Imagine you have launched a coffee shop and advertising your business in the most effective way possible. Of course, if your marketing campaign is good enough, you will definitely attract customers. Alright, you got them coming and served them what you think you are best at.
However, you started realizing that you haven’t seen any “returning customer” yet. How is that possible? You had a great-looking café and an equally effective marketing campaign? But still, you failed to “satisfy” your customer? Maybe it is due to the taste of your coffee or your staff’s behavior. In fact, it can be anything that “displeases” your customer. In short, you failed to achieve customer satisfaction.
Customer satisfaction is like the backbone or the “holy grail” for any business. Why is it important? How can a business improve it? There are other similar questions answered in this article. If this is something that interests you, keep reading!
Table of Contents
What Is Customer Satisfaction?
Customer satisfaction is a benchmark or standard that measures how successfully a company has fulfilled a customer’s expectations from its products or services. There are a number of factors that can influence customer satisfaction, such as;
- Communication
- Perceived product quality or value
- Complaint handling
- Convenience
- After-sales services
It is safe to say that customer satisfaction is a strong indicator of any brand’s success. In simpler words, if you don’t care about customer satisfaction, you cannot expect loyalty or even a “successful” business.
If you are still not “satisfied,” why is customer satisfaction so important? Here is what you need to know.
Importance of Customer Satisfaction
This section starts with the fact that 49 percent of businesses surveyed in 2020 reported that their top priority for the coming 5 years is customer satisfaction. The following points will further elaborate on the importance of customer satisfaction.
Returning Customers/Customer Retention
There is a simple business rule, “it is 6-7 times more expensive to get a new customer than to keep a current one”. The question is, how can you retain a customer? well, it is only possible through customer satisfaction. If you meet or exceed customers’ expectations, you can not only retain them, but they will be your advocates as well.
Reduction in Negative Marketing (Word Of Mouth)
If a happy customer brings more customers, a dissatisfied customer can reduce your customer volume by 9-15 people. Imagine, if you have multiple dissatisfied customers, how will you lose further? Ultimately, it will have a negative impact on your revenues.
Reduction In “Customer Churn”
There is a common misconception that prices are a major reason for customer churn. Honestly, that is only true to some extent. In fact, a major reason behind customer churn is “poor customer service.” A lot of brands are charging high prices for their products or services, yet they have a massive customer base. It is only due to customer satisfaction.
Competition Differentiator
Customer satisfaction can simply make or break your business. You are competing in a fierce competition, and the only way to win is to satisfy your customer. Likewise, your promotion strategies and marketing campaigns will fail if you have dissatisfied customers.
Cost-Effective
As said earlier, it is easier to retain a current customer rather than acquiring a new one. Acquiring new customers is not only challenging but also expensive. Marketing campaigns can be very costly, but satisfied customers won’t consume your marketing budget.
Benefits of Customer Satisfaction
We have already discussed why customer satisfaction is important. Here are some more benefits that customer satisfaction can offer to any business.
Strengthens Brand Loyalty
Who wouldn’t want a loyal customer? But, if a brand starts taking customers for granted, things can get out of hand very quickly. As PwC stated, 59 percent of consumers in the US generally quite a brand, product, or service after several poor experiences. In fact, 1 out of 5 customers quit it after one bad experience. However, customer satisfaction leads to brand loyalty – the dream of every business.
Growth in Sales and Audience
A happy customer brings more customers, and this chain never breaks. In fact, customer satisfaction pushes the customers to spend more. American Express Survey reported that US consumers are willing to spend 17 percent more on brands that provide exceptional services. Not only this, 84 percent of companies saw a considerable increase in their sales due to improved customer experience.
Builds Trust
Brand trust is the most important factor that affects the purchase decision of 81 percent of the consumers (Edelman). However, only 34 percent of consumers trust the brands they buy from. How can you win your customer’s trust? The formula is simple; customer satisfaction.
How to Measure Customer Satisfaction
Measuring customer satisfaction and then extracting useable data is a very complex process. Marketers use different metrics to measure customer satisfaction, and here are some of them.
