The Importance of Customer Satisfaction
This exhaustive guide breaks down why customer satisfaction is important and how you can (and should) measure it.
February 10th, 2021
We all know that keeping customers happy matters. But do we always know the true importance of customer satisfaction and how to capitalise on the data? One of our customer service marketing experts, Rob Mead, breaks down the how's and why's for you. Want to learn more? Read on to get started!
Measuring customer satisfaction 101
Measuring customer satisfaction (CSat) is the standard for understanding how customers feel about your customer service (CS). And for good reason. CSat scores are a great indicator of customer loyalty and brand advocacy, both of which affect your sales. Once you’re measuring and collecting data, you can use it to look for improvements in your CS by identifying trends in interactions that lead to low scores. That, in essence, is the real importance of customer satisfaction and why we track it!
In this in-depth article, we’re going to talk about measuring customer satisfaction, look at why it’s so important, and how you can improve your CSat score – resulting in happier, more engaged customers.
Table of Contents
- What is customer satisfaction?
- How to measure customer satisfaction
- The importance of customer satisfaction and measuring it
- The benefits of measuring customer satisfaction
- How to Improve Customer Satisfaction
- The FM Outsource difference
So, What Exactly Is Customer Satisfaction?
When we talk about measuring customer satisfaction and the importance of customer satisfaction, we often forget that ‘satisfaction’ can fall into three, fairly broad, categories: all as important as each other! These include satisfaction with the overall brand, satisfaction with the specific product or service, and resolution satisfaction with any pre- or post-sale issues. So measuring customer satisfaction will differ ever so slightly depending on which area you’re interested in. Customer service satisfaction will also mean different things to different departments. The marketing team will want to measure satisfaction as a means of analysing advertising awareness, whereas customer service teams will see ‘satisfaction’ as a means of seeing that their operators are doing a good job.
It’s also important to point out that measuring customer satisfaction is never to achieve 100% approval. There will always be difficult customers who want something unreasonable, and pandering to these for higher scores can create financial problems for your business down the line. For example, always giving a discount to customers who complain about services eventually leads to a culture where customers complain as a transactional means to lower prices. This could easily put you in a tricky situation if not contained properly!
How to Start Measuring Customer Satisfaction
Before we dig any further into this topic, we will first need to answer a fundamental question: what does customer satisfaction measure?
When measuring customer satisfaction, it is usually shown as a percentage, with 100% representing complete satisfaction and 0% representing the total opposite! To capture this data, brands present customers with a survey at the end of a customer service interaction. The questions in this survey aren’t set in stone, but the very minimum you need to start measuring customer satisfaction is a field asking them to rate your service out of 5 or 10.
In actuality, measuring customer satisfaction can be done in a number of ways, but the most popular are:
- CSat Surveys – As mentioned, these tend to be a 1-5 score based on potentially qualitative questions. These are used to measure customer satisfaction with products, services, operators, and overall experience.
- Net Promoter Score Surveys - A score of 1-10 where you take your percentage of 9-10 scores and subtract the percentage of 1-6 scores to give you an average of how well you are performing. Generally, 7 and 8 scores are deemed neutral and discounted completely
- Reviews – Either on-site or using an external tool such as Trustpilot, these are used to promote positive experiences as marketing collateral.
Whilst these are the primary ways of consolidating attitudes, they are not static. Measuring customer satisfaction via a CSat survey is constantly evolving as customers' expectations change. Historically CSat has been measured using numbers. But an issue here is that one customer’s 3 out of 5 may be the same as someone else's 4 out of 5, when in fact there’s an order of magnitude difference when averaged out. You’d much rather score 80% than 60%, after all!
At FM Outsource, we recommend recording this important customer satisfaction data by operator and by team, as well as an overall score. This amount of visibility lets you recognise high flyers, differences in CSat by channel (e.g. email versus web chat), and trends in clients' CSat over time.
When it comes to the importance of customer satisfaction and measuring it, the data is typically analysed against productivity metrics like response time or contacts per hour.
Faster responses lead to happier customers until responses are being received too quickly to contain enough detail to completely resolve the issue. This tipping point is worth identifying in your team (and it does vary by team, there’s no industry standard here).
Having this comparison of CSat and productivity readily available makes it easier to identify ways to improve your customer experience, and so your customer satisfaction.
The Importance of Customer Satisfaction
It’s all well and good knowing the what and how of customer satisfaction, but why is all this so important for your business?
