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Why – And How – Should Customer Satisfaction Be Measured?

Written by

 Jeremy Gallemard

Most companies understand the importance of customer satisfaction. It’s a key issue for ensuring sustainability and growth.

That’s why they develop action plans to better meet the needs of their customers. 

They strive to create products and services that delight their customers. They constantly seek to enhance their customer relationships and bring new customer enchantment to the user experience. But are customers satisfied?

The only way to find out is by measuring customer satisfaction.

In this article, we will answer the following questions:

  • What challenges does measuring customer satisfaction meet?
  • Which performance indicators should be taken into account?
  • Which methods can we employ to efficiently measure customer satisfaction?

 

4 good reasons to be measuring customer satisfaction

1 - Customer dissatisfaction is costly

The economic impact of customer dissatisfaction is considerable as it generates both direct and indirect costs.

Let’s begin with direct costs. 91% of dissatisfied customers will not make another purchase from the brand and instead hand their business to competing brands.

These net losses directly influence the company’s turnover. But the dissatisfaction occasioned also produces indirect costs linked to the increase in complaints to customer service, for example.

Measuring customer satisfaction enables companies to identify factors of dissatisfaction. By doing so, they can implement the necessary improvement initiatives before customers abandon the brand.

2 - It’s easier to retain customers than to acquire new ones

Acquiring new customers requires considerable marketing and prospection efforts. For many companies, reducing customer acquisition cost is a priority.

One of the solutions lies in improving customer retention.

If a customer buys more and more frequently, he or she brings more value to the company. Moreover, retaining a customer costs 6 to 7 times less than acquiring a new one.

The relationship between satisfaction and retention is more complex than it appears. Nonetheless, a satisfied customer is more likely to remain loyal to the brand.

Here again, we must begin by measuring customer satisfaction in order to act in a timely fashion.

3 - Customer dissatisfaction is detrimental to the brand image

Dissatisfied customers tend to share their bad experiences in their everyday conversations, including those on social media.

“On average, an individual will tell 9 people about good experiences, and 16 people about poor ones.”  - American Express Survey

Negative word-of-mouth can permanently damage a brand’s image. And getting people to forget unfavourable opinions or reviews on the web takes time.

The best way to protect a brand image is through prevention. Or by reacting before a negative event takes on too much importance.

How? By remaining vigilant as to customer satisfaction. To do so, satisfaction must be measured and rectified before it’s too late.

4 - Measuring customer satisfaction enables enhancement of the customer experience

Dissatisfaction may have different causes: the quality of the product or service, a flawed customer relationship…

By measuring satisfaction and its different elements, a complete panorama of the principal areas for improvement will be revealed. This will enable the company to improve its offer and propose a product that better satisfies its consumers. Measuring satisfaction will also provide ideas for improving customer relationship efficiency.

Finally, regularly measuring customer satisfaction also serves to evaluate the impact of a company’s efforts to improve customer satisfaction customer relationships. If satisfaction increases, it’s clear the company is moving in the right direction.

The importance accorded to customer satisfaction translates into the implementation of strategies for improvement. But for them to work, these strategies must be focussed on measurable objectives – thus on performance indicators. Let’s see which key indicators play a role in customer satisfaction.

Customer Satisfaction Checklist

Customer satisfaction measurement indicators

To efficiently measure the satisfaction of customers, the different aspects of satisfaction must be taken into account. Consequently, customer satisfaction metrics will be based on several complementary KPIs.

CSAT score or Customer Satisfaction Score

CSAT is the historic indicator for measuring customer satisfaction. It’s also the most basic. CSAT scores measure global customer satisfaction. How?

It is based on the answers of survey questions such as:

Overall, how satisfied are you with X?”.

According to each case, X may signify, for example, the solidity of a product, the response to a complaint, or the cleanliness of a retail outlet or hotel room. Everything depends on what you wish to evaluate.

In most cases, there are 4 categories of responses: Very satisfied / Somewhat satisfied / Somewhat dissatisfied / Very dissatisfied.

