Actionable Guide to Measuring and Analyzing Customer Satisfaction in 2024

What is Customer Satisfaction?

Customer Satisfaction is a factor that quite literally can make or break your business.

At its simplest, it’s a numeric representation of how happy or unhappy customers are when they interact with you in any way.

This includes the whole lifecycle from the first contact to using the company’s products or service to the possible after-sales service offered.

The customer satisfaction score is typically presented

1. as a percentage, where 0% represents that none of your customers are happy and 100% means all of them all or
2. with NPS, where the lowest number is -100 and the highest 100.

Factors Influencing Customer Satisfaction:

• Customer’s expectations
• How these expectations are met
• Communication
• Quality of your product or service
• Value you bring to the customer

Customer satisfaction can be measured (CSAT, NPS) and the data can be collected in many different ways (email, in store, in app,…) which are explained later in this article.

Why Customer Satisfaction Matters

Let’s talk about the importance of customer satisfaction for a bit.

It differs from industry to another, but for instance for Airbnb hosts, getting 5-star Airbnb reviews is crucial to getting reservations.

This might not be the case your all industries.

You have done all the heavy lifting: developed a kick-ass product, perfected your customer service, marketed your company to the right people in the right places. As a result, you finally have a steady stream of customers.

But are you able to keep them all or are some of them leaving in silence?

The cost of customer acquisition has risen dramatically by over 50% in the past 5 years and is expected to only keep on increasing.

If you add up all the costs it took to get one single customer, you might think it would be more of a priority to focus on customer success and to do customer satisfaction surveys.

If the cost for getting a customer in the first place was high, the cost of losing them is bigger than you think.

Retaining Customers > Customer Acquisition

Research has shown that it costs five times more to attract new customers than it is to retain an existing one. That being said, it’s important to internalize that customer satisfaction is a tool with which you can track your success and predict the future of your business.

A study made by InfoQuest shows why you should always know how happy your customers are.

After doing a statistical analysis of customer satisfaction data of more than 20,000 customer surveys done in 40 countries they found out that:

• A totally satisfied customer brings you 2.6 times as much revenue as a somewhat satisfied customer
• A totally satisfied customer brings you an astounding 14 times the revenue than a somewhat dissatisfied customer

But the real deal breaker is this:

• A totally dissatisfied customer decreases your overall revenue at a rate equal to 1.8 times than a totally satisfied customer is able to increase your revenue at the same time.

By ignoring your totally dissatisfied customers and only focusing on your already satisfied customers, you are headed for bankruptcy. Fast.

4 Crucial Reasons to Measure Customer Satisfaction

When you start gathering customer satisfaction data, here are some of the benefits you can expect to gain.

1. Maximize Customer Lifetime Value (CLV)

Once you have a customer, you should do everything in your power to make but also to keep them happy.

It took you a lot of work to gain their trust. The smartest thing to do is to track their happiness levels throughout their whole customer lifecycle.

You can calculate CLV by multiplying average sales, number of transactions and retention time. Then you divide this number with your profit margin. And voilá!

Happy customers are more likely to buy from you again. Figure out why people buy from you again to make more of your customers repeat buyers.

2. Prevent and Minimize Customer Churn

This is a no-brainer: If you hear about a problem and solve it, the customers won’t leave you.

In order to recognize where these problems are, you need to constantly communicate with your customers. It’s easier to solve a problem than to win someone back over once they’ve already left you once.

The key is to let them give feedback. Offer many options to voice their opinions to gather this invaluable information.

3. Recognize Negative and Positive Word of Mouth

Wouldn’t it be nice to hear what people are saying about you behind your back? The good AND especially the bad.

The former can be used as a selling point for potential customers and the latter shows you where there’s still room for improvement.

4. Increased Revenue with Less Investment

Once your customer satisfaction measuring strategy is implemented and proven to work, you can sit back and enjoy the benefits.

