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How do you measure customer satisfaction?

Sep 20, 2019 | Blog

How to Measure Customer Satisfaction

Unfortunately, a smile, “thank you” and even a nice tip aren’t enough to guarantee customer satisfaction these days. Some people are simply too busy to leave feedback, or not interested in doing so. Why should they give you their key takeaways? So how do you know how they feel? Are they happy customers? Will their experience lead to business growth? Lack of understanding on how to measure customer satisfaction is one important reason why firms are not able to measure a customer satisfaction score properly. In this post we will address:

  1. Why measure customer satisfaction
  2. How to measure it
  3. When to collect and measure it

Lets do the basics first, why does it matter?

Why Measure Customer Satisfaction?

The things we buy—from cars to mobile phones to washing machines, and the services we experience —are designed to make our lives easier and more enjoyable. Yet, unfortunately, most consumer products and services fall short of these expectations. This means dissatisfied customers and poor customer loyalty. In fact the headline from ASCI (the American Customer Satisfaction Index) from Feb 2021 is stark:

Steep Decline in Satisfied Customers Continues in Fourth Quarter. Specifically, national customer satisfaction has declined in eight of the past nine quarters. It’s now at its lowest level since 2005.

So it seems that customer expectations are not being met and unhappy customers abound. So, to ensure that the business avoids dissatisfaction, consistent measurement of customer satisfaction levels is important – albeit tricky. But why should a business collect these key drivers to help get a picture of customer satisfaction?

We think there are four key reasons why this must be part of any brands business strategies:

1) Preventing Online Customer Complaints

If the customer journey does meet expectations – there are many who will rapidly post to social media. According to an American Express survey – on average, an individual will tell 9 people about good experiences, and 16 people about poor ones. It is therefore critical for the level of satisfaction be be known immediately to prevent publishing online their negative experiences.. In fact, many businesses have no idea how bad their performance is and how much defection is occurring. So, to ensure that the business avoids dissatisfaction, consistent measurement of customer satisfaction levels is important – albeit tricky.

2) Reducing Customer Churn Rate

The lower the customer satisfaction level, the higher the percentage of customers who will churn, or defect. Thinkjar Research believes that 67% of consumers site bad experiences as reason for churn. And remember, retaining a customer costs 6 to 7 times less than acquiring a new one. We know this has a huge financial impact on the business – in fact we have a calculator that shows this impact.

Customer Defection Calculator - after Opiniator

But the good news is that you can improve in customer perception through immediate business action. Specifically, this means that although 85% of customer churn due to poor service was preventable, 67% of customer churn is preventable if the customer issue was resolved at the first engagement. What this means is that feedback needs to be at the point of experience and actionable by the business.

This alone, is a powerful reason to understand and measure customer experience.

3) Improves Business Decisions

Customer opinions are collected and measured to deliver a customer satisfaction rating. The rating scale used signifies strength of opinion. Open-ended questions and customer responses provide context and commentary. These combined deliver valuable insights from the business customer base that is used to improve current operations and strategic plans.

Consequently, the business no longer needs to guess what drives loyal customers or what causes a bad experience, or how to allocate resources for now they have valuable feedback to guide them. Most businesses do not do this, so presents a real opportunity for businesses to gain a competitive advantage and leapfrog competition. Specifically MIT Sloan Review said:

“Surprisingly few executives use data from their own organizations to test their assumptions about what factors drive financial performance.”

4) Drives Competitive Differentiation

Accurate feedback including customer concerns and negative reviews deliver a complete picture and crucial metrics about what drives customer success and failure. In particular, knowing where a business falls short of delivering on customer expectations AND what delivered a positive experience are the building blocks of a marketing strategy to beat the competition.
Critical to this are knowing:

  1. Who is the target buying customer
  2. What makes these customers happy
  3. Their key metrics on your business vs. the competition

Remember these are all delivered by measuring satisfaction.

Effective ways to measure customer satisfaction

Regular surveys or questionnaires after the experience help to keep a business up-to-date on what customers are thinking. In fact, customer satisfaction surveys are the only objective method to deliver customer insights, but we know that a business must get feedback at the time of experience not afterwards – if that business is to take action.

There are several generic methods with the type of survey chosen delivering a certain output. The more familiar ones include:

CSAT or Customer Satisfaction Score

It’s also the most basic. CSAT measures overall customer satisfaction. But how is this done? It is based on the answers to the basic question:

Overall, how satisfied are you with X?”

Usually with some form of Likert rating scale eg. 1 thru 5 Very poor to Very good. The most ideal is to repeat this over the customer lifetime so you can confirm if the average score is improving or declining.

NPS or Net Promoter Score for customer satisfaction

NPS measures the affective and behavioral dimension of customer satisfaction. It evaluates the likelihood of customers to recommend the brand or its products. It is an indicator of customer loyalty and hence, future purchase behavior. In practice, the NPS is based upon the answers to the following simple question:

“On a scale of 0 to 10, what is the probability that you would recommend our brand to your friends or colleagues?”.

The NPS is a hot topic and we have covered this elsewhere.

CES or Customer Effort Score

CES is a more recent indicator than the two preceding KPIs. Its main purpose is to evaluate the level of customer service quality. Specifically, it measures the level of effort the customer must exert to obtain satisfaction for his or her request. Specifically, a lower average note means that the customer easily obtained a satisfactory response.

So armed with any of these customer satisfaction measurement tools, and assuming a high enough survey response – a business can measure how it is performing and what it needs, and should be doing better. Within these, you may choose to ask what your customers expect of you and if there are any areas where you could be performing better. Moreover, it is worth confirming where your customers believe your competitors are presently bettering you.

Better still is the capture of such feedback at the point of experience. This means at your location when customers are experiencing your offer and service, and not after they have left. The easiest way to do this is via their own cell phone. Low ratings trigger an immediate staff alert. This means staff can now fix the issue, even connect and recover the customer, before they defect. Or worse, defect and complain online.

Getting an understanding of whether your customers would choose your service again, and recommend it to their friends and family, will certainly indicate how well your business is being received. Essentially, customer satisfaction is about both perception and intention – what do they think of you, and will they return?

Customer Satisfaction Measurement at the Point of Experience

Better still is the capture of such feedback at the point of experience. This means at your location when customers are experiencing your offer and service, and not after they have left. The easiest way to do this is via their own cell phone. Low ratings trigger an immediate staff alert. This means staff can now fix the issue, even connect and recover the customer, before they defect. Or worse, defect and complain online.

Here at Opiniator, we specialize in capturing real-time ratings, comments and feedback from a real brick and mortar customers during their experience. These actionable insights giving you the opportunity to respond in seconds to fix the issue and even connect with the customer while they are still at your location.

Simply contact us today to find out more.

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