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The quintessential guide on customer satisfaction: What, Why and how

Tanuj Diwan
Dec 11, 2019

12 mins read

Tanuj Diwan

With customers becoming more vocal than ever about their good or bad experiences, businesses will need to be agile in measuring customer feedback at the right touchpoints in their customer’s journey after all as a wise billionaire once quoted

“The customer’s perception is your reality.”

If your business does not Make customer satisfaction a top priority, you won’t be aware of the problems or complaints until it’s too late.

Improving customer satisfaction can yield more business benefits than any other quick growth hacks in the present day.

But what we have increasingly seen is there are more questions than answers in the customer satisfaction space.

Customer Satisfaction

Too many jargons, too many pedantic rules can really take your focus away from the core techniques and processes that a business needs to set up to measure, scale and improve their customer satisfaction levels.

Without any further ado, let’s dive into the key focus areas to measure and satisfy your customers.

Before delving into the technicalities of the customer satisfaction metric,

let’s understand the primitive and objective definition of customer satisfaction

The Cambridge dictionary defines customer satisfaction as -” a measure of how happy customers feel when they do business with a company.”

How to measure customer satisfaction

The customer satisfaction metric in the business terms measures the extent to which a customer is happy with your product, service, or experience.

This metric measured on a five- or seven-point scale how a customer feels about a certain experience,

with answers between “highly unsatisfied” and “highly satisfied” to select from using the below answer examples:

  1. Very Unsatisfied / Very Unhappy / Very Bad
  2. Unsatisfied / Unhappy / Bad
  3. Neutral
  4. Satisfied / Happy / Good
  5. Very Satisfied / Very Happy/ Very Good

Why should businesses make measuring customer satisfaction a priority

Most businesses subscribe to the theory of building products and later generating sales.’

Instead, the unconventional and insanely successful businesses know that to satisfy customers they need to be aware of what their customers want, and accordingly, keep building and improvising on their offerings.

For instance, Amazon motto has always been customer first, that makes them create every process as seamless and hassle-free as possible.

Whether it’s by letting its customers keep the items they accidentally ordered and shipping the right ones free of charge, or by refunding small balances to customers.

when the price of an item they’ve previously ordered decreases, amazon makes everything seem easy and quick.

Some basic long-term benefits of improving your customer satisfaction processes include

Reduced churn, Improved repeat purchase, and reduced business costs :

Repeat purchases from satisfied customers reduce the cost of doing business. A classic example would be how Amazon retains its prime members.

Research suggests 91% of the amazon prime members renew their subscription for a second year, and 96% of those members pay for a third year as well.

Pricing advantage over your competitors: If needed you can take the bold step of pricing your products at a premium owing to the superior buying experience

and post-purchase experience(alongside the distinct product features) that you provide, commanding higher prices than your competition resulting in an increase in your margins and, therefore, profits.

For instance, Ritz Carlton’s is able to retain a large group of loyal customers despite the premium price thanks to the unmatched hospitality and the incredibly personalized experiences that it provides.

New market opportunities: Word of mouth messages from your satisfied and happy customers provides your business with new market opportunities at a very low cost.

Example: Tesla and the Airbnb brand grew thanks to the amazing word of mouth marketing given by their happy customers.

New product development: becomes more productive as satisfied customers are willing to share feedback on your new initiatives and give you that early piece of feedback that could help your business open up to new sectors, address different ways of solving a problem and more.

Example: Hubspot- a B2B marketing automation SaaS company has an active community of loyal customers who are more than willing to test the new product features and give their feedback.

They also have an ‘Ideas’ section where customers can submit their ideas and suggestions on how to improve their products.

Satisfied customers: provide much needed financial and moral support when your company faces a corporate crisis. Satisfied customers could buy your products and services by practicing one-stop shopping.

This provides you with significant product diversification opportunities and, therefore, economies of scope.

For example: Disney survived its tough years and downsizing in the early 2000s, largely thanks to its cult fans who persevered its failures.

