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How to measure customer satisfaction: the complete guide

Everyone says they want customers to be satisfied, but what are you actually doing to make customers happy? How do you know if you’re on the right track? How do you know if your customer satisfaction efforts make a difference? Why even aim for customer satisfaction at all?

We get it. Customer satisfaction isn’t the easiest part of running a business, but it’s important. To cut to the chase, happy customers usually equals happy business owners.

Why? Because satisfied customers stick around as repeat customers. Customer retention also helps when happy customers share their positive experiences. But what if you have dissatisfied customers?  In that case, you might lose those customers, plus experience negative word-of-mouth.

That’s why it’s so critical to measure customer satisfaction. If you spot gaps, you can then work on turning unhappy customers into satisfied ones.

In this guide to measuring customer satisfaction, we’ll explore:

  • What customer satisfaction is
  • Why measure customer satisfaction
  • Key customer satisfaction metrics
  • Ways to measure customer satisfaction
  • The difference between customer satisfaction and loyalty
  • How to start improving customer satisfaction

The result: You’ll learn how to measure customer satisfaction in ways that help you boost your bottom line.

What is customer satisfaction?

Two people discussing customer feedback metrics at work.

Before you can measure customer satisfaction, you need to understand customer satisfaction.

Customer satisfaction “is a measurement of how happy (or unhappy) customers are with a company's products, services or experience. Customer satisfaction consists of a customer's perceived quality, value and expectations of your company and what you offer,” notes careers site Indeed.

Satisfied customers tend to be repeat customers. It also helps expand your business, such as through referrals and positive reviews.

On the flip side, dissatisfied customers can hurt your brand. Approximately “50 percent of customers will switch to a competitor after just one bad support experience,” finds Zendesk. Plus, unsatisfied customers can prevent others from becoming your customers. I know I’m not the only one who passed on a business after reading a bad review.

Why measure customer satisfaction?

Person pressing a button to give positive feedback on a device asking “how was your day”

As the saying (sort of) goes, you don’t know what you don’t measure. If you want to know if you have happy customers that will help you grow, then you need to measure customer satisfaction.

We all want to feel loved, but customer satisfaction is more than that. As you develop benchmarks for your customer satisfaction, you can also see how your business improves.  Suppose you start a new refund policy. You can then measure customer satisfaction to see if that correlates with an improvement.

Measuring customer satisfaction can also tie into areas such as talent management. Maybe your customer satisfaction surveys show that customers aren’t getting the help they need. That could mean your staff needs more training. Or maybe you need to hire more employees to share the workload.

Bottom line: investing in measuring customer satisfaction pays off. Three-quarters of customers would pay more to purchase from a company that offers a strong customer experience, finds Zendesk.

Key metrics used to measure customer satisfaction

Two people looking at analytics to measure customer satisfaction

Measuring customer satisfaction may seem tough. It’s not like you can use a tape measure. But in a way, you can put customer satisfaction on a scale. How? By using customer satisfaction metrics. Some of the more common ones include:

Customer Satisfaction Score

A customer satisfaction score (CSAT) can be a brand’s bread-and-butter customer satisfaction metric. It simply assigns a value to customers’ self-reported overall satisfaction. For example, a customer support team might ask customers to rate a recent service experience on a scale of 1-100. Or, a CSAT survey might ask respondents how satisfied they are with a purchase on a simple 1-5 scale.

Although CSATs are common, there’s not necessarily one standard measurement. The scales and questions used can vary, so a score may not be comparable from one brand to another. But don’t fret. If you measure your own company’s CSAT score, you can see how that changes over time to see if you’re moving in the right direction.

Net Promoter Score℠

Another one of the more common metrics used to measure customer satisfaction is the Net Promoter Score (NPS®), created by consultancy Bain & Company. The score works by asking customers to rate how likely they’d be to recommend a company or product/service on a scale of 0 to 10.  “Ratings of 9 or 10 indicate promoters; 7 and 8, passives; and 0 through 6, detractors. The Net Promoter Score is simply the percentage of promoters minus the percentage of detractors,” explains Bain. So, the scale runs from -100 to 100.

Determining your NPS could be more valuable than just averaging customer satisfaction scores. That’s because it gives you a clearer idea of where you stand among those with the strongest views. If you have a low NPS score, that’s reason to worry. Why? Because those dissatisfied customers might convince others to not buy from you. On the other hand, a high NPS tells you that you have a strong base of customers who can be advocates for your brand.

In general, a score that’s a net positive (above 0), shows you’re on the right track. What defines a ‘good’ or ‘great’ score is dependent on the industry. The creators of NPS say that anything above 20 is favourable. 50+ is excellent and 80+ is “world class”.

Customer Effort Score

We all want low-effort interactions when it comes to spending our hard-earned money. That’s why you should measure your customer effort score (CES). This metric was created by CEB, which is now part of consultancy Gartner.

To measure CES, ask customers on a scale of 1-7 whether they agree it was easy to resolve an issue (or a related question you want to ask). CES is then based on the percentage of customers who answer with a 5 or above, indicating they at least somewhat agree. “There’s a much bigger opportunity to build loyalty if customers can move out of active disagreement or neutral territory,” explains Gartner.

