The Benefits and Importance of Customer Satisfaction

I can’t get no satisfaction.

Aside from hearing it as the chorus in a rock n’ roll classic, it’s a phrase you never want to come from your customers. No customer satisfaction = no retention. No retention = shrinking customer base. And bad word-of-mouth. And plummeting profits.

Yes, you need a great product. Yes, you need a competitive price. But the future belongs to the experience around your product or service, through each stage of your sales funnel.

In fact, Walker Consulting predicts that experience will be the key differentiator by 2020. Not the price nor the product itself. It will first and foremost be about the experience – and customer satisfaction – you provide.

“It comes down to how your customer experiences the brand – and how that brand makes a person feel.” ~ Alex Allwood, The Holla Agency

In essence, their satisfaction with your brand, your product, your service, your messaging, and more, will make or break you. Are you ready for that?

In the 2018 Digital Trends report, Econsultancy asked which opportunity businesses were most excited about for the year ahead. The #1 response?

Customer experience (aka CX).

More than content marketing, more than mobile, more than personalization, and more than social. Experience – and by extension, satisfaction – beat out some very heavy hitters.

The good folks at Walker also discovered that 86% of consumers are willing to pay more for a better CX.

Businesses are going to focus on customer satisfaction and experience, and consumers are actively looking for those brands that deliver on the promise.

Sounds too good to be true, doesn’t it? But of course, you may have more questions than answers: how do you achieve customer satisfaction? How do you increase customer satisfaction? How do you define customer satisfaction?

Let’s dig in.

What Is The Meaning Of Customer Satisfaction?

Before we explore it in more detail, we need to define customer satisfaction itself.

At its most basic, customer satisfaction measures how your product, service, and overall experience either falls short, meets, or exceeds customer expectations.

How you measure it varies from business to business. Some may base it entirely on retention and repeat customers, while others may create a numerical value based on data and/or customer feedback.

Regardless, it measures, rates, and attempts to manage how happy your customers are with you, your products, and your brand as a whole.

Happy = good. Not-so-happy = bad. It’s really that simple.

Why? Glad you asked.

The Importance of Customer Satisfaction in Business

It’s obvious that satisfied customers are a good thing. However, it may be a bit harder to articulate exactly why.

The short answer: companies that prioritize customer satisfaction grow and increase revenue. Those that do not, don’t.

So, are you prioritizing customer satisfaction and success? And if you’re nodding your head, are you absolutely sure? Less than half of surveyed consumers – only 48% – believe the brands and businesses they buy from are actually doing so.

Growth and revenue are key elements of a successful business. That goes without saying.

Benefits

Beyond the growth correlation – if you actively work to increase customer satisfaction, you’re more likely to see an increase in revenue – there are plenty of other reasons to make it a top priority.

Take word-of-mouth, for example. It matters, especially in the ultra-connected and always-on digital world we call home. We can instantly share our experience with a brand with thousands of others on social media and review sites like Yelp.

And aside from that potential reach, we trust and seek out online recommendations:

• 92% of consumers trust recommendations from friends and family.
• 68% of respondents said a positive review made them more likely to use a business, while 40% said a negative one made them not want to use it.
• 93% turn to online reviews to decide if a business is good or bad.
• Just under half of consumers won’t consider a business with less than a 4-star rating.
• 34% read 4-6 reviews before deciding to trust a business.
• Word-of-mouth is listed as a key influencer for 74% of consumers.
• Facebook and Yelp are the two most trusted review sites.

That’s a lot of potential goodwill and positive publicity. But it works both ways. 60% of consumers share a bad experience with others – and they tell 3x as many people – compared to only 46% who share the good ones.

The takeaway? You’d better do your best to ensure each customer interaction is a positive one. If you don’t place a premium on relationship marketing and customer satisfaction, you won’t be aware of problems or complaints until it’s too late.

Once the word is out, it’s out. As the saying goes, you can’t manage what you don’t measure. If you prioritize keeping your customers happy, you’ll a) reduce the number of unhappy ones, and b) know about and work to resolve dissatisfaction that much faster.

Win-win.

But the benefits of a customer-first approach don’t stop there:

Brand loyalty
Why would a happy, satisfied customer ever look elsewhere or want to leave you? You’ll see lower churn, and higher retention. And a 5% increase in retention can increase profitability by as much as 25-95%. Let that sink in.

“Return customers tend to buy more from a company over time. As they do, your operating costs to serve them decline. What’s more, return customers refer others to your company. And they’ll often pay a premium to continue to do business with you rather than switch to a competitor with whom they’re neither familiar nor comfortable.” ~Fred Reichheld, Creator of Net Promoter

Brand buzz
A platoon of happy advocates and cheerleaders singing your praises on social media and review sites is the absolute best publicity that money can – or can’t – buy. Work to make it happen.

Brand trust
Consumers trust people – even strangers – more than they do advertising and marketing.

“Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” ~H. James Harrington, CEO of Harrington Management Systems

Measure, understand, control, and improve.

Customer Satisfaction Goals

So, what should your customer satisfaction goals include? Hard to say. No one knows your business better than you. Your goals may not be my goals, and vice versa.

Generally speaking, you want to keep things simple. Use the SMART goal system (Specific, Measurable, Achievable, Relevant, Time-limited). Set only 1-2 at a time (otherwise they start competing with each other). Write them down (studies show you’re 2-3x more likely to follow-through). Keep them realistic.

Your first goal should be to start collecting customer satisfaction data if you haven’t already. That’s a no-brainer, and we’ll get into the how in a moment.

