What is customer satisfaction and why should you measure it?
Customer satisfaction is a common method used to determine how well you meet – or exceed – customer expectations. It is used as a key performance indicator of customer service and product quality.
Customer satisfaction is a composite of many different aspects, and it is likely to change over time. Customers who develop attitudinal brand loyalty – that is, they have a positive emotional connection to a brand – have been shown to be less price sensitive than their less-loyal counterparts. They’re also more likely to convert when they buy from you. Highly satisfied customers are also likely to tell friends and family about their experiences and to promote your brand.
These are good reasons to aim for a level of customer experience that exceeds rather than simply meets expectations. But accurately knowing that you provide great customer service can be difficult without measuring customer satisfaction.
According to Mckinsey, you can see the impact improved satisfaction can make below:
4 key customer satisfaction metrics
So how do we effectively measure customer satisfaction?
Here are 4 key customer satisfaction measurements that are critical to your business success. They take into account the different dimensions of customer satisfaction, such as affective (emotional) and cognitive (rationally judged) reactions to a product or service and behavioural intentions (such as likelihood to recommend or repurchase) as well as taking overall scores of satisfaction as judged by the respondents.
1. Overall Satisfaction Measure (Attitudinal)
Example question: Overall, how satisfied are you with “La Jolla Grove restaurant”?
This question reflects the overall opinion of a consumer’s satisfaction experience with a product he or she has used.
The single greatest predictors of customer satisfaction are the customer experiences that result in attributions of quality.
Perceived quality is often measured in one of three contexts:
- Overall quality
- Perceived reliability
- Extent of customer’s needs fulfilled
It is commonly believed that dissatisfaction is synonymous with purchase regret while satisfaction is linked to positive ideas such as “it was a good choice” or “I am glad that I bought it.”
By using the perception of quality and product satisfaction as a guide, we can better measure customer satisfaction as a whole.
2. Loyalty Measurement (Affective, Behavioural)
Would you recommend “La Jolla Grove restaurant” to your family and friends?
This single-question measure is the core NPS (Net Promoter Score) measure.
Customer loyalty reflects the likelihood of repurchasing products or services. Customer satisfaction is a major predictor of repurchase but is strongly influenced by explicit performance evaluations of product performance, quality, and value.
Loyalty is often measured as a combination of measures including overall satisfaction, the likelihood of repurchase, and the likelihood of recommending the brand to a friend.
A common measure of loyalty might be the sum of scores for the following three questions:
- Overall, how satisfied are you with [brand]?
- How likely are you to continue to choose/repurchase [brand]?
- How likely are you to recommend [brand] to a friend or family member?
Understanding customer loyalty in this form of metric helps you to measure customer satisfaction from the angle of future behaviour. It can be helpful not only for understanding customer satisfaction now but also for developing future purchase predictions.
3. A series of Attribute Satisfaction Measurements (Affective and Cognitive)
Example question: How satisfied are you with the “taste” of your entre at La Jolla Grove?
Example question: How important is “taste” in your decision to select La Jolla Grove restaurant?
Affect (liking/disliking) is best measured in the context of product attributes or benefits. Customer satisfaction is influenced by the perceived quality of product and service attributes and is moderated by expectations of the product or service. The researcher must define and develop measures for each attribute that is important for customer satisfaction.
Consumer attitudes toward a product developed as a result of product information or any experience with the product, whether perceived or real.
Again, it may be meaningful to measure attitudes towards a product or service that a consumer has never used, but it is not meaningful to measure customer satisfaction when a product or service has not been used.
Cognition refers to judgment: the product was useful (or not useful); fit the situation (or did not fit); exceeded the requirements of the problem/situation (or did not exceed), or was an important part of the product experience (or was unimportant).
Judgments are often specific to the intended use application and use occasion for which the product is purchased, regardless of whether that use is correct or incorrect.