It allows you to focus on improving the areas that need improvement.

While you improve, your increasingly happier customer will help you grow organically by recommending you to others. Because why wouldn’t they recommend you as they are happy?

Furthermore, they’re more likely to stay as customers and keep buying.

Correlation Between Customer Satisfaction, Repurchase Intention and Customer Retention

Repurchase intention and customer retention are important topics to all, as the probability to sell to an existing customer is between 60 and 70%. As a comparison, the probability of selling anything to new customers varies between 5 and 20%.

First off, let’s define the terms.

Repurchase intention refers to a customer’s intention to buy from the same vendor again.

Customer retention refers to a company’s ability to keep their existing customers in a way that they buy from that company again. Succeeding in customer retention is one of the key factors in long-term business growth.

The two concepts are somewhat overlapping, but keep in mind that they aren’t just fancy words.

According to the Pareto Principle, 80% of your profits come from just 20% of customers. Furthermore, increasing your customer retention by just 5% boosts your profits by 25% to 95%.

Customer Retention’s Relation to Measuring Customer Satisfaction

According to studies, totally satisfied customers’  repurchase rate is from three to up to ten times higher than that of somewhat satisfied customers. The higher your customer retention rate is, the more likely you are to thrive.

In order for you to be able to capitalize on these totally satisfied customers, you need to know who they are. That’s why you should have an actionable plan in place to collect customer feedback on all possible touch points you have with your customer focus groups.

Once you have recognized your happy customers, you can

• Showcase your cooperation by producing case studies
• Get them to write positive reviews about you
• Produce testimonials of them.

All of these help you grow organically, as your most satisfied customers become your advocates.

What’s even better is that through the feedback you get from your loyal B2B and B2C customers you are likely to develop new product ideas and services.

A win-win scenario for you and your customers.

Measuring Customer Satisfaction Helps Prevent Customer Churn

Think about the last time you had a positive customer experience. How many people did you tell about it?

Then what about when was the last time you had a bad customer service experience. How many people did you tell about that?

Negative Word of Mouth Spreads Like a Virus

In a research done by McKinsey it was stated that each unhappy customer tells on average between 9-15 people about their negative customer experience. If you think that’s a lot, you’re in for a rude awakening.

They also stated that 13% of unhappy customers tell about their experiences to OVER 20 people.

There isn’t much research done on secondary negative word of mouth and its effects, but how often have you told your friend about a bad experience your cousin’s mum’s uncle’s cat had with company X when they consider buying from them? Yup. Yieks.

Now think about the last time your customer told you that they haven’t received what they expected. How did you handle that? Check out our tips on how to respond to negative feedback.

More importantly: Are you sure you know about every bad customer experience your customers have had?

Implement an Automated Feedback System

If you don’t have an effective and automated feedback system in place, it’s more than likely that most of your customers won’t go through the trouble of giving you feedback. It’s far more likely that they’ll simply just go to one of your competitors and you’re left wondering what happened.

When we think about customer satisfaction, we often think that we should focus on doing what we do best. In reality, we should focus on listening to our unhappy customers. Doing that will help us improve.

It’s been researched that it takes 12 positive experiences to make up for a negative one.

If you get bad customer service in a café, how likely are you to ever go back there? Exactly. You won’t give them the chance to make it up, but you rather go somewhere else AND tell 10-20 people how badly you were treated.

This is a widely known issue, as even Microsoft reported already in 2018 that 61% of their respondents stopped using their products as a result of getting poor customer service.

You can’t fix what you don’t know is broken

If you aren’t measuring customer satisfaction, you are missing out on the opportunity to identify your unhappy customers. When you identify who is unhappy, you can figure out why they are unhappy, and fix the situation before they churn. If people are leaving you faster than you get new customers, you’re on your way to failure.

Step out of your bubble where you think you are the best and do everything right. Start interacting with your customers and offer them a chance to voice their opinions by systematically collecting customer feedback.