A customer satisfaction score is calculated by dividing the total of positive responses (very and somewhat satisfied) by the total number of responses, multiplied by 100 to give us a percentage. The CSAT score is the most intuitive indicator of customer satisfaction. But it only measures the emotional dimension of satisfaction. By itself, it indicates nothing about the future behaviour of the consumer.

NPS or Net Promoter Score for customer satisfaction

A NPS survey measures the affective and behavioural dimensions of customer satisfaction and customer loyalty. It evaluates the likelihood of customers to recommend the brand or its products whilst at the same time provides a general idea of customer loyalty towards a brand.

In practice, the NPS score is based upon the answers to survey questions such as:

“On a scale of 0 to 10, what is the probability that you would recommend our brand to your friends or colleagues?”.

We obtain the NPS by subtracting the percentage of detractors (customers who respond 0 to 6) from the percentage of promoters (those who respond 9 or 10).

The NPS is precious because it enables:

  • The identification of promoters: this means we can implement actions to make them ambassadors for the brand.
  • The identification of detractors: this allows us to reflect on methods of improvement.

customer-satisfaction- metric

CES or Customer Effort Score

CES is a more recent indicator than the two preceding KPIs. Its main purpose is to evaluate the level of customer service quality.

Concretely, it measures the level of effort the customer must exert to obtain satisfaction for his or her request.

A lower average note means that the customer easily obtained a satisfactory response.

CHI or Customer Happiness Index

A new customer satisfaction metric is the Customer Happiness Index (CHI) developed By Hubspot. This new metric was developed to maximise customer engagement and minimise churn. The CHI index works by measuring three metrics that help determine how likely a customer is to abandoning a service and seeking it elsewhere.

Essentially this KPI identifies the number of customers that are likely to churn and the reason behind this behaviour. However, it should be noted that this metric is not widely used and should be coupled with other customer satisfaction metrics mentioned above. 

Other indicators

Other than these 3 indicators, we can also evaluate the way our offer responds to the customer’s needs. This is a good way to identify the strengths and weaknesses of a product or service.

The intent to repurchase is also a precious indicator of customer satisfaction and loyalty.

Once we have selected the indicators which make the most sense, we need only collect the data from our customers.

What tools and methods measure satisfaction in the field?

Customer satisfaction measurement tools

Satisfaction surveys

The satisfaction survey is the most common tool for measuring customer satisfaction. It enables the collection of customer feedback after a purchase or contact with customer service.

The satisfaction survey does however include practical constraints. As we cannot question all customers, we must define a representative sampling. And on the basis of that sampling, we can obtain quantitative and qualitative measures of satisfaction.

In a single questionnaire, we can include questions to measure each of the performance indicators presented above. To achieve this, we will ask both closed- and open-ended questions.

Prior to beginning, the following must be defined:

  • the context of the survey: what do we want to measure?
  • the channel for administering the questionnaires: mail, telephone, email, social networks
  • frequency of the survey
  • formulation of the questions: poorly-formulated questions could lead to errors prejudicial to a clear interpretation of the results.

Finally, vigilance is vital with regard to the analysis of the responses. Analysis bias could lead to counterproductive actions to improve customer satisfaction.

CSAT customer satisfaction measurement

 

Mystery shoppers

The “mystery shopper” method involves sending an investigator to test a service, contact customer service, or visit a point of sale. The objective is to evaluate the customer experience or relationship. Objective feedback from mystery shoppers enables brands to identify areas requiring improvement.

Qualitative interviews

Qualitative interviews are based on actively listening to customers. This method is used to determine the expectations, needs, motivations, and problems the customer has. In other words, to better understand the customer’s purchasing and decision-making process.

We use open-ended questions to encourage the customer to talk, then collect his or her feedback. The qualitative interview may be individual or collective. However, this method is costly and time-consuming. It might be used, for example, during the launch phase of a new offer.