In a nutshell, the advantages of measuring customer satisfaction are tremendous and can add immense value to an organization’s growth and success. That’s where how an organization measures customer satisfaction becomes critical.

If businesses must initiate processes that eventually lead to an improvement in customer satisfaction, it is extremely crucial to tackle the smaller experiences and several touchpoints along the customer journey.

So how can organizations start measuring customer satisfaction?

The basic metric that measures customer satisfaction is termed as a “Customer satisfaction score” also regarded as CSAT(customer satisfaction scores)that defines how satisfied the customer is along every touchpoint of their journey.

These touchpoints could vary as per the product, industry and the type of service offered.

For example, an eCommerce company could measure the overall buying experience at the end of completing a transaction or a support organization can measure CSAT metrics after every phone call between the agent and the customer or at the end of the successful resolution of a query.

Defining these touchpoints becomes crucial as you may want to strike the right balance of receiving feedback but not overdoing it.

A sample format of the CSAT question is mentioned below :

How would you rate your experience with your recent interaction with <<agent name>>… (e.g. recent support requirement)?

  • Very unsatisfied
  • Unsatisfied
  • Neutral
  • Satisfied
  • Very satisfied

Customer Satisfaction

Pre-defined multiple-choice surveys are a proven way to measure customer satisfaction at crucial touchpoints. Few channels to measure qualitative scores on customer satisfaction include

Webpage pop-up/chatbot surveys: Typically, these can be set up after the end of one web page activity. For instance: after the user completes a specific transaction or if the user visits a certain landing page.

Phone calls/SMS /WhatsApp messages: This survey can be measured after every phone call interaction with a support agent. One could start by asking basic questions such as:

“Why did you purchase that specific product or service?”, “Were you happy with your purchase?”, “Would you be willing to buy more products in a specific category” and more.

However, ensure to keep the right balance between asking the important questions and restricting the conversation to no more than 5 questions, post the point when it becomes annoying for the end-user.

Phone calls can also be initiated when a customer cancels a certain order or when the customer expresses deep dissatisfaction by logging a complaint on the support form

Emails: Emails work best for interactions that require a lot more quantitative detail from the end customer.

For instance, one could float a survey to record the intent to repurchase or ask the reason for abandoning the cart or an intent to refer your product to someone else with a number from 0 to 10.

Few advantages of CSAT include :

  • CSAT data is more objective and easier to measure,
  • It works best if you’re researching larger groups of customers
  • Since it’s measured at different touchpoints of a customer’s journey, the CSAT data can be measured frequently
  • There can be patterns perceived because these surveys can have the same questions, that will allow to compare data over time and see if there are any changes.

Few disadvantages of CSAT include :

  • Measuring CSAT scored may not give you clearer insights on the perception of your customers. They may be satisfied however they may not be very happy with your product yet.
  • There could be few cases of customer burnout where customers may randomly key in values that may not reflect their actual sentiment.
  • At times, CSAT may not provide you with room for nuance and context that is needed to introduce a new product feature or upgrade your offering.

In these circumstances, businesses should also focus on other key metrics such as net promoter scores(NPS) and Customer Effort Score(CES) to gain a bigger picture of their customer’s perceptions about their offerings and about the efficiency of its internal operations.

While CSAT can give businesses minor pitfalls and satisfaction levels along key touchpoints in the buyer journey, there are other metrics like NPS that can provide a bigger picture and context of customer satisfaction.

NPS is defined as how likely a customer would recommend your company/product/service to a friend or colleague.

A standard NPS question format: On a scale of 0-10 (or a scale of 0-5 based on the defined criteria) how likely would it be for you to recommend [company name] to a friend or colleague? Scale <0-10> or Scale of <0-5>

Customer Satisfaction

Source: http://www.customerchampions.co.uk/net-promoter-score-nps-a-balanced-view/

Few key advantages of measuring NPS include :

  • It’s a single measure to record the complete customer experience and customer sentiment.
  • As there is only a single question the cost of operations and other analyses would be greatly reduced.
  • It’s a well-known industry standard for predicting customer loyalty and therefore company growth.

