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Customer satisfaction: What it means and how to measure it

Last updated

14 February 2023

Reviewed by

Miroslav Damyanov

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Most business owners agree that you need happy customers to build a successful business. In fact, 81% of marketers say they compete primarily to provide a satisfactory customer experience. 

Yet, if you asked different business owners and marketing teams what customer satisfaction is, you’d likely get a different answer from each one.

Customer satisfaction is key to getting and keeping customers. But, if you don’t understand exactly what it is, you can’t determine whether your customers are truly satisfied.

By learning more about customer satisfaction and how to measure it, you can figure out how your current efforts are performing and devise a plan to improve your customer satisfaction ratings when necessary.

What is customer satisfaction?

 Customer satisfaction (CSAT) is the measurement of how pleased your customers are with your products or services.

While the quality of your products or services is important, satisfactory end use isn’t the only indicator of customer satisfaction.

Customer satisfaction is derived from how the customer’s overall experience compares to their expectations. It’s a measurement of how people feel about every interaction with your brand.

Consistency is vital to ensuring great customer satisfaction. You can achieve it by providing consistently good service across every stage of the customer relationship.

Since customer satisfaction is measured across the entire customer journey, each touchpoint provides your teams with an opportunity to delight or disappoint customers. So, what does it take to satisfy customers?

The American Society of Quality’s (ASQ) model of customer satisfaction explains that it’s the way perceived value and quality meet customer expectations and how the company’s response to customer complaints relates to customer loyalty.

HubSpot expands the notion of customer satisfaction into the following 12 factors:

  • Accessibility: Can customers reach you with questions, comments, and complaints?

  • Empathy: While the customer may not always be right, they are human. Do you hear customers out when they’re upset and show concern for the situation?

  • Language: Insider language and industry jargon are fine to use among colleagues, but customer-facing language should be transparent and easy to understand.

  • Response time: Same-day delivery and instant responses are expected in today’s busy world. Do you interact with customers in a timely manner?

  • Convenience: Busy customers don’t have time to go out of their way to buy from you. Do you make every touchpoint in the customer journey as convenient as possible?

  • Choices: An abundance of choices helps customers feel in control of their purchase.

  • Simplicity: If your website is hard to use, your process is too involved, or your product is overly complex, your customers are unlikely to make the effort to use your products.

  • Quality: Top-notch service without quality to back it up leaves customers disappointed.

  • Reasonable prices: While your prices should reflect the quality of your products or services, avoid pricing yourself out of the market.

  • Appreciation: Do you have a process for showing customers how much you appreciate their business?

  • Loyalty programs: Loyal customers are some of the most important contributors to company growth. Do you have a loyalty program that rewards long-term customers?

  • Community: You can keep customers engaged with your brand by creating a community that facilitates interaction.

Recognizing each touchpoint along the customer journey is important, no matter how many factors you include in your efforts to measure customer satisfaction.

Why is customer satisfaction important?

Customer experience is more than a marketing buzzword. An experience that makes customers feel appreciated and heard will likely help build loyalty. In contrast, negative experiences can chase customers away faster than you’d imagine.

Customer satisfaction leads to more than five-star reviews. It impacts your business in several different ways.

1. Satisfied, loyal customers promote company growth

Acquiring a new customer can cost five to seven times more than retaining an existing one. However, loyal customers have a lot more to offer than helping you avoid acquisition costs.

A 5% increase in customer retention can lead to profit growth of 25–95%. When customers are familiar with your brand and trust your company, they’re 50% more likely to try new products and spend an average of 31% more than new customers.

2. Dissatisfied customers are likely to switch brands

There tends to be ample market competition for businesses that provide a valuable product or service. Unfortunately, one bad customer experience can be all it takes to lose your customers to your competitors.

Research shows that 59% of US customers will leave a company or product they love after several bad experiences. 17% will walk away after just one negative experience.

3. Customer satisfaction helps guide strong business goals

Businesses need innovative ideas and new products to maintain success and grow in new directions. Yet, novelty ideas can fall flat and market trends can quickly lose popularity.

By basing your business choices and goals on customer satisfaction, you’re more likely to develop goals that lead to higher sales rates.

For example, customer feedback about product flaws can provide the information you need to improve before customers churn. Seeking customer suggestions early and often with recommendations about existing or related products could inspire your company’s next big idea.

4. It helps you stand out from competitors

73% of all consumers say customer experience is an important factor in purchasing decisions. However, only 49% of US consumers say companies provide a good customer experience.

Striving for flawless and consistent customer service can help you stand out from the crowd as an exemplary provider. When you find a niche way to go the extra mile for your customers, you can build a reputation as a customer-first brand.

5. Satisfied customers promote your business

95% of consumers read online reviews before shopping and 58% say they would pay more for a brand’s products if they had good reviews.

Yet, to recommend a company, customers first have to be satisfied with its services. 77% of customers will recommend a brand to a friend after a single positive experience. When you put the power of social media behind such a recommendation, every happy customer can become a brand ambassador.

How to measure customer satisfaction

Customer satisfaction significantly impacts your business’s success. Yet, many businesses don’t accurately determine how satisfied their customers really are.

