Tracking the right customer satisfaction metrics will help you better understand how to retain your current customers and attract new ones.
In an increasingly crowded marketplace, merely being able to sell your product or service doesn’t always guarantee business growth. You also have to make customer satisfaction and customer experience management a top priority.
Why? Because customer satisfaction is a key competitive differentiator. It increases your customer lifetime value, strengthens your brand reputation, and positively impacts your bottom line performance.
The Importance of Customer Satisfaction Metrics
Tracking customer satisfaction metrics allows you to collect relevant data and use it for actionable insights that will improve your customer experience.
You’ll also be able to predict future behavior and more accurately anticipate the needs and wants of your customers — well before they need and want it.
Effectively measuring customer satisfaction will help your company turn happy customers into loyal ones, increasing their lifetime value.
So, how do you measure customer satisfaction?
Enter “customer satisfaction metrics: ” these are numerical scores or data points that summarize how happy or satisfied your customers are with their experiences with your brand, product, or service.
Simply put: customer satisfaction metrics are indicators of the health of your relationship with the customer.
5 Customer Satisfaction Metrics You Need to Track
There are dozens of metrics you can choose from when trying to determine customer satisfaction. We narrowed them down to a small list that you can focus on, revisit, and help guide your product, service, and business development.
Net Promoter Score
First introduced by Frederick Reichheld in his 2003 Harvard Business Review article, the Net Promoter Score (NPS) survey methodology is one that countless organizations are using in order to measure customer satisfaction. Specifically, it is used to gauge the loyalty of a customer to a business.
Using NPS means asking the customer feedback question:
On a scale of 0 to 10, how likely is it that you would recommend our company, product, or service to a friend or colleague?
Based on their response to the question, you’ll quickly be able to categorize your customers into Promoters, Passives, and Detractors.
Promoters (score 9-10) are loyal enthusiasts and very satisfied customers who will help fuel your business growth by buying and referring other customers to your business.
Passives (score 7-8) are also satisfied customers, but their lack of enthusiasm may render them vulnerable to offerings from the competition.
Detractors (score 0-6) are dissatisfied, unhappy customers who may impede your growth and spread negative word of mouth about your business.
To calculate your Net Promoter Score subtract the percentage of Detractors from the percentage of Promoters.
Why is it useful?
The Net Promoter Score methodology is easy for everyone within your organization to understand and it’s also great for segmentation. You can organize data about your customers based on their category and track the score over time, so you can benchmark it and see how well you’re doing as you evolve.
What to watch out for
For larger organizations, NPS on its own may be too simplistic of a metric. It helps you understand that customers have had a positive or negative experience, but not necessarily why that’s the case. NPS works best if paired with other customer satisfaction metrics, or when you utilize a secondary follow-up question to investigate the customer experience in greater detail.
Customer Satisfaction Score
Customer Satisfaction Score (CSAT) is another widely used metric for measuring satisfaction.
With CSAT, customers are asked how satisfied they are with a product, service, or interaction on a scale of 1 to a predetermined number (typically 3, 5, or 10), or on a scale of 0 to 100 percent. The standard CSAT survey question is:
How would you rate your overall satisfaction with (the company or business)?
In some cases emojis (smileys, frowns) are used instead of numerical scales to overcome any language barrier.
A quick tip on using scales: make sure they’re oriented in the same direction. If “5” means “satisfied” in one question, it can’t mean “dissatisfied” in the next. Also, use a neutral answer option in your rating scales, and/or a “Not applicable” answer option.
Even though the approaches vary, the standard way to measure CSAT is to express customers’ responses as a percentage between 0 to 100 percent with higher percentage scores corresponding to higher customer satisfaction levels.
The key difference between CSAT and NPS is that the former is more focused on the respondent’s feeling or emotion (“I am satisfied” / “I am not satisfied”) while the latter focuses on intent (“I will recommend” / “I will not recommend”).
Why is it useful?
Similar to NPS, CSAT serves as an excellent tool for measuring customer satisfaction holistically. CSAT surveys are also usually short, intuitive, and simple. As a metric, CSAT is also useful in showing the type of impact each aspect of the business has on your customers, especially if secondary follow-up questions are used.