Affect and satisfaction are closely related concepts. The distinction is that satisfaction is “post-experience” and represents the emotional effect produced by the product’s quality or value.
Using this metric to measure customer satisfaction helps you to narrow down the causes of customer satisfaction levels. Unhappy customers may have a particular emotive response to products or services, rather than quality being the issue, for example.
4. Intentions to Repurchase Measurements (Behavioural Measures)
Example question: Do you intend to return to the La Jolla Grove restaurant in the next 30 days?
When wording questions about future or hypothetical behaviour, consumers often indicate that “purchasing this product would be a good choice” or “I would be glad to purchase this product.” Behavioural measures also reflect the consumer’s past experience with customer service representatives.
Customer satisfaction can influence other post-purchase/post-experience actions like communicating to others through word of mouth and social networks.
Additional post-experience actions might reflect heightened levels of product involvement that in turn result in an increased search for the product or information, reduced trial of alternative products, and even changes in preferences for shopping locations and choice behaviour.
How to measure customer satisfaction through KPIs
However, it is better to measure customer satisfaction with particular goals in mind. By having scores you’re aiming to meet, whether that is an internal or industry benchmark, you’re able to track your progress over time and react to how you’re doing. If your actions aren’t improving your CSAT score, you might need to re-evaluate where you’re going wrong.
So how do you set a realistic goal for your customer satisfaction score that can act as your KPI?
Improve on your past customer satisfaction score
The most obvious answer is to consistently improve on your past customer feedback. Taking an initial score as a benchmark and taking stock at regular intervals will help to not only measure customer satisfaction over time but to constantly improve your service. Your score might refer to one part of the customer journey – for example, ordering a new car, or picking it up. Try to figure out what is causing the scores you’re receiving – speak to customers, product teams, frontline staff – all of them have useful insights to help you improve. Of course, customer satisfaction will continue to change and evolve and you should treat it as such.
Just because your score is high doesn’t mean it will stay that way – constantly look to improve customer satisfaction!
Take a look at the competition
Your competition will almost certainly be measuring customer satisfaction. Understanding – to whatever extent you can – where you stand in comparison to your competitors will help you to set yourself customer satisfaction goals for the future. They are likely seeing the importance of customer satisfaction – so don’t get left behind.
Judge by industry benchmarks
Your industry will almost certainly have customer satisfaction benchmarks that will provide you with a solid guideline for measuring customer satisfaction. If you’re not meeting your industry’s baseline, then it’s likely that your customer experience is falling short of the expectations of your consumer base.
Using customer satisfaction surveys to gauge success and take action
Gathering customer satisfaction data and developing KPIs is an important process, but measuring customer satisfaction is often seen as a rote exercise to complete.
Customer satisfaction surveys are a useful tool in a brand’s arsenal for gauging success, but they are often seen as a “must-do” action rather than a useful tool. Instead, to prioritise customer success, brands need to develop an agile, adaptable approach to customer surveys.
Why measuring customer satisfaction should be agile
Developing a system of delivering a customer satisfaction survey that is agile and well-targeted will help you to not only take the pulse of customer sentiment, but it will also help to create targeted actionable insights on an ongoing basis.
A quarterly or an annual measurement will only provide you with a snapshot of customer success. It won’t help you to measure the reaction to a new launch, or the integration of a new system. It also won’t help you to narrow down whether overall customer sentiment has changed, or whether specific actions you’re taking have had an effect.
Collecting customer feedback in an ongoing approach will help you to see the micro-trends of customer satisfaction. You can quickly adjust your customer journey to help new customers experience the best of your brand, rather than take delayed action.
Use customer satisfaction data to hone processes
As outlined previously in this article, there are four key metrics that you should use to help you improve customer satisfaction.
However, simply gathering this customer satisfaction data isn’t enough to help your business thrive. Narrowing down the key triggers for unhappy customers and taking action to improve customer satisfaction is the most vital part of the process.