Customer Happiness Index

As you look to measure customer satisfaction, you may come across Hubspot’s customer happiness index (CHI). This metric is based on an internal algorithm at Hubspot (a marketing platform). It measures engagement with marketing actions, explains marketing agency Impulse Creative. However, CHI seems to have fallen out of favor in recent years, so we don’t think you need to measure this on your own. Still, it could be valuable to think about whether you have any unique data you can use to measure customer satisfaction.

Common ways to measure customer satisfaction

Two people analyzing information, and CSAT, with a computer and whiteboard

Have a good grasp on customer satisfaction metrics? Great! Then we’re on to the next step: collecting or organizing data to measure customer satisfaction. Common ways to do so include using:

Surveys

Many customer satisfaction metrics, including CSAT, NPS and CES, are based on customer surveys. You can also create your own custom surveys using a survey tool that ask respondents questions related to customer satisfaction to develop your own indicators. And then you can use a survey analysis tool to analyze and find insights in the responses.

For example, you may want to follow up on an NPS survey to determine what aspects of your brand a customer most enjoys. So, you might ask open-ended questions about that, like asking customers to describe their satisfaction level with a new feature you started offering. You can ask survey questions through essentially any medium. You can use email surveys, social media, your website, the phone, etc.

Other sources of customer feedback and insight

Survey responses help, but don’t put all your stock there. Some customers might be survey-shy and hold back information. And some might not want to fill out a formal survey, so you may have low response rates. That’s why you need to analyze other sources of customer feedback. Truth is, most companies already get a ton of feedback from existing channels. This feedback can occur across channels like:

  • Email: Customers might complain or give praise while interacting with your customer support team through email.

  • Social media: Even if customers don’t tag you or comment on your posts, they may still be talking about you on social. For many companies, there is a huge pool of untapped feedback on social media waiting to be analyzed.

  • Online reviews: Check review websites like G2 or Capterra for customer feedback on your product. A lot of this feedback can be automatically pulled into feedback analytics platforms like Thematic for analysis.

  • Phone: If a customer calls in, like for technical support, they may not be willing to stay on the phone for a formal survey. But they may still provide comments verbally that clues you in.

  • In-person: In-person feedback might be more anecdotal, but it can still be a good way to measure customer satisfaction. For example, if you notice specific complaints popping up from retail customers in a store, that could be an area worth addressing. That may even be a predictor of future complaints that will start to show up in survey responses.

You can use a platform like Thematic to help make sense of all this customer feedback. Thematic uses NLP technology to structure and analyze text to find meaning and insights in feedback data. The great thing about the platform is that you can integrate, analyze and measure the dormant feedback you already have. Such as social comments, reviews, help tickets, surveys, metadata and more. And when you’re analyzing by the source of feedback this helps you to understand context, urgency and the level of effort needed to improve customer satisfaction.

Analytics

You might have certain internal analytics you can use to better measure customer satisfaction. For example, if you have a low CES, you might look at analytics around average customer wait time. If you can improve that aspect, you might see CES improve.

Or, you might look at analytics around repeat purchases to get a sense of customer satisfaction. If you sell something that’s designed to be purchased more than once, yet you’re not getting much repeat business, that could be an indicator of low satisfaction that you’d want to address.

What’s the difference between customer satisfaction and loyalty?

A satisfied customer checking out at a store

As you measure customer satisfaction, you may notice a correlation with customer loyalty. They’re two peas in a pod, but not the same pea. Customer satisfaction is about how customers feel when purchasing from your brand. Customer loyalty refers to whether customers are willing to stick with your brand long-term.

In general, customer satisfaction leads to customer loyalty.

As you build customer loyalty, you can reduce customer churn. Loyal customers will keep coming back rather than switching to competitors. A reduced churn rate can also make it easier to benchmark customer satisfaction. You don’t have to keep surveying new customers at the beginning of a customer journey. Instead, you can measure the same customers over time.

How to start improving customer satisfaction

Three people looking at a computer, discussing how to improve customer satisfaction using Net Promoter Score (NPS).

By this point, we hope you understand why and how to measure customer satisfaction. But what do you do from there? How can you make changes that improve customer satisfaction?

Start by addressing survey scores, online comments and other sources of customer feedback. Suppose you have a low CES due to long customer service wait times. That could be a sign you need to grow your team to meet customers’ expectations.

But you also don’t have to wait until problems show up in customer satisfaction metrics. Be proactive in solving customer problems. For example, you could use a feedback analytics solution like Thematic to identify emerging negative themes in feedback. You may see that ‘waiting times’ are impacting your metrics. The faster you can alert your team to this, and take action, the less negative impact you will see on your customer satisfaction metrics. The more steps you can automate in this process the better.

Only 13% of customers in a Gartner survey reported being on the receiving end of proactive customer service. But if you want to improve customer satisfaction metrics like CSAT, NPS and CES, you should be proactive, notes Gartner.

At the end of the day, if you want to improve your business, start measuring customer satisfaction. Find ways to make customers happier, and I bet your business will be happier too.

Want to learn more about how you can improve customer satisfaction? Take a look at Thematic’s library of insights on customer experience.

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