What to watch out for
CSAT can provide information about specific customer interactions, but like NPS, it may not necessarily pinpoint underlying customer experience issues and trends. There is also potential ambiguity in what a good or a bad score is because of wide-ranging benchmark data across various business industries and categories. Because it focuses more on emotion than intention, CSAT is also not very effective in determining whether or not a customer will recommend your business to their friends and family.
Customer Effort Score
Customer Effort Score (CES) is used to measure how much effort customers have put into their experiences or interactions with your company.
Questions designed to measure CES usually are phrased like this:
“Did the company make it easy for you to handle your issue?”, or “How much effort did you have to make for your request to be handled?”
Customers may then respond on a 5- or 7-point scale, and scores are calculated simply by getting the average of all the collected responses. Reducing customer effort can be a valuable marketing investment that makes your brand stand out in a sea of unaccommodating, not-very-helpful competitors.
As Forbes’ Blake Morgan wrote, “Today’s customers are busy and don’t want to have to jump through hoops to get the help they need, especially if a product breaks or they have issues with a service. Reducing customer effort makes life easier for customers and improves their impression of the brand and their overall customer experience.”
Why is it useful?
CES provides highly actionable information about your customers, and is more accurate in predicting customer loyalty than CSAT. It is also often a great predictor of future purchase behavior and referrals.
What to watch out for
Unlike NPS, CES does not provide segmentation by type of customer. It also does not provide a great deal of information about a customer’s overall brand perception or overall relationship with your business.
Churn Rate
Customer churn or attrition is defined as the loss of clients or customers and is also one of the first and most obvious indicators of customer dissatisfaction.
This makes churn rate one of your most important customer satisfaction metrics; it is especially critical if your business model is subscription-based (example: software companies and membership-based services).
Remember: it’s easier (and cheaper) to retain customers than acquire new customers.
Tracking churn rate will allow you to see and apply new ways to handle the challenging situation of customers cancelling their plans or subscriptions as well as to overcome other roadblocks to fostering customer loyalty.
Businesses that consistently keep an eye on this metric are also better at predicting if and when a customer is at risk of churning, so that they can take the next step and close the loop with at-risk customers.
Why is it useful?
Churn rate is a very useful metric for identifying trends in customer satisfaction. Tracking this over time, or based on customer-facing changes you make (pricing updates, loyalty programs, feature rollout, brand messaging changes, etc.) can also be insightful for determining what influences customer behavior and decision-making.
What to watch out for
As a customer satisfaction metric, churn rate does not necessarily provide information on which customers you’re losing (high-value customers, low-value customers, etc.).
Online Reviews and Ratings
One of the best ways to achieve an accurate understanding of how satisfied your customers are is to track your business’ online reviews and ratings, such as those posted on sites like Yelp, Google, Facebook, and TripAdvisor.
The rating systems of online review sites vary, so numbers and scores aren’t readily or immediately benchmarkable. However, reviews are a powerful way to tap into the voice of the customer and collect actionable information about the customer experience.
An increasing number of data-driven companies are also embracing customer experience analytics and natural language processing techniques in order to look beyond star ratings and get more out of unstructured data found in online reviews. This allows for sentiment measurement and the insight to understand the underlying reasons why a customer might be dissatisfied or why a customer would choose not to recommend the company.
Why is it useful?
Online reviews and ratings are a great source not only of customer satisfaction information, but also of reputational data.
What to watch out for
Like the others listed above, online reviews and ratings can provide truly actionable information when used with other metrics. As mentioned above, rating systems also vary, so it can be challenging to try to standardize scores and numerical data. It can also be difficult to monitor and analyze reviews manually, especially for larger organizations with multiple business locations. To drive efficiency, it’s best to invest in review management software.
Final Thoughts
Are you delivering experiences that satisfy your customers? How seamless and effective are the interactions customers have with you, across various platforms and throughout the stages of their journey? Is your customer service doing justice to your brand, or harming it?
The key to finding the answers to these types of questions lies in your ability to track customer satisfaction metrics. When utilized appropriately, along with your organization’s commitment to putting customers first, these metrics will give you the leverage you need to deliver customer experiences that satisfy and delight.