However, few major disadvantages of NPS include :

  • It lacks the information to identify the root cause and act upon driving factors behind customers’ responses.
  • There is little point in asking customers for their views unless an organization is ready and willing to act upon the answers they receive.
  • The survey also tends to be biased towards the customer and not the organizational needs if the organization currently lacks the resources or the capital to scale up to the customer’s needs immediately.

NPS gives a picture of your overall customer perception levels outside-in while your next metric -Customer Effort Score or CES specifically indicates how you perform in handling customer issues along the key touchpoints.

The main purpose of measuring CES is the purpose that organizations create satisfied and loyal customers by reducing their customer effort.

CES is defined as a metric that measures customer satisfaction levels by focusing on the efforts customers make to interact with your business’ services and products.

Meanwhile, CES reflect deeper on the company’s efficiency to handle a certain issue/query. It indicates how an organization made it easy for its customers to handle their issues.

Example of a CES query:  Did the <<Name>>organization make it easy for me to handle my issue?

  • Strongly disagree
  • Disagree
  • Somewhat disagree
  • Neutral
  • Somewhat agree
  • Agree
  • Strongly agree

Customer Satisfaction Graph

(image source : digital.mobius.on)

Few key advantages of measuring CES include:

  • It’s easy to pinpoint and narrow down to actionable improvement areas
  • The responses can help organizations prioritize their key problem areas quickly

However, measuring CES has a few disadvantages that include:

  • The fact that CES measurement is effective for mainly service quality and not necessarily product performance
  • CES doesn’t delve into the root causes of why customers have any issues in the first place.

Again, measuring these key metrics can at times prove to be a big hurdle as companies may experience poor response rates resulting in a low sample size to make important decisions.

  • Adding incentives like rewards, coupons or even a fun gamification mode format increases the willingness to cooperate and improve the sample size.
  • Also, including a few open-ended questions to the CSAT, CES surveys can help organizations analyze why did the problems arise in the first place or identify the root causes for certain problem areas. Incorporating few text-analytics tools can come to your aid in managing the open-ended questions.

Now that we have defined metrics to measure customer satisfaction levels,

how can companies go about improving their customer satisfaction measurement process and directly loop the learning to improve the overall customer satisfaction levels of their customers? It again boils down to what are you asking?how can companies go about improving their customer satisfaction measurement process and directly loop the learning to improve the overall customer satisfaction levels of their customers? It again boils down to what are you asking?

The objective of measuring CSAT scores boils down to gaining insights on how organizations can improve a certain aspect or process along their customer journey.

1. For this, firstly, make a list of goals you wish to achieve for setting up a continuous CSAT measurement process.

For example, Your organization can focus on one larger subject you wish to work on such as dealing with excessive negative reviews/complaints or improving the number of referrals.

Organizations can also prioritize their customer satisfaction measurement goals based on the results that they would want to achieve, such as :

  • Speed and Quality of service/product offered
  • The intent of customers to repurchase or sign up for a loyalty program
  • Follow-up on complaint resolution satisfaction levels and so on

These goals would of course vary based on the industry and the target audience whom you intend to reach.

2. Secondly, define and target the key audiences in terms of designation and industry you want to reach out to,

create the multiple-choice format survey questionnaire and float it to the relevant customers at crucial touchpoints along their purchase journey.

Measuring customer satisfaction levels and implementing the key insights from these metrics is an extensive process yet as stated earlier a key measure that companies simply cannot ignore.

Watch out for our dedicated blogs as we further unlock and simplify the process on how organizations can effectively measure customer satisfaction scores,

and on how they can implement some of the key learnings/insights from these metrics to positively impact their overall customer’s satisfaction levels.

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