Other sources of customer feedback and insight

While customer surveys and questionnaires are a great place to start measuring satisfaction they should not be your only method of obtaining customer feedback. Some individuals prefer not to fill out lengthy surveys or are not very keen on taking part informal data collection methods. When this happens you might not be getting enough survey responses to adequately draw conclusions as to what makes a happy or unhappy customer. Remember that your company is most likely already getting a lot of feedback from already existing channels such as:

  • Email: Take a look at your written communications between your customers and support team. You might find some positive feedback or be able to discover some common customers frustrations and complaints. 
  • Social media: Nowadays, it's crucial to closely follow what your customers are saying about your brand online. Monitoring comment sections and tags are a good place to start and are often full of untapped customer feedback. 
  • Online reviews: It's important to check online review sites such as Capterra for customer insight and ratings. 
  • Phone: If you get your customers on the phone, remember to ask your support team to take note of any suggestions or customer feedback that might be shared during the call.  

There are also other signals through which we can evaluate customer satisfaction. CRM tools provide analytics about customer behaviour: interactions with the brand, repeat purchases, purchase frequency: all are signs that can be interpreted.

We can also gather customer feedback during the length of the customer journey with intelligent questionnaires to enable users to express their satisfaction.

customer-feedback

How to achieve customer satisfaction 

Establish an internal customer culture

One missed or negative interaction with a customer can be enough to generate dissatisfaction. The volatility of customers is so great that the slightest hitch can lead them to leave a brand. For companies, it is therefore necessary to minimise the risks of error or dissatisfaction at all levels of the customer relationship. To achieve this, it is important to define a formal customer satisfaction strategy and to communicate it to employees.

Improve customer knowledge

What does "improving customer satisfaction" mean? To better respond to customers' expectations and needs? Improving customer relations? Re-enchanting the customer experience? It's all of these things at the same time.

The common denominator is always the customer. They must be at the centre of any customer service strategy. But adopting a customer-centric approach is only possible if you know your customers well. To do so you must improve your customer knowledge by:

  • Understanding the customer journey and experience
  • Constantly keeping an eye on customer feedback
  • Listening to your customers 
  • Centralise customer data using a CRM 

Personalise the customer experience

Customers no longer want a standardised experience. In their interactions with brands, they want to feel recognised and unique. For all brands, personalisation is becoming a huge challenge. But how do you offer each customer a unique experience? The first step, as we said earlier, is to listen to your customers and gather data. Additionally, you can: 

  • Segment the customer base
  • Contextualise and personalise customer communications
  • Deliver a consistent omnichannel experience

Optimise customer relations

Customer relations include all the points of contact between the customer and the brand. It encompasses not only customer service but also all the people who interact with the customer. You can optimise these exchanges by: 

  • Identifying and understanding new consumer needs
  • Automate recurring support requests by integrating self-service in your customer service strategy 

Promote customers

Satisfied and loyal customers can become brand ambassadors. But they need to be encouraged to share their good experience. It is in the interest of brands to implement customer advocacy and customer loyalty programs.

To promote your base of satisfied and loyal customers is to: 

  • Offer them exclusive advantages via customer loyalty offers that can include: gifts, discounts, previews
  • Systematically respond to reviews on social networks;
  • Encourage user-generated content

Measure and improve customer satisfaction on an ongoing basis

In the previous paragraphs, we have listed several ways of improving customer satisfaction. But how do you know if the actions you take are working? The only way is to set up regular measurements of customer satisfaction. Thanks to measuring results, you can then amplify the actions that work and optimise your customer satisfaction strategy.

To enhance customer satisfaction, we must adopt pertinent indicators and measurement tools. However, they must not be used blindly: they must be adapted to each context and set of needs. Care must also be taken to avoid errors of interpretation which may lead to false conclusions and undermine a customer satisfaction improvement strategy.

View the top 30 customer service trends of 2021

Jeremy Gallemard

Hello! I'm Jérémy, President & Co-founder of Smart Tribune. With my background in the digital & customer experience space I'm happy to share my insight & practical advice on customer experience today & what it might look like tomorrow. Happy reading!

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