Overall Satisfaction Measure
This is a general or basic but highly effective measure as it reflects the customer’s satisfaction experience with a product or brand. Customer experiences that result in quality attributions are the single most important predictors of customer satisfaction. Generally, there are three contexts used to measure perceived quality.
- Perceived reliability
- Overall quality
- The extent of fulfillment of customer’s need
Usually, “purchase regret” means customer dissatisfaction, while statements like “I’m glad that I bought it” are a sign of customer satisfaction.
Net Promoter Score
Net promoter score is a rating system where a customer rates a product or service out of 10. The question generally looks like this,
“On a scale of 1 to 10, how likely are you to recommend our product/service to a friend?”
NPS is a relatively easier option for the customers to respond to, but it is just a one-dimensional option.
Customer Satisfaction Score
Customer satisfaction score (CSAT) is another very common time-tested metric. It consists of a very basic question, such as, “how would you rate your experience interacting with our sales/customer service/support department?”
The scale generally offers following ranges: very unsatisfactory / unsatisfactory / neutral / satisfactory / very satisfactory.
Customer Effort Score
This is a completely different approach in comparison to those mentioned above. The question generally reads like this, “how hard did you have to work to get a problem fixed/query answered/service rendered?”
Generally, the scale ranges from 1-5, where 1 is the best score, and 5 is the worst.
How to Improve Customer Satisfaction
The good thing is, customer satisfaction is something a business can improve by considering few important factors such as.
Listen To Your Customers
Customers are more blunt and vocal nowadays. In fact, 65 percent of the consumers prefer speaking about their bad experiences with brands. However, the good thing is, it is easier to communicate with customers and identify their issues with social media conversations and other tools. Just listen to them and react accordingly.
Show Them Empathy
If you want to make it work, you have to empathize with your customers. People can feel depressed or frustrated because of their problems. You have to ensure them that you can feel their suffering.
Offer Solutions, Not Features
Consumers have no interest in your product’s features because they want “solutions”. Don’t tell them what your product is made of. Rather, tell them how your product can help them.
Ask Questions And Ensure Follow-Up
Feedback is important when it comes to customer satisfaction. Ask your customers if they liked your product or service. If they didn’t, ask them what you can do to improve it? Most importantly, ensure a follow-up unless the issue is resolved.
Examples of Customer Satisfaction
Rackspace
Rackspace is a cloud infrastructure company offering high-quality services at premium prices. The company has won several industry awards for its excellence. One of the company’s main strengths is its customer support service. Here is a prime example of that:
Once, an employee from Rackspace was helping a customer via a troubleshooting session. During the conversation, the employee heard the customer talking to her colleague and saying she was hungry. The employee put the call on hold and ordered a pizza for the customer, which was delivered in 30 minutes. The customer was delighted and charged enough to continue the session energetically.
This is a prime example of the fact that you don’t need a big buck for great customer service. A simple act of generosity can please your customers.
JetBlue
JetBlue is a name that doesn’t need much of an introduction. The airline started its operations back in 1998 and has never looked back. One of their “strongholds” is their customer service, and they are very creative with it.
For example, once (during the flight), the People Officer stood up and started hosting a trivia game. Not only this, he announced flight vouchers (for midflight games) for winners and also gave away 12 tickets. Moreover, the airline offered free flights for medical supplies and staff during the corona pandemic.
A positive and friendly organizational culture makes the job easier and fun for employees. Ultimately, employees feel more attached to the organization and customers.
Ritz-Carlton
Ritz-Carlton has simply taken customer service to the next level. Here is a jaw-dropping example of their exquisite customer service.
A family staying in Ritz-Carlton, Bali, had a member with food allergies. Therefore, the family had brought milk and specialized eggs. However, after reaching the hotel, they noticed that both items were not in useable condition.
The hotel staff and the manager turned “every stone” in the town but failed to get relevant food items. However, the executive chef of that particular branch/resort knew a store in Singapore that sells these foods.
He called her mother-in-law in Singapore and requested her to buy those items and fly to Bali. The mother-in-law agreed to this, and the reaction of the customers was inexpressible.
Give your employees control and incentives to go any length when it comes to customer service.
