How to measure customer satisfaction: understanding the top 4 metrics

How to measure customer satisfaction: understanding the top 4 metrics

In competitive markets, increasing customer satisfaction is vital to maintaining (or increasing) market share. Customer satisfaction contributes to customer loyalty and the higher revenues that come with it. 

(Pro Tip: here are some ways to deliver great customer service)

Dissatisfaction, on the other hand, has a swift and decisive downside. Even just one or two bad experiences can be enough to lose a customer. We found that 59% of customers were willing to switch to a competitor due to a negative experience.

So that you don’t worry about losing customers because they’re unhappy, we’ll go over how to measure customer satisfaction and understand the metrics that go with it. 

How to measure customer satisfaction

  1. Determine the metrics you want to use to measure customer satisfaction
  2. Define your goals and create KPIs
  3. Choose your methods for collecting the right data
  4. Analyze the data

Why should you measure customer satisfaction?

With so much riding on delivering products, services, and experiences that influence customers, you need to determine how to measure customer satisfaction to monitor and manage it. It’ll reveal how customers feel about your business and how well your products and services pan out. But that’s not all that goes into it, as we’ll explain below.

What is customer satisfaction?

In the simplest terms, customer satisfaction is how happy customers are with your products or services. At first look, it may seem impossible to measure. 

After all, how can you rate how happy someone is? However, when you break down the elements that impact customer satisfaction, you’ll see they are things you can measure and track. 

Factors impacting customer satisfaction include how well your business meets customer expectations, and the value and quality customers perceive in your products and services. Customers can rate those factors, thereby giving you ways to measure customer satisfaction. 

Customer satisfaction vs. customer success

People sometimes use the terms “customer satisfaction” and “customer success” interchangeably; however, they refer to two different things. Customer success involves proactively addressing your customers’ needs, building solid relationships and higher customer lifetime value (LTV), and having customers advocate for your business. 

Customer satisfaction is an element that contributes to customer success – giving you yet another reason to monitor and measure it carefully. 

What are the four key metrics of customer satisfaction?

When measuring customer satisfaction, consider these four metrics and choose the best option – or combination of options – to get the information you need. 

Customer satisfaction score (CSAT)

CSAT scores rely on simple surveys that allow customers to rate their satisfaction on a five-point scale. You can ask specific questions, such as “How satisfied are you with the outcome of your call with our customer service team?” or “How satisfied are you with our renovated facility?” 

After you conduct the survey, divide the number of people who rated their satisfaction at 4 or 5 by the total number of survey takers. Multiply that number by 100 to find the percentage.

Net promoter score (NPS)

When it comes to CSAT vs NPS, the latter takes a slightly different approach to measuring customer satisfaction. With this method, you ask just one question: “How likely are you to recommend our business to a colleague, friend, or family member?”

Customers who respond with a 9 or 10 are “promoters,” and those who respond with a 6 or lower are “detractors.” Not included in the metric calculation are those who answer 7 or 8 (they’re “passive”).

Find the percentage of promoters and detractors, and then find the difference between the two. That’s your NPS. 

Comparing your NPS score to others in your industry is wise since customer service benchmarking can vary. You should also track your NPS over time to make sure it doesn’t decrease, particularly if you make changes to products, services, or processes. 

Customer effort score (CES)

CES leverages surveys similar to CSAT. However, these questions find how easy or difficult it is for customers to interact with your business. 

In general, if most customers communicate a poor experience by giving a low rating, it’s important to dig deeper into those incidents to avoid increasing customer churn rates

Customer retention rate

Because customer satisfaction and loyalty are proportional, you should regularly monitor customer retention. That way, you’ll know how many stay with your business and how many are out the door.

If you measure it quarterly, subtract the number of customers acquired over that timeframe from the number of total customers. Then divide that number by the number of customers you had at the beginning of that quarter and multiply by 100. What that equals is your customer retention rate. 

A decrease in this rate can indicate low customer satisfaction, and you should immediately look for root causes and take action to turn that trend line upward. 

How to measure customer satisfaction through KPIs

A well-planned strategy will give you the most accurate insights into customer sentiment toward your business. These four steps will prepare you to measure customer satisfaction levels in the most meaningful ways. 

Define goals and data collection plan 

The first step is to decide what you want to learn from your customers. Are you primarily concerned with their impressions of customer support interactions? 

Do you want to know how they feel about the quality of your products? Or do you want to gauge overall satisfaction?

Set objectives and then determine which customer support KPIs will provide you with the insights you need and which method you’ll use to collect data.  

Define key survey questions

The next step in measuring customer satisfaction is to draft questions. The types of questions you ask will drive the survey methods you choose. However, they need to be clear and concise to give you the necessary information. 

Keep in mind that you need to encourage enough responses to your survey so that it is a good representation of your customer base. Questions that customers can answer with a rating rather than an open-ended response are easier to respond to and will help you get more participation in your survey. 

Conduct surveys

Once you have prepared a plan and your customer survey, it’s time to allow your customers to take them. 

Create a way that makes it easy for people to provide you with feedback, for example, by asking just one or two questions at checkout. You can also use a pop-up in your contact center app or website to invite customers to participate. 

Analyze data and use it in decision making

After collecting survey insights, invest time into analyzing the data. Additionally, if you find that customer satisfaction levels are low in any part of the customer journey, take action to improve them. 

What are different data collection methods for measuring customer satisfaction?

Another thing to remember when devising a plan for measuring customer satisfaction is to have options for collecting feedback and data. In addition to creating surveys and calculating customer service scores and metrics, consider these other sources. 

Live chat

Your customers’ interactions with your support team via live chat can provide you with deep insights into their sentiments toward your business. The right solution can make capturing and analyzing that data easy. 

AI chatbot

Customer interactions with an AI chatbot can also provide insights into customer satisfaction. It can use data to detect positive or negative sentiments. AI chatbots like Zoom Virtual Agent can also log requests to help with specific issues, which may indicate higher-than-average customer effort in those areas. 

Social media

You can also track sentiment by monitoring what your customers say about you on social media or online review sites. Responding to negative comments (in a polite, professional manner) immediately is best to protect your brand reputation. However, it’s also smart to track comments and use them as an indicator of customer satisfaction. 

Web analytics

Monitoring web traffic can also provide insights into customer satisfaction. In addition to helping you maintain a healthy traffic flow to your site, look at where people are going. If you see an increase in traffic to specific knowledge base pages or your help center, it may point to an issue diminishing customer satisfaction.

On the other hand, if more people are visiting pages to learn about pricing plans, add-on services, or upgrades, it’s a sign that you’re doing things right. 

Getting started on measuring customer satisfaction

If you’re concerned that the time and effort necessary to determine how to measure customer satisfaction effectively won’t result in ROI, rest assured it’s worth your time. Maintaining visibility into customer sentiment through a well-planned strategy of monitoring KPIs, devising effective surveys, and using all data sources to create a clear picture of how customers perceive your brand will put you in a position of power. You can take immediate action if you see dissatisfaction brewing and double down on the elements of your business that your customers love. 

Learn how to positively impact your customer experience with Zoom’s communication and collaboration platform.

Don’t forget to share this post