Satisfying your customers is one of the most important missions of your business. But measuring customer satisfaction can be a very tricky exercise. How can you tell if your customers are actually satisfied, or if they’re only sticking with you until something better comes along? Are they purchasing from you because they really love your customer experience and products, or because it’s just too much effort to switch to another business right now?
To ensure you’re truly satisfying your customers and not just meeting the bare minimum of their expectations, you need to know what types of metrics measure customer satisfaction. Gaining an understanding of these key KPIs will help you measure the real level of customer satisfaction with your business. And with that data, you can begin exploring how to improve customer satisfaction so you can create legions of loyal customers who return again and again. That’s how you build a business that lasts and thrives.
What is customer satisfaction?
Customer satisfaction is a concept that sounds simple: how satisfied customers are with your business. But it’s quite a bit more complex than that in reality. This is because there are so many facets of your business that contribute to the overall customer experience, and customer expectations vary as well.
For example, you might have the best product on the market in your industry bar none. Let’s say you created a new type of laptop battery that gives users two days of battery life. That sounds exceptional! Short battery life is a big problem for many consumers, and they’d pay extra and be highly loyal to you for solving their problem so effectively, or so you figure. But if your innovative battery also has issues regularly so customers need to contact your help team often, and that customer service team is surly and sub-par, most customers probably won’t actually feel very satisfied at all by your business even though they love the concept of your product.
On the other hand, if your product is a cheap and cheerful laptop case that costs 50% less than anything else on the market and has very few issues, your business might invest more in self-service resources on your website instead of a fully staffed customer service team. And since customer expectations are lower due to the perception that your price is more than fair, customers might be pretty satisfied with your business even though your customer service is basically just some articles on your website.
Customer satisfaction is all about expectations vs. reality. If you promise much more than you can actually deliver, or parts of your customer journey are much more difficult than customers feel they should be, you will have low levels of customer satisfaction. If you’re meeting or exceeding customer expectations, or your customer journey seems almost effortless, satisfaction levels will probably be high.
Does this all sound a little bit (or a lot) vague? You’re not wrong—customer satisfaction is a pretty slippery metric to nail down. But fortunately, there’s an effective way to measure this critical metric so you know where you stand.
The CSAT (Customer Satisfaction Score) asks customers how satisfied they are with one particular interaction or their overall experience with your company. Don’t worry—we’ll go into much more depth about all of this down below.
Why you should measure customer satisfaction
Measuring customer satisfaction is very important for every business, no matter your customer base profile or industry.
Satisfied customers stick with your company—they’re loyal repeat consumers. And that comes with big cost savings for your business. It costs anywhere from 5 to 25 times more to acquire a new customer than to keep your current ones. If most of your customers are dissatisfied with your business, they’ll churn quickly and frequently over to your competitors. (Don’t believe us? Check out our free CSAT ROI calculator!) You’ll be left with higher marketing and sales costs trying to attract new business to keep your company afloat.
Measuring customer satisfaction can also help you uncover exactly why your customers are satisfied or dissatisfied. Perhaps they love your customer service team but find your products mediocre. Maybe they find your services helpful but just hate your billing process. Or maybe they love your customer experience overall but have issues with just one specific product—an easy fix to keep them delighted.
Whatever the problems are, you can’t fix them until you know about them. And you can capitalize on your strengths when you know exactly what those are as well.
For CEOs, in particular, according to the American Marketing Association, customer satisfaction enables them to align their strategy and execution not only with the needs of their customers but also with the expectations of their board and investors.
Measuring customer satisfaction over time also helps your business track its progress. You can see how changes you make to the customer experience or with your product line impact customer satisfaction, so you know what’s working well and what’s falling flat.
Many businesses assume to know the ways in which changes and improvements will affect customer satisfaction, or that if business is good then everything must be fine—but those assumptions are often wrong. Measuring satisfaction levels by asking your customers directly is a much better way of seeing where you are right now and where you need to go. The importance of customer satisfaction is too great to leave those assumptions unmeasured and untested.
How to measure customer satisfaction KPIs
Now that you know how vital customer satisfaction is to your company’s success, how can you measure customer satisfaction levels with accuracy? Here are the most important customer satisfaction KPIs and when—and how—you should use them.
Customer Satisfaction Score (CSAT)
Customer Satisfaction Score, or CSAT, is a customer loyalty metric that companies use to measure how satisfied a customer is. You can use it to measure satisfaction with a specific interaction, like a purchase or customer service experience, or to measure satisfaction with your company as a whole.
CSAT is the main metric used to measure customer satisfaction because it’s so simple and direct. You use it by sending out a customer satisfaction survey asking your audience to rate their satisfaction with your brand or a specific experience. This rating happens on a five-point scale: very unsatisfied, unsatisfied, neutral, satisfied, and very satisfied. View more examples of CSAT surveys to get a full picture of the possibilities.
Then, you take the number of satisfied customers (those who rate you a 4 or 5) and divide that by the total number of responses, and multiply that number by 100. This formula will give you the percentage of customers who consider themselves satisfied—your CSAT number.
Net Promoter Score®
While CSAT is the gold standard for how to track customer satisfaction, there are a few other types of CX metrics you can use to measure customer sentiment and loyalty. The Net Promoter Score survey (NPS) is one. It measures how strong the relationship between the customer and your company is—how likely are they to recommend your business to a friend or colleague?
Net Promoter Score gauges how strongly customers feel about your company in a positive or negative way. It measures if more of your customers are out there telling people how wonderful your company is, or if they’re unsatisfied and telling their friends and family about it. And it also tells you if customers are buying from you now but likely to move to a competitor if the right offer comes along. These are good secondary measures of customer satisfaction and can provide additional data on your overall customer experience and loyalty levels.