Most Used Metrics to Measure Customer Satisfaction

Now that you understand what customer satisfaction is and why it is important, you should consider the best way to measure your customer satisfaction.

Next up, there’s a break-down of the three most commonly used customer satisfaction metrics and their characteristics. After going through this list, you’ll know which one works the best for your business.

We’ll go over

1. CSAT
2. NPS
3. CES

First up:

1. CSAT = Customer Satisfaction Score

It literally means the percentage of your customers that are happy with your brand.

CSAT surveys ask questions, such as:

On a scale of 1 to 10,

How well did we meet your expectations today?

How would you rate the [product / service] you purchased?

CSAT surveys focus on the customer experience and the full customer journey or specifically on satisfaction of the customer support.

The benefits of measuring customer satisfaction score include:

1. Turn negative reviews into positive feedback
2. Improving the level of customer service
3. Enhancing referral program
4. Drive more sales
5. Reduce churn rate
6. Identify poorly performing products or services
7. Inspire customer loyalty

2. NPS = Net Promoter Score

This bad boy is commonly thought of as a growth indicator. The higher your NPS is, the more likely you are to be successful.

A Net Promoter Score survey only has one question,

“How likely are you to recommend our product/services to your friend or colleague?”

It can be followed up by an optional “What is the primary reason for your score?”

Your customers are highly likely to respond, as the survey is so short. After all, it takes them at the simplest one click of a button to rate you between 1 and 10.

However, the answers you get are more informative than the CSAT score, as it gives you more (and detailed!) information about your customer satisfaction.

1. How satisfied your customers are with your product/service
2. Brand and customer loyalty
3. Most importantly: How likely they are to recommend you to others.

How does NPS work?

Long story short: Based on the answers, your customers are divided into three categories.

The people that…

1. Rated you 9-10 are your Promoters
2. Rated you 7-8 are Passives
3. Gave you 1-6 are Detractors

For all you visual people reading this:

Your NPS score is calculated by taking the percentage of your 9s and 10s and subtracting the percentage of people who gave you a 1-6. Your NPS score can be anything between -100 and 100.

What is a good NPS?

Anything higher than a zero. If your NPS is over 50, you’re in an excellent place and anything over 70 is exceptional. (AirBnB’s NPS is currently at 74 and Tesla’s at 96)

Then you can compare your NPS to the Fortune 500 companies. Further NPS industry averages can be found in one of our previous blog posts.

Want to know more about NPS? Check out these following blog posts for more info:

What is NPS and how do you measure it? and

How to improve Net Promoter Score? 7 Ways to Improve your NPS

3. CES = Customer Effort Score

This metric measures how much effort your customers need to put in to get their  issues resolved. Whether it be a question they need answered or a technical issue they are faced with.

In layman terms: CES measures how easy (or difficult…) it’s for your customers to interact with you to accomplish their goal.

Your customers will choose their answer on a scale of one to five, starting with “Strongly disagree” and ending with “Strongly agree”. CES is then calculated by summing up all customer effort scores and dividing them by the total number of respondents.

To Sum up the Customer Satisfaction Metrics

It’s worth mentioning that CES offers the least information and we recommend that you use it as a part of your customer satisfaction surveys. It is great in measuring customer loyalty, but as it is asked after each action, it can also make even loyal customers seem unsatisfied, if they’ve had one bad experience among many good ones.

Because there will be bad encounters in every partnership. The differing factor is whether they are fixed or swept under the rug and never dealt with.

CSAT, NPS and CES are somewhat complementary to each other, but they each serve a unique purpose.

When and How to Measure Customer Satisfaction

We’ve now had a look at what types of metrics there are available for measuring customer satisfaction. Then let’s move on to figuring out when and how to actually contact your customers to gather the data.

The best strategy for measuring customer satisfaction is not a one-size-fits-all approach. In many cases, a strategy that works for a B2C business won’t work for a B2B SaaS company.