The importance of customer satisfaction lies in its ability to indicate how loyal your customers are, and how likely they are to be brand advocates. CSat doesn’t measure them directly but instead serves as a signal of how likely your customers are to prefer and recommend your brand.
The UK Customer Satisfaction Index (UKCSI) of July 2020 found that 95% of customers who gave an organisation a CSat score of 9 out of 10 or over said they were likely to recommend a brand. But the kicker is how this compares to customers who had a satisfaction score of 8 or lower out of 10; only 54% of these customers said they were likely to recommend the brand.
This, combined with the fact that it costs 5 times more to attract a new customer than it does to retain a current one, makes the benefit of a high CSat score clear to your bottom line.
Measuring customer satisfaction is also important for getting businesses to buy into your processes and performance. Because it results in something quantifiable, it gets a lot of attention from internal parties, and is one of the best ways to create the classic upturn graph which every department needs to look good.
The Benefits of Measuring Customer Satisfaction
Measuring customer satisfaction leads to a number of business benefits – starting with insight. Businesses don’t know what they don’t know, and leaving customer satisfaction entirely to the customer service department is missing key information that marketing, sales, operations, and other departments really need to get a full view of satisfaction.
A great example is product satisfaction. Satisfaction with a new product line is key information for manufacturing and product quality to know whether it’s worth continuing with or whether previous lines performed better.
Insight leads to better training, leads to happier customers, and then more revenue.
For customers, measuring satisfaction is the first step to delivering excellent service which is a prelude to a successful business. Whether you target consumers in budget, premium, luxury, or some other demographic as a private business, you need to provide a level of service ahead of the competition if you want to continue to grow.
How to Improve Customer Satisfaction
Reply to Low Scores
Measuring customer satisfaction is great for determining areas that need improving within your business and your products, but it also acts as an early warning system of the quality of advice your operators are giving. If you see low scores you can then assess them pragmatically; was the operator at fault, or did the customer not get the answer they were looking for?
Our founding CEO, Sally Chandler, found a way to use this level of analysis to increase the same customer’s satisfaction:
We go back to a customer that left a low CSat score and say: "you were right to feel let down, and this is what we’re going to do to make it right." This makes you look proactive and gives you massive credibility. We ran a survey that asked: "in the event that you have had a claim with us, are you more likely to come back to us, or not?" The response from customers who had made a claim was an overwhelming "yes, I’m more likely to come back" because their complaints were handled so well.
If you’ve spent enough years measuring customer satisfaction, you’ll have noticed that every time you get busy, a lot of the messages you receive are from customers chasing a response to their previous message because they’re frustrated.
It’s a fair assumption that these customers are going to leave a
lower CSat score purely for the inconvenience of waiting longer than usual for a response.You can prevent these lower scores by keeping customers updated on the amount of time it will take for them to receive a response.
If it usually takes you less than an hour to reply on Facebook Messenger, but this extends to four hours because of volume, let them know. Customers will then either choose a different channel to contact you, or they’ll know they need to wait a bit longer than usual for a response. This may not influence a customer that was going to leave a low score simply because they had to contact your CS team, but the rest of your customers will appreciate the tip.
Customers will also get faster answers if your team actively chases first contact resolutions (FCRs). Every 1% increase in FCR rate sees a 1% increase in CSat.
How do you boost FCR rate? Make sure operators are providing full answers that explain the rest of the customer’s journey and anticipating any follow-up questions the customer might have.
The FM Outsource Difference
At FMO, we know the importance of customer satisfaction, which is why we are constantly investing in technology to help us keep a step ahead of the competition. When using an FMO team for measuring customer satisfaction, you’re guaranteed technology and insight being matched with training and coaching of agents. This leads to an increase in customer loyalty, retention, and existing customer revenue from brands that engage with us.
The three areas of efficiency, effectiveness, and product knowledge come together to make up FM Outsource’s balanced approach.
We over-invest in training and development, which differentiates us from the standard cost-first basis of competitors. We don’t have any time limits to make people stick within a marginal efficiency which benefits the outsourcer over the brand. Our use of technology is what keeps us above SLA for each client, meaning when a customer who needs more time and attention comes up, they’re given what they need rather than rushed through the process.
The result is increases in both internal and external scoring (e.g. Trustpilot) and increases in customer retention and advocacy, as well as greater marginal revenue growth.