The Rolling Stones probably didn’t have customer satisfaction in mind when they wrote their hit song, but today’s shoppers often feel like they “can’t get no satisfaction.” Overall customer satisfaction in the US has sharply declined in recent years. While 2023 saw some recovery, experts with the American Customer Satisfaction Index say satisfaction levels are still far below where they need to be.
Learn how customer satisfaction can impact your business, plus how to use a few best practices to keep your customers happy.
Table of contents
What is customer satisfaction?
Customer satisfaction measures how content a consumer is with a company’s services and products. By collecting data about your customers’ expectations, needs, and desires, your business can improve its products, services, and overall customer experience.
What are the elements of customer satisfaction?
A few key elements contributing to customer satisfaction include:
A customer’s needs, preferences, and pain points drive not only their purchasing behavior but their expectations as to what your product or service should deliver. Understanding the expectations of your target customer can inform business decisions around product offerings, support, and other elements of the customer experience.
Customers weigh the price of a product or service against the perceived value, and they expect their purchases to meet or surpass their expectations in terms of performance, reliability, and value for money. In fact, product quality and value are two important drivers of customer loyalty.
As coined by global management consulting firm McKinsey, the three C’s of customer satisfaction are consistency, consistency, and consistency. Maintaining consistent quality, service, and experience across all customer touchpoints is essential for building and sustaining high satisfaction.
With a growing suite of data-driven marketing technology tools, it’s never been easier to offer some level of personalization to your customers—and they expect it. McKinsey reports 71% of customers expect brands to personalize experiences. In a sea of choices, tailoring offerings and experiences to individual customer preferences and behaviors can help you stand out.
Customer support software provider Zendesk reports that 61% of consumers said they’d switch to a company’s competitor after one bad experience—just one. When consumers feel they have not been adequately taken care of, it’s easier than ever to simply move on. Your customer support team and channels must be easy to find and offer swift resolution to issues or questions.
Besides easy access to customer support channels, consumers expect smooth and convenient experiences when interacting with your business, whether in-person or online. According to data from the National Retail Federation, 97% of consumers have reported backing out of a purchase because it wasn’t convenient. An intuitive and user-friendly website or app, transparent pricing, and hassle-free payment options can reduce friction in the customer journey.
Benefits of customer satisfaction
- Drive growth
- Increase loyalty
- Improve customer retention
- Highlight strengths and weaknesses
- Guide business and product decisions
- Create positive word-of-mouth
- Increase customer lifetime value
Customer satisfaction directly impacts the overall health of your business and is a foundational step in building customer loyalty and trust. Here are the main ways customer satisfaction can impact your business:
Satisfied customers are more likely to make repeat purchases and typically spend more doing so. This can mean increased revenue and average transaction values.
With customer satisfaction comes customer loyalty. While it may take several satisfying purchase experiences to gain loyalty, the effort can bring trickle-down benefits of customer trust and retention, word-of-mouth referrals, and revenue.
Improve customer retention
All businesses experience some level of customer churn, but retaining existing customers can be just as valuable as acquiring new ones—or more so. Not only does it cost anywhere from five to 25 times more to acquire a new customer (according to the Harvard Business Review), but achieving even a 5% increase in customer retention can lead to a 25% increase in profit (according to global management consultant Bain & Company).
Highlight strengths and weaknesses
Monitoring various customer satisfaction metrics can highlight what you’re doing well in your consumer’s eyes—and where you might need to improve.
Guide business and product decisions
Monitoring customer satisfaction metrics can help guide branding, marketing, customer service, and other business decisions while providing valuable insight into current product performance and expansion opportunities.
Create positive word-of-mouth
An unhappy customer is more likely to share their experience than a happy one. While this adage may be true, happy customers are essential for positive word of mouth and can help bolster your acquisition. In particular, family and friends are the most trusted source for product recommendations among Gen Z, according to a survey by Insider Intelligence.
Increase customer lifetime value
A customer’s lifetime value (CLV) estimates the total revenue that can be reasonably expected throughout your business relationship with a customer. Satisfied customers who buy from you repeatedly and become loyal help boost your CLV.
