Measuring Customer Satisfaction


5 min read

Measuring Customer Satisfaction

Brett Smith

Oct 21, 2016


    How To Measure Customer Satisfaction Effectively

    Have you ever received negative reviews from your customers? Have you lost customers because they felt that your products or services did not meet their needs? Have you ever asked yourself if you are measuring customer satisfaction? And if you are, have you ever considered if you are measuring it correctly?

    In this article, we’ll guide you through the different customer satisfaction metrics and what steps you can take to improve your overall customer satisfaction levels.

    Why is it important to measure customer satisfaction?

    Simply put, it is important to measure customer satisfaction because it costs more money to get a new customer than to retain an existing one.

    From a business perspective, it is more profitable to keep those customers satisfied and build a relationship with them. This is how customer satisfaction affects business, since loyal customers can also be advocates of a brand and refer friends or colleagues to your business.

    It’s also why providing great customer service should be a priority for your company. Online surveys or in-person surveys are great ways to gather information about what makes your customers happy. These surveys can also reveal points of improvement.

    Consequently, these important pieces of information can lead to changes in your products or services which can lead to greater satisfaction among your customers. The more satisfied your customers, the more likely they are to return, driving revenue.

    So, customer satisfaction surveys are important tools for improving your business, but how do you know if you are measuring it accurately?

    How do you measure customer satisfaction correctly?

    To measure customer satisfaction correctly, you must first establish a key performance indicator or a goal. After that, you can choose a customer satisfaction survey that can best answer the question related to your goal.

    What KPIs are you trying to measure?

    Your business can have several KPIs. These must be aligned with your business objectives for the quarter or year. An example would be customer retention. A specific KPI can be to retain at least half of your remaining customers for the next year.

    Another example is if you want to grow your customer base by 50%, which can be done through referral. And yet another goal may be to increase the average revenue per user or the value you derive from each customer. This can be done if they will purchase your product or service more frequently or in greater volumes.

    If you already know your goals, you are ready to move on to the next step which is measuring them in relation to customer satisfaction.

    What customer satisfaction metrics should you use?

    If you want to know how to measure customer satisfaction, you first have to know what customer satisfaction metric to use. There are many metrics that you can choose from, but the most basic ones are:

          Customer Satisfaction Score (CSAT)

    ●      Customer Effort Score (CES)

    ●      Net Promoter Score (NPS)

    Each metric measures an aspect of customer satisfaction and it is recommended that you administer these tests or surveys together to paint a complete picture of a customer’s experience.

    Remember to properly allocate time and resources to run these surveys!  If you’re a startup, a SME, or a business in the service industry that simply doesn’t have time for it, try a shift worker app to see if there are any gaps in your schedule. An app like Planday also enables you to quickly and efficiently communicate with your team when you’re running these surveys and implement the changes from the study.

    When you have that sorted, then you’re ready to run your surveys and get your customer satisfaction score!

    1. Customer Satisfaction Score (CSAT)

    The standard and most common customer satisfaction metric is the Customer Satisfaction Score or CSAT. It asks your customers to rate their satisfaction with your business, product, or service. Your CSAT score is then the average rating of your customer responses.

    The simplicity and directness of the CSAT are two of its main advantages. However, for some customers, this satisfaction can be tricky to estimate. Since it measures an emotion at a specific time, it may not be consistent, or it can also be prone to change.

    How to calculate your Customer Satisfaction Score

    There are many ways to administer the CSAT. Some prefer a scale ranging from ‘Excellent to Bad’ and there are even companies who use emojis or stars.

    If you plan to get creative with your CSAT survey, be sure to assign a numerical value to the symbols or words you’re using. For example, 7 is excellent and 1 is bad. The usual scales are from 1 to 3, 1 to 5, and 1 to 7.

    To get your Customer Satisfaction Rating or Customer Satisfaction Score, you must tabulate the average score of all your respondents. This can be calculated by adding up the sum of all scores and dividing the sum by the number of respondents.

    When do you use Customer Satisfaction Score?

    The CSAT is most commonly used to immediately evaluate a customer’s experience with a specific encounter with the brand. Most companies try to get the CSAT score within 15 minutes of the interaction.

    Going a little deeper, “customer effort” examines how easy it is for a customer to communicate with your business...

    2. Customer Effort Score

    After calling a company’s customer service department, you may have received a survey that asked how easy it was for you to get your problem solved. This survey is designed to measure your “customer effort” score.

