What is customer satisfaction?

These two words are not new but will determine the success or failure of any business, of any size, in any industry.

So what is customer satisfaction?

Customer satisfaction is a measure of how products or services supplied by a business meet or exceed customer expectation. The definition of customer satisfaction, as defined in “Marketing Metrics” is “the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals.”[*

Over 70% of Senior Marketing Managers state that they find customer satisfaction a very useful metric in managing and monitoring their business*. In fact, Customer Satisfaction is often seen as a key performance indicator for business and, in the instance of a decline, can work of problems likely to affect sales and profitability. Conversely, where ratings increase this can often bode well for a company with the likelihood of increased customer loyalty and positive word of mouth marketing. Rather than simply an intangible notion, numerous studies conclude that customer satisfaction is highly correlated to business performance – more satisfied customers, spend more, more often.

It is critical that when approaching customers to gauge their level of satisfaction in your product or service, that three key considerations be made.
1) What questions will you ask?
2) How will you ask your customers?
3) Will you motivate or incentivise your customers?

Ask the right questions

So the easy answer is – ask a customer what they think of you! But is it really that simple? You need to make sure you are asking the right questions.

A fundamental metric for customer satisfaction is the Net Promoter Score developed by Fred Reichheld, Bain & Company and Satmetrix. Introduced in 2003, “Net Promoter Score (NPS) measures the loyalty that exists between a provider and a consumer. The provider can be a company, employer or any other entity. The provider is the entity that is asking the questions on the NPS survey. The consumer is the customer, employee, or respondent to an NPS survey.”**

The Net Promoter Score is determined by asking just one question – “How likely is it that you would recommend our company/product/service to a friend or colleague?” with the answer being a rating from 0 (not at all likely) to 10 (most likely). The Net Promoter Score can vary from -100 right through to +100, where anything higher than a zero is seen to be good, and anything above +50 is excellent.

If you want additional insights beyond just a “score”, your survey should be designed to identify what it is you are doing right, and what you are doing wrong. What are the key features or identifiers of your product or service? Quality, Price, Staff, Appearance, Ambience, are just a few examples. This provides a contextual roadmap for your business and allows you to build KPI’s around them

How should I ask them?

So now you have thought about what questions to ask, it is also vital to make the survey easy for a customer to complete. As you will have seen in our other blog posts, there are a number of available tools to survey your customers and get their feedback. There are also a wealth of articles available on the Internet comparing these services, from forums, online chats, to simple contact forms. Fundamentally, the customer wants to only complete a survey that is simple, easy to understand and quick. A business needs to have real-time data, actionable insights, detailed yet easily understandable reports, and ability to explore and manipulate data as needed.

Will you offer an Incentive?

There is really no point in having the perfect survey set up and ready to go, if your customers are not motivated to spend the time on it. This is where the length of your survey is vital, and where often businesses use a “Hook” to motivate customers. One way to motivate customers is to offer some form of reward; a voucher offering a discount or a free product. Remember there is a transaction taking place – their providing feedback and their valuable time and you’re giving them something for that feedback.Another incentive commonly used is all respondents are included within a promotion; the prize could be anything from a $50 voucher through to an international holiday. It is important to recognise that a reward does not always guarantee higher response rates but getting the balance right will lead to a broader catchment of data sets from your customer base.

* Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN 0-13-705829-2.
** http://en.wikipedia.org/wiki/Net_Promoter