Even though the principle is always the same: Ask for your customers’ opinion when they are most likely to respond, the timing of the question varies. Tremendously.

Timing, timing, timing

For instance, a bakery visitor would be confused if they were asked about the products right after entering the store (How did you like our products today?), but also would be unlikely to remember how it tasted after a few weeks (or hours!).

But most probably, they’ll give you a raving review while they’re still eating or right after it. Instagram is one good example of this: If your customer posts a story of your amazing baked goods, it’s there to see for 24 hours. Not a week or even a few days, but 24 hours.

A software user, however, will want to get the job done and not be bothered with “How do you like us at the moment?”-type of questions while doing it. They are most likely to respond after having completed whatever they wanted to have done (remember CES?).

If you want more general information, such as how likely they are to recommend you, there’s a time and way for that too.

After you have identified when to contact your customer to ask if and why they like or dislike you, you need to find the best way to reach them. Let’s first have a look at when is the right time to ask for feedback so that we can figure out how to do that in practise.

When to measure customer satisfaction?

One of the most common questions in measuring customer satisfaction is: When should I do it? The answer is simple: Everytime you want to know what your customers think.

Most companies are currently measuring customer satisfaction once a year and some quarterly with looooooooooooooong surveys that hardly anyone responds to. How many of these long surveys have you got this year alone? Whenever I see that a survey takes 5 minutes or more to do or they have many pages, I’ll skip it.

The problem with measuring too rarely is that you aren’t getting real-time data whether your customers are unhappy and about to leave you. In order to avoid this, you need to identify your key customer touchpoints.

This is how simple it should be to ensure as many responses as possible.

Key customer touchpoints are straightforward: They include everything from first seeing your brand,  to buying your products or services and finally to the after-sales services.

How to Analyze Customer Satisfaction?

Once you have chosen the right software for your purposes, designed and implemented your customer satisfaction measuring tactics, you start to get a constant flow of answers.

Note: You’ll only get customer feedback regularly, if you have done all the aforementioned points right! If you don’t get feedback regularly with the set automations, they are in the wrong place/targeting the wrong people or there’s something wrong with the survey.

When you scroll through the answers the first time ever, you blush a little while reading the positives. At the same time, you wince in pain as some of your customers are rather unhappy. You are starting to realize what a mountain of work you have ahead of you to keep what’s good and improve so your clients won’t leave you.

So that you won’t feel overwhelmed about the feedback you receive, here is a guide to get started on analyzing the data.

Actionable Step by Step for Analyzing Customer Satisfaction Data

Depending on the types of surveys you have used and the industry you are in, the stages can vary greatly. This is aimed to be an all-encompassing list to help you begin analyzing – and taking action based on the results.

How many people have answered your survey?

The percentage of how many answered compared to how many customers you have is a good place to start the analysis. This percentage will tell you how generalisable your results are. Remember to sort the answers according to the predetermined customer segments (What is relevant for your business? What are your main customer groups?).

A good rule of thumb is that you need to do the groundwork well. If you find it hard to analyse your results, you’ve probably missed a step in setting your goals and figuring out your customer segments before doing and sending out the survey. But don’t worry, it’s never too late to tweak these for next time and to gain valuable insights of the results you’ve now got as well.

Start by Analysing Quantitative Data (The numbers)

Analysing the numerical data first gives you an overlook on how your business is doing. As this information isn’t ambiguous like the open-ended data, you can be more analytical. So start by analysing your customer satisfaction score.

Take a look at the NPS results you have got.

Pay close attention to the number of promoters (9-10), passives (7-8) and detractors (1-6) your company has. Interestingly, the number of passives seems to be one of the most crucial factors to track, as they are the most likely to churn in a B2B annually billable software and services context.