    A landmark study published in the Harvard Business Review suggests that no matter how hard you try to “delight” your customers, it won’t translate to customer loyalty after certain threshold. So, what determines customer loyalty? The same study suggests that it actually depends on how much effort customers need to spend when availing services or trying to interact with a brand.

    So how does a company quantify something as nebulous as “effort”?

    How to calculate your Customer Effort Score

    To gauge this metric, the Customer Effort Score was established, which asks the customer:

    “How hard did you have to work to get a problem fixed/a query answered/a service rendered?”

    There are several scales you can use to measure you Customer Effort Score. The easiest one is giving your customers three options: Easy, Difficult, or Neither.

    Measure your Customer Effort Score by subtracting the percentage of customers who replied “easy” from the percentage of customers who replied “difficult”. The result would be between -100 and 100. The higher your score, the better.

    The next question is the most common one; the 5 Scale Question. Customers are asked, “On a scale of 1 to 5, how much effort did you have to put forth to handle your issue?” 1 = Very low effort; 2 = Low effort; 3 = Neutral; 4 = High effort; 5 = Very high effort.

    To get your Customer Effort score, simply work out the average. You can do this by dividing the sum of all individual customer effort scores by the number of customers who provided a response. A low score of 1 to 2 is good news. It means your customers didn’t have to work too hard to interact with your brand or get their complaints solved.

    Another scale uses seven responses for a question of “On a scale of 1 to 7, how easy was it to get your issue resolved?” 1 = Extremely easy; 2 = Very easy; 3 = Fairly easy; 4 = Neither; 5 = Fairly difficult; 6 = Very difficult; 7 = Extremely difficult.

    If you’re using the 7-point scale, the computation for the Customer Effort Score is the same as the 5-point scale. The lower the score, the better.

    When do you use Customer Effort Score?

    Customer Effort Score is best used for predicting customer loyalty.

    It is usually administered after they’ve dealt with your customer service. Another time to use it is after an interaction that led to the customer availing of your company’s product or services - when they’ve visited your website, for instance.

    Customer satisfaction is obviously something to aim for, but the most successful companies go even further, turning their customers into evangelists, or “net promoters”.

    3. Net Promoter Score

    A good predictor of business growth is the Net Promoter Score. It calculates the word-of-mouth value of your brand and if your loyal customers are willing to become your advocates.

    The key question for the Net Promoter Score is: Using a scale of 0 to 10, how likely would you recommend the brand to a friend or colleague

    Respondents are classified into “Promoters”, “Passives”, or “Detractors”.

    Those who score from 9 to 10 are known as “Promoters”. They are enthusiastic about your brand and will likely refer others, enabling growth for your company. Not only would you be able to retain those customers, but through their referral, the cost of acquiring a new one should be lower.

    If they scored from 7 to 8 are “Passives”, who are satisfied but overall relatively unenthusiastic. Keep an eye on these customers because they can easily be swayed by competitors.

    Finally, those who scored from 0 to 6 are called “Detractors”. They are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

    How to calculate your Net Promoter Score

    To calculate your NPS, subtract the percentage of Detractors from the percentage of Promoters. Your score can range from -100 to 100. If every customer is a Detractor, that is the only time you can score a -100. On the other hand, if all customers are happy Promoters, then you can score a perfect 100.

    When do you use Net Promoter Score?

    You can use a Net Promoter Score when you launch a new product to check if your early customers are likely to recommend it to others.

    Also, you may start a conversation with your happy customers and encourage them to join a referral programme, if you have one.

    Studies have shown that customers who were referred by friends or colleagues have a higher customer lifetime value of up to 16% and they also offer a higher return on investment.

    Net Promoter Score is a user-friendly, clear way to estimate business growth, word of mouth value, and customer lifetime value.

    Once you’ve established what you need to know, how do you get that information?

    What are the different methods to measure customer satisfaction?

    After finalising your KPIs and choosing which metric to use, the next step is deciding how you will administer the test.

    • Online survey. This can be published on your website, app, or sent to a customer after an online interaction with a brand or customer service representative.
    • Offline survey. You may choose to make it easy for your customers to give their feedback by giving them the survey while they are in your place of business. For example, some restaurants hand out surveys after a meal. In airports and hospitals, there are also survey stands where customers can simply tap or click their rating for the business.

    You can even gauge customer satisfaction without asking them to look at a form or survey...

    Beyond surveys: Are there other ways to research customer satisfaction?

