Customer Satisfaction: How to Measure, Analyze and Improve It

Customer Satisfaction is a term used to quantify the level of satisfaction with your services, products, and experience, in general. It measures how a customer feels about interaction with your business at any stage of buying journey. A few examples might be:

All of these points, along with other interactions, form the overall experience of your brand.

Customer satisfaction is applicable to any touchpoint: website, phone, physical stores, etc. In fact, customer satisfaction can be quantified by specific metrics and analyzed on a deep level. For businesses, keeping track of customer satisfaction gives an understanding of their place among competitors and estimates chances to grow returning sales.

What advantage does it give to have a great customer satisfaction rate?

For example, if customers are satisfied with a live chat experience, how does that help to grow your business? 

(Except for a hint on giving a raise to your support department)

We asked a few Customer Experience experts about the importance of customer satisfaction for business revenue.

Here’s the expert view from Richard Shapiro, Founder & President, The Center For Client Retention:

So why bother with measuring customer satisfaction? 

Customer satisfaction is a powerful source of knowledge for growth. Based on customer survey data, you may identify the following opportunities:

Customer satisfaction and retention boost one another. Loyal customers stay with your brand for longer and the chances they’ll buy from you later are extremely high. Bain & Company consulting indicates that increasing customer retention rates by 5% can grow profits anywhere between 25-95%.

Scoring “good” at customer experience may create the required loyalty and bring your customer back later on.

Scoring “excellent” will make customers act as brand ambassadors and bring more new clients for free.

Happy customers will talk about their positive experiences to their family, friends, and on social media. 83% of eCommerce customers trust the product or service recommendations of friends and family. That makes 10-30% of eCommerce revenue from up-sell and cross-sell recommendations. 

Clients say that excellent customer experience is more important than price. Do they receive one from you? 

The value of CX shows that 8 out of 10 consumers (81%) say they are eager to spend more with an organization for a better customer experience. Also, resources say a returning customer pays 67% more than a new customer.

Reviewing your business scores on convenience and user experience may give you a large space for growing your business income by becoming more convenient, faster, and friendly to a customer. 

Think about Sephora, Amazon, Trader Joe's, Zappos, and other customer-centric companies. These companies provide fantastic customer experience, which makes them stand out from the competition and be the industry leaders. Customers love these companies, and they are more likely to choose them over competitors. 

What’s prominent for these companies is applying customer-centric services and options for a better experience. Collecting and reviewing feedback from customers, simply by asking for suggestions and reading their reviews, may give you many ideas on how to be better than your competitors.

Customer satisfaction is not just about lower prices, closer locations, or other factors that make these companies so popular. It’s an excellent humane customer experience that makes them stand out from the crowd.

To sum up, customer satisfaction is “a great thermometer to understand whether you're hitting the mark or not with your customers. But why you are hitting it or not is a deeper, more important question to ask.” Mary Drumond, CMO at Worthix

Some customer journeys take a minute or two, and the others take weeks or even months. To measure satisfaction, you can either analyze the general brand experience or focus on specific touchpoints. 

For example, you can feedback on contacting customer support, using a particular product feature, and making a purchase on the website to see how these stages of the customer journey perform. On the contrary, you can ask for a general feedback about using your product or buying from your brand to learn the overall picture.  

The best way to measure customer satisfaction is to conduct a survey. The form of a survey depends on the channel that you want to analyze – we covered some of the options below in this post. 

To cover the scope of customer satisfaction, start with such steps: 

Customer satisfaction and retention strategies are key fields that influence churn rates. Before recording customer feedback, you might want to analyze your current funnel and check conversion rates for each step.

Pick up separate customer segments to keep the data clear and make the findings applicable to the customer experience. 

Once the analysis and segments are done, ask yourself: 

• Where the metrics could have been better? 
• Where do customers fall off? 
• What are the retention rate and percentage of returning customers? 

These may give you a good starting point for creating surveys.  Also, customers may have already left a number of comments about your business. In case you already have some kind of feedback survey, check the submission rates there as well. Are these questions asked in the right stage of the funnel and in the best form possible? 