According to the Zendesk Customer Experience Trends Report,  60% of companies give themselves high marks for service. This is despite 68% of customers claiming there’s room for improvement.

Measuring customer satisfaction is the only way to ensure you’re getting it right. Keeping tabs on why buyers are satisfied or dissatisfied enables you to identify pain points and resolve problems.

Accurately measuring customer satisfaction requires concrete and relevant data. The following metrics can help you determine how satisfied your customers really are:

  • CSAT surveys: You can collect information from your customers at the end of each business transaction with short customer satisfaction surveys. You could even use short surveys with one or two questions that inquire about the customer’s satisfaction level and areas for improvement.

  • Net promoter score (NPS) surveys: How likely are your customers to recommend your business to others? NPS surveys ask just that and allow customers to rate the likelihood on a scale of 1–10. Don’t be surprised if these responses aren’t exactly in line with customer satisfaction responses. 

  • Customer service data: Customer service is a treasure trove of information about customer satisfaction. Seeing several tickets focused on a single issue is a sign that something requires attention. Typically, resolution rates are also a good indicator of your company’s ability to satisfy customers even in the face of a problem.

  • Quantitative customer satisfaction metrics: Use metrics from customer data alongside customer satisfaction and NPS scores. For example, your customer churn rate and customer lifetime value will help you understand whether customers are delighted with your services or turning to your competition.

How to improve customer satisfaction

True customer satisfaction is a journey, not a destination.

To meet your customers’ evolving needs and demands, you need to continuously monitor and improve your customer satisfaction rates. Whether you’re trying to turn low satisfaction levels around or planning for the future, these suggestions can help you gain and maintain impressive customer satisfaction ratings.

Be available for suggestions and feedback

The combination of global business, online shopping, and busy lifestyles mean your customers need a platform to share their opinions (both positive and negative) from anywhere at any time of the day.

Positive customer feedback offers insights into where you’re excelling. Meanwhile, providing an outlet for negative opinions helps you mitigate problems before customers share their grievances in online communities. Chatbots and other tools enable you to assist your customers 24/7.

Stay proactive with real-time responses

A bad experience is two to three times more likely to prompt a customer to write a review than a positive one. What’s more, it takes 12 positive reviews to cancel out the effects of one negative review. Still, negative reviews are a source of data that can help you improve your efforts.

The way you respond to customer complaints also has a significant impact. 90% of customers are more likely to overlook a negative review if the business responds appropriately and addresses the issue.

Whenever possible, address negative customer feedback in real time. Responding to a customer complaint and resolving the problem within 24 hours can turn a bad review around.

Get personal

71% of consumers expect personalization, and 76% get frustrated when they don’t find it. By personalizing advertisements, shopping processes, and communications, you can make customers feel appreciated.

The following are a few ways you can provide customers with a personalized experience:

  • Send birthday or customer anniversary cards

  • Ask a few simple questions about user preferences during product signup to tailor use on platforms or software

  • Trigger relevant surveys based on customer actions

  • Identify customers by name in all communications

Measure customer satisfaction frequently

You can’t accurately improve customer satisfaction without clearly understanding where you’re falling short.

By measuring concrete data, you can pinpoint customer dissatisfaction and devise a plan for improvement. Measuring customer satisfaction after fixing problems is equally important. It enables you to determine how solutions generate improvements.

Increase communication between departments

Customer surveys are typically conducted by marketing teams, while development teams handle product design and software issues. If these teams don’t communicate, customer issues often fail to be resolved before they churn. 

You can resolve issues more quickly by spreading customer satisfaction data across all departments.

Communicate through social media

82% of the US population uses social media. With an active social media profile, you can meet customers where they are and take steps to address customer satisfaction.

The following are just a few successful ways brands interact with customers on social media:

  • Addressing questions and concerns in real time

  • Telling customers about problems, sales, and promotions

  • Transparently responding to negative publicity

  • Highlighting the ways customers use your products

  • Humanizing your brand with photos and content

Use focus groups

Surveys are great for providing quantitative information surrounding customer satisfaction. However, focus groups can be more effective when you want qualitative information.

Gathering a small group of customers and potential customers allows you to obtain in-depth feedback about their unsolved needs and issues with your products or services.

Check out competitors

Customers turn to your competitors when they churn because they’re unhappy. Investigate the customer journey provided by your strongest competitors. By doing so, you can find out what they’re doing right.

While directly copying your competitors is unlikely to impress customers, you can find inspiration to develop your own new procedures.

Provide self-service options

Today’s shoppers are comfortable researching products and solutions online. While human customer support can’t be replaced in complex situations, many issues can be resolved without interacting with a customer service rep.

70% of customers expect companies to have a self-service portal where they can get answers quickly. Providing this option helps you relieve customers of waiting for support and free up your representatives to focus on customers who really need them.

Build a customer community

A customer community allows your customers to gather and share information about your products or services. This idea might seem intimidating, but a strong customer community can improve the customer journey and increase trust in your brand.

For example, customers can answer each other’s questions and offer solutions to obstacles they have already experienced. 

Customer satisfaction could be the most important metric used within your organization. By learning about all the elements of satisfaction on a customer journey and the best ways to measure them, you can improve your customer satisfaction ratings and grow your business.

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