How to measure customer satisfaction

Customer satisfaction is essential for any businesses, since it leads to customer retention and increased customer spending. But how can you measure it?

Before learning how to evaluate it, we need to understand what customer satisfaction is.

In general, it can be defined as the extent to which a customer is happy with the products or services they have purchased from your company. Customer satisfaction is important for businesses because it can have a direct impact on customer retention and customer spending.

Several factors can influence customer satisfaction. The most important are:

• the quality of your product or service: customers should feel that they are getting value for their money;
• the level of customer service: they should feel that your company is helpful, that they are being treated well and their concerns are being addressed;
• the price of the product or service: they should feel that they are paying a fair price.

By taking these factors (and others) into account, you can increase the likelihood that your customers will be satisfied with their purchase.

Measure customer satisfaction

You can measure customer satisfaction in many ways. For example:

1) Customer satisfaction surveys

One of the most common ways to measure customer satisfaction is through customer surveys. This can be done via phone, or in person, but the most common is to send out an email or online survey to customers after they have made a purchase. You can use surveys to ask customers about their level of satisfaction with your product or service, or you can ask about specific areas of satisfaction or dissatisfaction.

Online or email surveys can have different formats, such as open questions, multiple choice questions, or Likert Scale. The latter allows customers to evaluate an affirmation on a scale of 1 to 5 (1 being very dissatisfied and 5 being very satisfied).

The advantage of customer surveys is that they provide you with direct customer feedback. This can be very valuable in identifying areas where you are doing well and areas where you need to make changes. The disadvantage is that they can be time-consuming and expensive to administer, and you may not get a high response rate.

2) Customer complaints and customer support tickets

Another way to measure customer satisfaction is by tracking customer complaints. This can be done by tracking the number and content of customer service calls you receive, or the complaints you receive via email or social media.

This simple action gives you a direct indication of customer dissatisfaction and it helps you in identifying areas where you need to make changes. Unfortunately, customer complaints give you a snapshot of customer satisfaction at a particular moment in time, and may not be representative of the overall customer population.

3) Customer focus groups

Customer focus groups are small groups of customers who are brought together to discuss their experiences with your product or service.

Focus groups can provide you with direct, real-time, detailed insights into customer satisfaction, but - as for surveys- they can be time-consuming and expensive to administer, and you may not get a high response rate.

4) Social media monitoring

Social media platforms like Twitter and Facebook provide a wealth of data that you can use to track customer sentiment.

In addition to insights, social media are platforms in which companies and consumers interact, so you just need to look at the comments on your posts and the messages you receive to get an idea of what people think about what you offer.

Finally, you can search for the name of your company or product on social media to keep track of the conversations that concern you.

The main advantage of social media monitoring is that it can provide you with real-time insights into customer satisfaction.

5) Online reviews

Online reviews are customer testimonials that are published on third-party websites, such as Google My Business, Yelp, and TripAdvisor, or on social media.

They are a valuable source of information because they are written by customers who have had direct experience with your product or service. Unfortunately, sometimes they can be biased because they may be written by customers who had a particularly positive or negative experience.

6) Connect your products

A highly cost-effective way for brands to reach and capture consumer feedback is to add a digital tag to their products. Consumers can scan the products with their smartphones and access information and services, including surveys, customer care assistants, and be incentivised to provide ratings, reviews and share social content. Consumers that connect to products for authentication purposes will often freely answer questions posed by the brand, turning the product into a cost-effective channel to capture useful feedback that can improve the product and user experience.

Metrics to check

Data is the basis for making informed choices. So what metrics give you an idea of customer satisfaction? In our opinion, the following are the ones you need to keep an eye on.

1) Net Promoter Score (NPS survey)

This is not properly a metric but it is a popular way to measure customer satisfaction. The NPS is linked to customer loyalty and measures how likely customers are to recommend your company to others.

It is calculated by asking customers how likely they are to recommend your company on a scale of 0-10, and then subtracting the percentage of people who give you a score of 0-6 (detractors) from the percentage of people who give you a score of 9-10 (promoters).

The advantage of the NPS is that it is quick and easy to calculate, and provides you with a single metric that you can use to track customer satisfaction over time. The disadvantage is that it does not provide you with any insights into why customers are giving you a particular score, so it can be difficult to identify areas for improvement. Indeed, NPS should not be used as the sole indicator of customer satisfaction, however, it can provide valuable insights into the overall health of a business. As such, it is an essential tool for any business that wants to stay ahead of the competition.

2) Customer churn

Customer churn is the percentage of customers who stop doing business with you over a given period of time. Tracking it provides you with a direct indication of customer dissatisfaction, which is useful to identify those areas you need to improve. However, it doesn't give you any idea about the reasons why customers are leaving. Moreover, it may take some time for the effects of customer dissatisfaction to show up in your churn rate.

3) Customer retention

Exactly the opposite of customer churn is customer retention, which is the percentage of customers who continue doing business with you over a given period of time. The advantage of tracking customer retention is that it provides you with a direct indication of customer satisfaction. But, as for customer churn, you don't get any hints about the reasons why customers are staying.

4) Customer lifetime value

Customer lifetime value (CLV) is a metric that measures the total value a customer will bring to your business throughout their relationship with you. It is directly linked to customer satisfaction. In fact, the more satisfied a consumer is, the longer and more profitable the customer relationship will be.