Like any communication, the survey needs to have a very clear goal. As your customers take time to complete it, make sure the answers will provide value for your business. Similarly, when setting personal financial goals or seeking to learn about investment strategies, resources like SoFi's Investing 101 Center can offer valuable insights to guide decision-making.

As you mapped out the pain points and high friction moments, set up touch-points to engage and survey customers along the course of their journey.

• Why are you doing this survey? 
• What touchpoints will be analyzed? 
• How the answers received will be processed later on?

When the goals are defined, you have to focus on choosing the metric. What is the main customer satisfaction KPI? Dan Gingiss, Chief Experience Officer answers: 

We covered these metrics below in the part “What types of metrics measure customer satisfaction”. As for qualitative feedback, there are a number of ways to analyze such reviews. We listed some of these in the section “How to collect customer satisfaction feedback”. 

They can be segmented into separate categories, like “delivery”, “product”, “agent experience”, etc. One of the most important goals for such analysis is to: 

Once you’ve decided on the goals and metrics, make sure to customize the survey's layout and questions. What are the channels fitting for the survey’s goal: email, site, pop-up, etc?

Keep in mind the channel specifics and customer intent to increase the completion rate later. Think about what customer action will trigger the survey:  end of live chat, completed a purchase, exit intent, etc. 

Conduct the survey and afterward, analyze collected data and make improvements based on the information that you have discovered. 

Now, let’s move on to the customer satisfaction metrics that you can track.

Customer satisfaction can be quantified by Customer Satisfaction Score (CSAT), Net Promoter Score (NPS), Customer Effort Score (CES), and a few other business metrics you'll see below.

CSAT is the average satisfaction score that your clients give based on the experience they had with your brand. It is a very simple and easy-to-implement metric and usually takes no time and effort for customers to fill in.

CSAT surveys use a single question: “How would you rate your experience with [brand name]?”

Usually, it uses a 1 to 7 point scale or a 1 to 5 scale (where 1 – very unsatisfied and 5 – very satisfied). Answers can be binary (yes or no, a happy face or a sad face), or expressed on a rating scale.

What is considered a good score? Expectations vary across industries, but a good score usually falls between 75% and 85%. The actual score varies across different industries. 75% means four out of five customers are giving your brand a positive assessment instead of a neutral or negative.

In addition to a simple score option, you may also want to add an open question form if the user chooses a neutral or negative score. 

NPS is another popular metric that helps to measure customer loyalty and predict growth. It asks a simple question: ”How likely are you to recommend this brand to a friend or colleague?". The answer is usually offered on a scale of 0-10.

NPS may measure any interaction with the brand, service, or product. It is very simple for customers to answer and easy for you to track. 

How does NPS predict business growth? When your company’s NPS is high (or, at least, higher than the industry average), you can keep track of the enthusiastic relationship with customers. They are likely to fuel word of mouth and generate a positive growth cycle.

The scoring system divides all responders into 3 groups:

Customer Effort Score (CES) measures clients' efforts to complete a single action like contacting support, finding what they were looking for, or ordering the product.

CES questions typically look like: “How easy was it to solve your problem with our company today?”. The answer options have a 5- or 7-point scale system where 1 is Very Difficult and 5-7 is Very Easy.

The CES metric helps to analyze customer experience in-depth and mark up “early signs” of customer dissatisfaction. For instance, your customer may have a great affection for your company but had a bad interaction this one time. Sure thing, if more of these keep happening, the affection may be gone. 

Eliminating this effort from the customer side will positively influence the NPS and CSAT scores.

And after all: 

This metric, along with others below, can be analyzed on your business profile. 

Churn Rate shows the total number of clients that have stopped using your services or buying your products. It's the number or percentage of lost customers within a specific time.

As with NPS, measuring Churn Rate is essential because it helps retain existing customers and identify the problem spots.

Customer Retention Rate measures how your business retains customers. The Retention Rate links to Churn Rate: the higher the retention rate goes, the lower the churn rate is.

For example, you had 1500 customers, and in a month, you acquired 300 more customers. Some of them dropped off, and by the end of the month, you have 1650 customers. So, ((1650-300)/1500)*100= 90% retention rate. 