Identify the problem spots, the bottlenecks, and the frequent complaints.

After that, your goals may include reducing churn or increasing retention by X%, reducing the number of contact points with repeat customers, decreasing complaint response time, increasing the NPS by X%, experiment with different communication channels, boost the number of “completely satisfied” customer interactions, reduce shipping time, and so on.

What would most benefit your business and your customers? Go with that.

Learn How to Measure Your Customer Satisfaction

Now we get to the meat and potatoes. It’s all well and good to plan and promote customer satisfaction within your business, but how exactly does that play out in the world?

Hubspot recommends a simple acronym to remember the steps: OCCAM (as in Occam’s Razor, the idea that the simplest explanation or approach is usually the best one):

1. Outline goals and plan.
2. Create customer survey.
3. Choose trigger or timing.
4. Analyze the data.
5. Make adjustments.

You can’t get much simpler than that.

Begin by asking yourself: Why? Why am I doing this? What do I hope to accomplish? What do I want to get out of this?

A customer satisfaction survey is one of the easiest and most reliable methods for getting a snapshot of satisfaction levels around a particular element of your business (your products, your complaint resolution, your customer service, and so on). Popular methods include:

1. Customer Satisfaction Score (CSAT), which measures their satisfaction on a particular interaction.
2. Customer Effort Score (CES), which examines the ease with which they were able to have their issue successfully resolved or complete an action (like making a purchase).
3. Net Promoter Score (NPS), which asks how likely they are to recommend your business to someone else.

Next, determine who will receive your survey, and when. Immediately after a purchase? At the end of an online chat? A week after a complaint was lodged? Look to your goals from the first step for guidance here, as the who and when is determined by what you’re trying to accomplish.

The cardinal sin of data collection is doing nothing with it. Once you have the data, make sure you analyze and use it to make improvements. Otherwise, you’ve wasted everyone’s time and effort.

Some methods are easy to analyze – NPS is simply the percentage of Detractors subtracted from the percentage of Promoters – while others are more complicated. Many customer satisfaction tools have built-in analysis as part of the service. If not, a quick online search can provide dozens of tutorials and how-to guides.

Surveys with a single question and a multiple-choice answer are typically best, but don’t be afraid of longer ones with open-ended questions. They require more effort in both creation and analysis, but they also provide deeper and more varied understanding. You get what you put in.

Once you have some insight, use it. Make adjustments. Unclog bottlenecks. Remove friction. Make it easy and convenient for your customers to get what they want and do what they need to do.

That’s the whole idea.

3 Customer Satisfaction Examples

Looking for some inspiration? Here are three examples of the satisfaction game done right:

In Action

Trader Joe’s is a popular chain of grocery stores with 470+ locations. They have a truly remarkable return policy that puts customers completely at ease and removes all friction, especially those thinking of trying a new product. They will literally take back any product – even if it’s open and/or partly consumed – without a receipt. No. Questions. Asked. The policy includes food, beverages, and alcohol. Don’t like that new wine or beer? Bring back what’s left, get a refund.

“Try it. We think you’ll like it. If you don’t, bring it back for a full refund.” ~Trader Joe’s

With a generous return policy like that, you can bet everyone is recommending them to their family, friends, and followers.

Read or Leave a Review
Amazon clearly knows what it’s doing. Every product on the site has a star-rating at the top of the page, and every customer is encouraged to leave their honest review.

Click the upside-down triangle, and you can select the star-rating that matters most to you, and instantly read the comments left by those consumers that rated it as such. What problems did people have that resulted in a 1-star rating? What pros motivated others to give it five stars?

Not only is Amazon collecting mountains of valuable data on customer satisfaction to answer those questions and more – allowing them to identify common complaints and issues – but they’re also leveraging that data immediately as testimonials – both positive and negative – for those thinking about making a purchase. One-click. One stop.

And that’s one of the many reasons why Amazon is the king of the e-commerce game.

Customer Satisfaction Survey
The humble customer survey performs outside its weight-class. Easy to create and execute, but delivers a powerful data punch.

Dashlane is a password vault and manager. Already one of the most popular in the niche, they’re not resting on their laurels.

This simple NPS survey was sent out via email to existing customers, literally takes just seconds to complete, but collects priceless data and makes their customer base feel warm, fuzzy, and appreciated (their opinion matters).

The Best Strategies to Improve Customer Satisfaction and Retention

Convinced yet? You should be, so let’s jump into some of the best strategies for better customer satisfaction and retention.

Net Promoter Score

The NPS is one of if not the most popular strategies for gauging customer satisfaction with and loyalty to a particular brand. It’s simple, easy to calculate, and boasts some excellent completion rates because it takes just a few seconds to complete.

One basic question (usually a straightforward one like “How likely are you to recommend us/this product to your friends and family?”), and a scale from 1 (least likely) to 10 (most likely). That’s it.

Anyone answering from 0-6 are called Detractors. They’re your unhappy customers, and they can do a lot of damage to your reputation if left to fester.

Passives are those that answer either 7 or 8. They’re satisfied, but not really enthusiastic.

Your Promoters are those customers responding 9 or 10. They’re happy, loyal, and frequently recommend your brand and products.

Your NPS is a quick calculation:

Percentage of Promoters – Percentage of Detractors = Net Promoter Score (a value ranging from a low of -100 to a high of 100).

Just knowing your score instantly tells you how your customers feel about you. But you can do so much more with it: segment your customers into promoters (reward and encourage them), passi

source https://blog.kissmetrics.com/benefits-and-importance-of-customer-satisfaction/