Whether it’s poor customer service or customer frustration at a particular ordering process, finding the core causes of customer dissatisfaction – and conversely, what makes customers happy – is the right approach.
Take action to avoid stagnation
The customer satisfaction process will constantly need improvement to meet new demands and to avoid stagnation in a highly competitive market.
For example, this diagram shows a potential customer satisfaction process improvement cycle:
Here, customer follow-ups and customer satisfaction surveys are a fundamental part of the development of customer experience. At each stage of the customer interaction, gathering customer data and formulating a response is a given part of the process – meaning your customers’ satisfaction is never left to chance.
Your internal process should include a number of stages that will form an understanding of customer sentiment and take appropriate action:
1. Customer satisfaction data gathering
Listen to what your customers are saying on a rolling basis. This data can be gathered effectively through customer satisfaction surveys, but it can be bolstered by social listening and unsolicited customer feedback (customer lifetime value, etc). Often, a customer satisfaction survey will return insights at the extremes, with highly negative reviews and very positive reviews. Gathering further data and collating it all within one platform can help you to tease out the truth of customer satisfaction.
2. Understanding customer journey touchpoints and their effect
Knowing the particular journey your customer has experienced is important for determining touchpoint value. This is again why ongoing customer satisfaction surveys can be more effective than taking a static, scheduled approach. Once you understand how customer satisfaction is tied to particular touchpoints, you can prioritise action more effectively.
3. Narrowing down the drivers of customers satisfaction
It’s not enough to know how customers feel – discovering the drivers of their satisfaction is key for progress. There are many deciding factors behind customer satisfaction, and they’re likely to differ between customers. Determining which drivers affect each audience segment helps you to better meet their needs and expectations.
4. Empowering your employees to take action
Brands need to evolve their internal processes to help drive customer satisfaction, but they also need to empower their employees to take action. Creating a culture of action – where issues are identified and closing the loop is consistently achieved – will help your employees to be proactive in their approach. Employee coaching can also help to create customer experiences that are not only satisfactory, but memorable.
5. Automating your actions
Another way to ensure your employees are able to take quick, effective action is to automate the process. Rather than relying on human effort to ensure that tickets, alerts, and follow-up actions are scheduled, use technology to improve customer satisfaction at scale. You can deliver actionable insights to the right teams at the right time automatically – meaning you’re never missing a step when it comes to addressing customer dissatisfaction. By uncovering and taking actions for problems on a micro level, your team has the time to tackle wider strategic and macro issues more effectively.
How to measure customer satisfaction through tools
Learning how to measure customer satisfaction is only part of the wider customer experience picture. Customer satisfaction is complex and ever-changing, and as a result, it’s important to take frequent measurements across a range of metrics in order to get the most accurate picture possible.
The wider measurement picture
Your customer satisfaction score should always be considered among a broader picture of data, including customer effort score, Net Promoter Score (NPS), and more. This will help you to understand customer sentiment and customer loyalty in relation to the service you’re providing.
As mentioned, there are more sources for information on customer satisfaction than a customer satisfaction survey. Social media monitoring, focus groups, customer retention data, and more can help you to establish why existing customers stay and why new customers might not develop their customer relationship with you.
But how do you keep track of all those customer satisfaction metrics, and how do you analyze them relative to one another to one-another and gather actionable insights?
How to measure customer satisfaction using cohesive tools
As mentioned, we recommend taking an ongoing approach to customer satisfaction along with other metrics as part of a broader customer experience program.
Scheduling surveys, automating tickets, sending actionable insights and more is more effective with the use of a single cohesive platform, such as Qualtrics XM™.
By measuring and analysing your customer satisfaction metrics within a single platform, you’ll not only benefit from powerful analytic tools and easy-to-interpret results, but you’ll also be able to integrate your findings with other elements of your customer experience data. But most importantly, you’ll be able to take action on your insights across the organisation far more easily.