Customer Effort Score
Your Customer Effort Score (CES) is another customer sentiment measurement that gauges how easy you make it for your customers to do business with you. Do they need to do lots of time-consuming tasks just to pay a bill, or is your customer experience seamless and simple? The easier you make it for your customers to make purchases and get assistance, the more likely they are to be satisfied with your company.
While CSAT is a great measure of customer satisfaction, CES is a stronger measure of customer loyalty. Research has shown that if you solve problems for your customers quickly and with a minimum of effort on their part, you’re building loyalty. It makes sense—customers don’t expect that they will never have an issue they need to resolve with your business. But they do expect that when one arises, you’ll deal with it effectively.
Combining your CES, CSAT, and NPS scores will give you a strong Voice of the Customer (VoC) program to measure and analyze how customers feel about your business. This will give you a view of the overall satisfaction levels of your customers—do they feel satisfied with touchpoints in the customer journey, with your brand, with the effort needed to resolve problems, and are they satisfied enough to recommend you to others?
Getting an overall view is important because there are so many factors that affect customer satisfaction, and they all can contribute to customer sentiments about your business and brand. Always be sure to add open-ended question options for feedback with all of these surveys so you can ask customers why they feel the way they do, and you’ll get ideas for improvement right there.
External and industry benchmarks
External benchmarks are important to review to see where your customer satisfaction scores stand. The overall US customer satisfaction score is 74.4%, so start from there to see if you’re doing pretty well or falling far behind.
Customer satisfaction levels also vary widely by industry. It probably won’t surprise most people to learn that internet service providers have low average rates, while people are highly satisfied with soft drink companies (they’re delicious!). Check out a thorough list of customer satisfaction levels by industry in our complete guide to CSAT.
You shouldn’t use external or industry benchmarks as a reason to excuse your scores if they’re low, however. You’re competing mostly against yourself to satisfy and delight your customers as much as you possibly can. But these benchmarks can provide context for your scores so you can see if they’re in line with your competitors or out of the norm, and what action that means you need to take.
How do expectations and customer opinions of your brand stack up to what you actually offer? This is where conducting market research by investigating and understanding your brand attributes can come in handy.
Brand attributes are the descriptive attributes your brand has to your customers, which might seem like it doesn’t have a lot to do with customer satisfaction. But knowing what associations —positive and negative—your consumers have with your industry and brand can help you spot opportunity areas in your customer experience. And knowing how well your business delivers on what your brand attributes promise can also measure how you’re living up to customer expectations, which are a big driver of satisfaction levels.
For example, if you’re pushing a brand image that promises high-quality luxury handbags, but in reality, your bags tend to fall apart pretty fast, your customers are going to feel deceived by your perceived brand attributes. Your delivery doesn’t match the expectations you set for them. Conducting market research to get customer feedback on your brand attributes and comparing them to what people are searching for from brands in your industry can help you identify and fill gaps in your customer perception and satisfaction.
How to improve customer satisfaction
Once you’ve measured your current customer satisfaction levels, you might find that some key KPIs are lacking a little bit (or a lot). While this might feel disheartening at first, it’s actually a positive step! Now that you have the data to tell you what’s wrong, you can start to make it right.
Improving your customer satisfaction levels comes from following the next few critical steps to increase satisfaction. Take these actions and watch your CSAT score rise. Basically, improving your customer satisfaction levels requires listening closely to your customers when they offer you the gift of feedback and acting on it quickly and effectively. If you do those two things, you’ll be watching your customer satisfaction KPIs tick steadily upward in no time.
Ask for feedback
If you don’t actually ask customers directly if they’re satisfied and why they are (or aren’t), you’ll never have an accurate view of the current issues and opportunity areas in your business. Every business has weak spots, but fixing them starts by asking your customers for their input. You can send out a variety of customer feedback surveys, but it's always good to start with a classic CSAT survey and go forward from there.
Take a customer-centric approach
It’s common for many businesses to focus first on their own priorities. But to really satisfy your customers’ needs, you should be starting from a customer-centric approach. That means asking how upcoming changes and product launches will be felt by your customers before you think about how they’ll impact your business. Beginning by thinking about customers instead of business priorities or the bottom line will result in an overall better customer experience, and that’s what will leave them satisfied and highly loyal to you.
Your customers don’t need to be just passive recipients of your customer experience—you can and should engage them as well! You can do this in a number of ways. One great method is asking their opinion in surveys regularly so they’re active feedback providers. You can also engage with them via your social media channels—ask questions, start conversations, and see what happens.
Listen and monitor feedback across all channels
Speaking of social media, it’s a great tool for continuously monitoring conversations customers are having with your brand. They’ll often leave comments about problems they are experiencing in Twitter threads or Facebook comments, or on your latest Instagram post.
Sometimes these will be positive shoutouts you should use as testimonials or as feedback on your brand strengths. But other times, issues will surface that you should deal with quickly to avoid it becoming a larger problem. Your business needs to have a plan for listening to your social media channels so you don’t miss these important conversations and opportunities to connect.
And it almost goes without saying—you need to listen closely to the feedback your customers give in the surveys you send them across all channels!
Act on valuable feedback to improve satisfaction
Your customers are taking time out of their busy lives to provide you with thoughtful feedback that can significantly improve your business. If you’re not actually acting on that feedback, it’s wasting both your time and theirs as well. Some feedback is easier to act on than others, but it’s important that your customers feel you’re actually listening to what they’re saying. Making real changes based on the feedback you get when it’s compelling enough to warrant a shift will help increase customer satisfaction and your business will thrive as a result.
Measuring and tracking your key customer satisfaction KPIs can be a tough exercise but it’s well worth it for the benefits your business will see. You can find gaps and pain points in your customer experience and use that knowledge to create a better one.
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