Ways to measure customer satisfaction
- Customer satisfaction surveys
- Customer churn rate
- Repeat purchase rate
- Customer service metrics
- Customer feedback
- Reviews and ratings
- Social listening
Taking a multifaceted approach to measuring customer satisfaction levels can give you a holistic view of what makes your customers happy and how you perform.
A few of the most commonly used tools and metrics include:
Customer satisfaction surveys
There are several standardized and widely used surveys available to measure customer satisfaction, including customer satisfaction score (CSAT) surveys, net promoter score (NPS) surveys, and customer effort score (CES) surveys. You can also ask open-ended questions on these customer surveys to gather qualitative data.
Customer churn rate
Churn rate calculates the percentage of customers who have stopped using your product or service over a specific period.
Repeat purchase rate
Purchase rate measures how often customers make repeat purchases, which can illustrate levels of customer satisfaction and loyalty.
Customer service metrics
By tracking metrics related to customer support efforts, such as response and resolution times, you can gain insight into how your customer service initiatives impact customer satisfaction.
Monitoring and analyzing feedback from customer emails, phone calls, live chats, and social media channels can add another valuable piece to your satisfaction measurement efforts. Client advisory groups can also help gather customer feedback while gauging satisfaction.
Reviews and ratings
Tracking reviews and ratings on platforms like Amazon, Google, industry-specific review sites, or other tools available through your ecommerce platform provides specific insights into customer satisfaction.
Social media listening tools—to monitor online conversations—can also help you track brand mentions, feedback, and general customer sentiment.
How to improve customer satisfaction
- Understand and exceed customer expectations
- Solicit and use feedback
- Bring personalization to the customer experience
- Measure customer satisfaction regularly
- Collaborate across teams and departments
Use these strategies to start improving customer satisfaction:
1. Understand and exceed customer expectations
Understanding the expectations of your target market is foundational and an essential driver of satisfaction. Customer expectations vary between sectors, industries, and target markets. However, an ongoing effort to understand your customers’ needs and pain points can provide valuable insight for product decisions, marketing communications, and refining the overall customer experience.
2. Solicit and use feedback
Positive reviews are great, but there’s a lot to be gained from not-so-great reviews or comments from dissatisfied customers. Solicit customer feedback, pay attention to reviews, and respond to customer complaints quickly to avoid churn. Make customer support, reviewing, or other feedback channels easy to access and use.
Satisfied customers are also a valuable asset. They can become brand advocates through incentive or referral programs, for example.
3. Bring personalization to the customer experience
Providing your customers with experiences tailored to their needs and preferences helps them feel valued. Through personalized messaging, offers, and product recommendations, you can drive up both satisfaction and loyalty. To personalize effectively, you need the right data, like customer location, demographics, purchases, and on-site behavior. You also need a deep understanding of each customer journey to customize interactions at every step.
4. Measure customer satisfaction regularly
As with any key performance indicator (KPI), it’s essential to consistently measure customer satisfaction metrics. Regular measurement and analysis can help to identify trends, quickly address the most pressing problems, and assess how ongoing solutions or strategies are performing.
5. Collaborate across teams and departments
As a driver of long-term business success and profitability, customer satisfaction should be a core value. Satisfaction is a multifaceted concept impacted by various parts of your business, so share customer satisfaction data, insights, and issues across teams and departments.
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Customer satisfaction FAQ
How do you achieve customer satisfaction?
Consumer satisfaction is a multifaceted concept you can achieve by understanding your customers’ expectations and then providing them with perceived value, consistency, convenience, personalized customer experiences, and exceptional customer service.
What is an example of customer satisfaction?
Allbirds, a footwear company launched in 2014, exemplifies high customer satisfaction levels. With a 2022 net promoter score of 86, considered high in its industry, and 50% of its income stemming from repeat customers, Allbirds demonstrates a strong base marked by satisfaction and loyal customers.
What makes good customer satisfaction?
Customers are generally satisfied when they feel their needs and pain points are being recognized, perceive value in your products or services, and enjoy an easy, convenient, and personalized customer experience.
Are there industry benchmarks for customer satisfaction?
Yes, specific metrics like customer satisfaction score (CSAT) or Net Promoter Score (NPS) vary by industry. Organizations that track consumer satisfaction and sentiment across companies and industries, such as the American Customer Satisfaction Index, may offer insights and industry benchmarks as part of their product offerings.