Learn From Your Customers

What types of metrics measure customer satisfaction?

Thursday, 21 October 2021
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Customer satisfaction can be an important indicator for a lot of different aspects of your business – will your bottom line keep growing? Does your brand have the potential for long term success?

These are more long term questions, but customer satisfaction levels are also constantly changing, so brands need to keep an eye on them in the short term as well. If levels dip, action needs to be taken immediately to prevent further decline. If they rise, figuring out what changed and replicating it across your business can lead to even more success.

And even if your customer satisfaction has long been in decline, it’s never too late to try and create a better experience for your customers — the kind that will help you gain more loyal customers and see more success in the long run.

Measuring customer satisfaction can feel a little intimidating, but it doesn’t need to be. And it’s okay if there are some areas where you’re falling short. But if your customers are unhappy it’s much better to understand why and resolve the issues than to keep your head in the sand and hope the problems magically disappear.

So, where to start? There are a few important customer satisfaction metrics to help you understand how you’re doing already and find areas for improvement. Even a tiny improvement in the following focus areas can mean a better experience for your customers, and a better bottom line for your business.

Customer satisfaction metrics to guide your business

Depending on your business, some of these will probably make more sense for you than others. You don’t necessarily need to focus on all of them, but committing to monitoring a few of them can bring you great results for your business. The more of them that you can focus on, the more your customer satisfaction will likely improve.

Customer retention and churn rates – do they stay or do they go?

Customer retention looks at which of your customers stay with your business over any given period of time. You can figure out how to calculate yours here.

Because acquiring new customers is generally more expensive than retaining your current customers, customer retention rates can have a huge impact on your bottom line in both the long and short term.

There are a few different strategies for boosting customer retention. Starting a customer loyalty program can be an excellent way to incentivize customers to keep spending with your brand and so can offering a discount towards their next purchase at the end of their transaction. Better email engagement programs and win back campaigns sent to customers who have already moved on can help as well.

Repeat purchase rate

To figure out your repeat purchase rate,simply divide your total number of customers by your return customers. This is an excellent way to measure customer satisfaction because if you have a large number of customers returning that indicates that your customers are happy enough with your product or service to keep coming back. The numbers speak for themselves.

Unless you’re selling something where people truly only need one or can use the same product for a long period of time, a low repeat purchase rate is typically a bad sign for your business. It means it’s time to ask why your customers aren’t coming back.

If you’re suffering from a lower repeat purchase rate, there are plenty of ways to help improve it. And even if yours is doing pretty well, any improvements to this will still translate into large financial gains for your brand.

Customer lifetime value

Closely tied to repeat purchase rate, your customer lifetime value is the total amount of sales your business will typically see per customer. And it stands to reason that the better your customer experience, the more business you will likely see from each of them.

This is a great metric to keep an eye on as you put more of a focus on customer satisfaction. If you do it properly, you’ll be able to watch it grow over time as your focus on their experience has them coming back more and making larger purchases.

Once you get to a point where you’re seeing higher lifetime value from each customer, you can really put all your focus on acquiring new customers, because the ones you have are already happy with your brand and extremely loyal to it.

And here’s the real beauty of working to improve your customer satisfaction levels: the happier your existing customers are, the easier (and cheaper) it will become to attract new customers.

NPS – are your customers promoting your brand?

Your NPS – Net Promoter Score – measures how likely your customers are to recommend your business to a friend. This is done with a brief survey asking your customers how likely they are to recommend your business on a scale of 1-10. Chances are, you’ve encountered this survey question embedded right into a software product you frequently use.

Answers between 0-6 reveal your detractors, 7-8 are your passives, and 9-10 are your promoters. Subtract the percentage of detractor responses from the percentage of your promoters and you’ve got your score.

This can be a great option for businesses because it’s a relatively simple survey that your customers are likely already familiar with — and possibly more likely to engage with. It also takes just a moment to fill out. You can also get a lot more out of it by leaving a spot for your customers to be able to leave qualitative feedback about how your business could improve.

Re-calculating your NPS score over time can help you see how your customer satisfaction levels are rising or falling, so for best results you should do this once or twice a year.

Customer reviews for qualitative and quantitative feedback

Customer reviews go straight to the source about how your customers feel about you. And because they consist of both star ratings and the actual review, they also provide you with both quantitative and qualitative feedback.

Customer review Swappa

Reviews can also tackle two different customer service issues, right at the source. Responding to reviews and resolving customer issues helps keep individual customers happier. But taking it a step further and making changes to your business based on common trends in your reviews helps ensure that future customers won’t have the same issues.

Because of this, customer reviews are both a metric for customer satisfaction and a tool to help you engage with your customers and offer them better customer service, all at the same time.

Customer reviews are a powerful customer satisfaction tool for one other reason. They offer your customers a place to engage with your brand – and for you to build trust in your brand by engaging with them. Your customers are going to be talking about your brand online either way, but collecting and responding to your customer reviews allows you to be a part of that conversation.

CSAT scores for a quick and simple pulse check

CSAT scores are another method of direct customer feedback. You survey your customers and give them a 1-5 scale to rank how satisfied or unsatisfied they are with your business. You take the number of customers that gave you a four or five – satisfied or extremely satisfied – divide by your number of survey responses, and multiply by 100. That gives you your percentage of satisfied customers.

These can be emailed to your customer base as surveys, come as a popup at the end of checkout, be sent through SMS, or any other way you communicate with your customers.

CSAT scores are a great way to get a general pulse of how your customers are feeling, but the main limitation here is the lack of qualitative feedback. CSAT doesn’t help you figure out where you’re missing the mark for your unsatisfied customers or how you could improve their experience going forward.

When you grow your customer satisfaction, you grow your business

Not all of these customer satisfaction metrics are going to be right for your business so it’s important to take a look at each of them and decide what’s right for you. Once you have an idea of which ones – and we definitely suggest more than one – make sense, then you can get started.

We know that negative feedback is never fun, but shying away from it only hurts your business in the long run. Confronting your negative feedback head on is the only way to improve your business moving forward and create a better experience for your customers.

If customer reviews seem like a good metric to measure and improve your customer satisfaction, we’re here to help. Click here to speak with one of our specialists and start collecting reviews from your customers today.


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