    If you have a website or a social media page, a good indicator of customer satisfaction is how much time they engage with your pages and if they visit them regularly. Some social media websites, for example, have an automatic rating feature where your customers can immediately rate you and also give feedback for your business.

    Another way to measure customer satisfaction is to find out what your customers are saying about you. Some companies use social media listening tools which collate mentions about their brand in public social media sites like Twitter and other forums.

    If you want a more thorough investigation, consider holding a survey panel or a focus group interview. If you have a business where your employees interact with customers on a daily basis, also consider asking them to do a mini survey with your store’s patrons. One or two questions should suffice and the feedback can easily be relayed to managers using a staff communication app.

    Like any field of research, you can always go deeper, broader or get more precise. Here’s how...

    Going deeper: How do you better measure customer satisfaction?

    You must ask questions based on goals, focus on customer loyalty, track overall satisfaction, and dig deeper with analytics. Questions must always go back to improving your bottom line. Loyalty and overall satisfaction are some of the factors that determine a customer’s lifetime value.

    1. Ask questions based on goals

    You may want to ask your customers a lot of questions but the longer your survey, the less likely they are to finish it. Prioritise your questions that directly relate to your goals

    For instance, if your goal is to grow your business, then questions about referral or willingness to try new products should be asked. Or, if your goal is to find the level of loyalty of customers, ask questions on how likely they will go back to your store or renew their membership or subscription.

    2. Focus on customer loyalty

    The Customer Satisfaction Score, Customer Effort Score and Net Promoter Score are very straightforward but do not provide you reasons for why your customers answered that way.

    While the Net Promoter Score gives you a good general indication of how you’re doing, it’s even more valuable when you also ask some relevant follow-up questions:

    • Open-ended questions. Ask customers to explain the factors behind their response. What it would take for them to answer 9 or 10 if they didn’t?
    • Questions about future behaviour. For example, how likely the respondent is to renew their membership at your gym or dine at your restaurant within the next month.

    Tracking overall satisfaction

    A customer’s overall satisfaction is something that front-line managers can directly impact. It becomes even more useful when you combine it with follow-ups on areas like quality, reliability and customer fulfillment. Don’t forget to add open-ended questions where customers can tell you the reasons for their answers. These questions help you turn your data into tangible actions.

    Your overall satisfaction rating is also useful to track over time. Sometimes the most valuable metric to know is how you’re doing compared with your own past performance.

    Dig deeper with analytics

    The Net Promoter Score and the overall satisfaction rating give you a big-picture look at how you’re doing. Attributional questions help you drill down to get the specific information you need to make improvements and retain customers.

    Attributional questions are those that determine industry-specific factors or keys to customer satisfaction. For example, for a restaurant, the attributes might be the quality of food, service, ambience, location. Finding the attributes that matter to your restaurant customers can greatly improve your customer service.

    Looking at another business, a gym’s survey might include attributes like cleanliness, equipment, classes and service.

    Keep this list as short as you can so respondents don’t lose interest. And use the same language your customer would – not industry terms – in describing attributes.

    In this section, you can also ask how important each attribute is to the customer; what do they look for in your business- value, quality, convenience, or something else? That will give you even more valuable data you can use in making the right decisions for your business.

    As mentioned earlier, ease of use is very important for customers. So, use the survey as an opportunity to find out if any experiences weren’t easy for customers. For example, this might be something administrative like signing up for membership in your gym or booking you restaurant’s event room.

    The ultimate customer satisfaction question: How do you improve customer satisfaction KPI?

    Once you implement your survey and gather your data, the next step to improve your customer satisfaction KPI is to use your data to make necessary changes to your products and services.

    Valuable data exist in those surveys! For example, if you conducted the Net Promoter Score survey, you can find out which customers are willing to be advocates of your brand. They can be part of a referral program that will enhance their loyalty and widen your customer base.

    By asking open-ended questions or attributional questions, you may also pinpoint a specific area for improvement for your business. For instance, if you have a restaurant, a point of improvement may be to engage with your customers more. Aside from that, you can read our other handy tips to perfecting customer satisfaction in your restaurant.

    It’s a good idea to conduct the same survey again, after implementing the changes, to check if your customer satisfaction score has improved.

    Customer satisfaction surveys may fluctuate from time to time. The important thing to remember is that it is not a one-time survey because its ultimate aim is to continuously improve your brand, leading to happier, long-term customers.

    You think you don’t have the time to conduct and measure Customer Satisfaction Survey? With effective staff management software, it’s easier than you think...

    © 2004 - 2024 Planday