Customer Lifetime Value (CLV) sometimes referred to as lifetime value (LTV) is an estimated profit that a company can acquire from one customer over the time of their business relationship. The longer a client stays with your company, the greater their lifetime value becomes.

Here's how to measure CLV: 

1. Avg. Purchase Value – company’s total revenue in a time period / #purchases over the course of that same time
2. Avg. Purchase Frequency Rate – #of purchases over the course of time / #unique customers who made purchases during that time period.
3. Customer Value – Avg. Purchase Value x Avg. Purchase Frequency Rate 
4. Avg. Customer Lifespan – average out of years a customer continues purchasing from you.
5. Customer Lifetime Value – Customer Value x Avg. Customer Lifespan

There are a few ways to conduct customer satisfaction surveys. Choosing the best one depends on your business model and goals. What’s more, the scope of customer satisfaction may not be tied to one channel or show the same result for all businesses.

Meaning, there is no one-for-all success channel for collecting customer feedback. 

While other experts indicate: 

So let’s take a look at all of the possible ways. 

Follow-up message – send a request for feedback after the customer has completed an action. For example, after a client purchased on your site. 

Chatbot – a bot can be your digital assistant to ask questions in a form of natural conversation. 

Chatbot survey is an engaging form of collecting customer feedback. As a tool for measuring customer satisfaction, it can be used as a complementary channel for asking simple questions or as an independent touchpoint to provide detailed surveys. 

The conversational approach is a key feature that increases the chances of survey completion compared to other ways of collecting feedback.

Chatbot survey is: 

• Engaging: the flow of a conversation will help you stand out from other surveys and attract attention. Talking to a chatbot feels like a human-to-human experience rather than completing a form all alone. Customers may not even notice how the questionnaire has begun as chatbots do the talk;   

• Highly customizable: the chatbot is suitable for any type of question and answers: multiple choice, image choice, open phrases, and much more. Limitations may come with the channel specifics – like character limit – but overall, chatbots allow you to get 100% of the messaging potential.  

• Flexible in responses: the learning abilities of chatbots allow you to create highly-adaptive surveys. For example, a trained chatbot can fetch the next question based on the user's previous response or have a few options for the survey ending. This way, you can keep the survey personalized and even provide timely offers if the customer shows a high interest in your product during conversation;

• Available on different platforms: depending on how your chatbot is built, it can potentially reach customers on Messaging apps (WhatsApp, Facebook Messanger, Viber, Telegram, etc), websites, and even SMS (yes, SMS chatbots do exist). Let’s not forget the voice bots that can be used as well. 

There are a number of ready-to-use platforms specifically for creating surveys. For example, Rival Tech is a mobile-first platform that allows you to use chat surveys with video and media-rich activities to get better insights from your best customers on mobile. Inca is another AI-powered platform that uses engaging research conversations and custom natural language processing (NLP) to help you understand customer perceptions and motivations. 

To start small, you can create a survey based on your existing chatbot. If you don’t have it yet, try out building your own chatbot.

Pop-ups – create a pop-up to collect feedback right on the website. Perfect for NPS & CSAT scores. 

Widgets – use widgets to send feedback surveys while a customer is on your website.  

Customer Interview – conduct a customer interview to collect feedback. Some customers will be happy to share their thoughts about your brand, or sometimes you may offer them an incentive for their feedback. 

Feedback form – send a survey via email to collect customer feedback or through a Survey QR code using a QR code generator.

Social Media – monitor mentions of your brand on social networks. Some tools can help you with that: Hootsuite, Sprout Social, Agorapulse, Brand24, etc.

Exit intent feedback form – ask your customers for feedback when they are trying to leave your website or abandon their order. Check out the best practices for exit-intent surveys here: Website Exit Survey: Get Feedback Before Your Visitors Leave. 

Monitor other sites – there are plenty of different reviewing/rating platforms and sites like TripAdvisor, Capterra, G2, Clutch, Yelp, etc. Monitor these platforms to hear what customers are saying about your products.

Live chat feedback – ask for feedback right after live chat interaction. 

Customer satisfaction can be measured on different levels: customer- or business-based, qualitative or quantitive. The most important question is how to work with that data later. 

Here’s how experts advise working with these metrics.