creating a data-driven strategy to improve the numbers.

Ultimately, everyone likes to feel heard and seen, be that consumers or professionals. To empower your customers to give you their most honest, critical feedback and use it to improve your business and move closer towards market-leading customer satisfaction.

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Net Promoter® and NPS® are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.


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