Take a look at the numeric data you have collected with CES

1. The higher the number is, the easier it is for your customers to interact with you and get the job done.
2. Take a look at the CSAT score you got. An outstanding CSAT score is 80%, but it varies with each industry.
3. Compare your results with your industry’s benchmark (And with your competitors!) by Googling “enter industry here” CSAT benchmark → realtors CSAT benchmark

Source: Nicereply

Take a look at the qualitative data (=what people have written to the open-ended parts)

1. Pay special attention to what the passives in each customer segment have said about you and act on it immediately (or at least very soon). This group is easier to convey to stay than detractors.
2. Going through the qualitative data offers you great insight into what your customers value and what they wish was done differently. This data will help you understand the motivations behind their purchasing decisions and the reasons why they are unhappy.
3. Divide the positive and negative feedback into their own groups.

Look for Trends

After you’ve analyzed all quantitative and qualitative data, it’s time to look for recurring trends.

Look at your data as a whole, but then segment your customer satisfaction data based on your buyer personas or ideal customer profiles.

Here are some questions that help you in getting the big picture.

1. What are the most commonly mentioned aspects?
2. Are some of the comments mentioned across the whole data?
3. What is the most surprising thing to come up?
4. What did you expect to come up, but didn’t?
5. What kind of comments have the customers with the highest lifetime value left you?
6. What are the areas of improvement?

What to Do With the Analyzed Customer Feedback Data?

Now that you have the data you wanted, it’s time to act on it.

Not sure where to start? Go over this practical list and you’ll be able to make better business decisions based on the analysed data.

Fix what’s broken

Don’t disregard the customer’s opinion, but aim to change the things they don’t like. And do it NOW before they leave you for someone better.

Present Data to Relative Managers within Organization

Your Sales Managers, Marketing Team, Growth Hackers and Customer Success Managers need different data and in different forms.

This means that you need to take the data to them in a bite-size format and go over what that means currently for them and their work. You need to give each team concrete goals for the future and to help them figure out what they need to do in order for the metrics to look different next time.

Make Customer Centricity a Norm and Prioritize Customer Success

In order to stay on the pulse of what each of your customer feels, you need to constantly measure their satisfaction levels. If someone gave you a positive review a month ago, they might feel differently now.

Remember those goals you set with your managers? Once you have got more data with the current customer satisfaction scores, go over the changes with the managers. Help them see how their everyday actions help in improving customer satisfaction.

Analyze Changes Over Time

Once you’ve collected data for months you’ll start to see certain trends. Once you continue the process for years you get a detailed picture of how you did in June 2020 vs how you did in June 2021. It’s not just important to compare the current month with the previous, but also what the situation looked like a year or five years ago.

Measuring satisfaction systematically over a long period of time will offer you insights of your company you couldn’t previously have even dreamt about.

It’ll help you in figuring out what’s wrong with your business and also to see what actions have actually made a difference.

Causation vs. Correlation

Focus more on chain effects than if x than y- scenarios. Tracking your customer satisfaction is a long-term process, not a sprint. Its needs and practices change, develop and grow at the same time with your business. One thing is sure: Improving customer satisfaction will lead to tangible benefits.

Engage your Whole Company

Getting positive feedback is important for us all. We want to feel that our work matters and we all need to hear what we’re doing well. It’s a great way to boost morale within the organization, if you automatically inform all employees with automated workspace integrations when a client has given a positive review.

That way others can see even the work quiet people have done and can make doing well a common priority.

It’s a positive experience for each employee to be thanked and hyped both by their own managers and colleagues. The example below illustrates this perfectly. (As the person giving the feedback didn’t allow us to use this feedback as a public referral with his name on it, the name of the customer and the company they work for are blanked from this picture. They did leave their name for us to see.

When your employees feel good it will inevitably improve customer satisfaction. It creates a positive cycle where everyone feels good and your customers get excellent customer service.

Happy employees → Happy customers → Happy business

By the way, when was the last time you measured employee satisfaction?

Trustmary has great employee satisfaction question templates to try!