Customer satisfaction: Why it matters & how to improve it

Read time: 4 minutes

Customer satisfaction has hit a two-decade low. In a market driven by high CX expectations, this should sound alarm bells. But how can brands develop effective strategies to reverse this downward trend? Is it possible to be satisfying customers all the time?

As the Harvard Business Review says, “Companies can and should delight the customer with an amazing experience but with realistic aims.” 

This last caveat is important. You need to provide an unrivalled end-to-end customer experience to win high levels of consumer satisfaction, and you need to do it in a way that drives value to, rather than drains it from, your brand. 

To do this you need comprehensive customer data. Insights into not only what your customers buy but also why they make these choices allow you to understand their preferences, brand sentiment, and motivations. With this depth of understanding, you can tailor experiences and offers more precisely. You can provide exactly the right thing — whether that’s a thoughtful thank you gift or personalised marketing email — at the right time, so you can delight your customers while optimising your marketing resources.

In this post, we’ll share the strategies and tactics you can put in place to do it. 

What are the key points of customer satisfaction?

There are many ways to foster customer satisfaction, including:

• Offering proactive multi-channel support
• Acting on customer feedback
• Personalising the user experience
• Leveraging NPS 
• Following up with customers

Below, we'll explain the four key points of customer satisfaction.

Net Promoter Score (NPS)

Customer satisfaction metrics like Net Promoter Score are critical in gauging customer satisfaction. Categorising your customers as Promoters, Passives, or Detractors gives you an overall picture of satisfaction levels, while at the same time allowing you to see which customers are most well disposed to your brand and therefore most likely to respond favourably to satisfaction and customer experience drives.

Feedback Channels

You can collect feedback through various channels:

• Online surveys 
• Social media interactions 
• Customer support communications 
• Product reviews

Each channel provides different types of feedback, all of which give you a different angle from which to understand customers' direct experiences and opinions.

Generative AI and Sentiment Analysis

Generative AI, particularly in the form of sentiment analysis, revolutionises how businesses process and understand customer feedback. By analysing text from reviews, surveys, and social media, AI tools can identify common themes and sentiments, allowing you to quickly identify areas for improvement and spot places in the customer journey where you can intervene effectively to maximise customer satisfaction.

Customer Origin Surveys

Customer origin surveys ask individuals to specify how they first heard about or decided to engage with your brand. This is important information, as understanding how customers discovered your brand tells you which aspects of your marketing are most effective. Once armed with this knowledge, you can refine your marketing strategies and focus your efforts on the most productive channels. 

Why is customer satisfaction important?

Customer satisfaction is vital for your business because it shows whether your customers like your brand, which is key for growth. Higher satisfaction leads to better customer retention, higher lifetime value, and a more positive brand reputation.

1. Better loyalty and retention

Satisfied customers are more likely to remain loyal to your brand and continue purchasing your products or services.

2. More word-of-mouth referrals

Happy customers are likely to recommend your brand to their friends and family, leading to new customer acquisition through referrals.

3. Increased revenue

High customer satisfaction often leads to repeat purchases and higher lifetime customer value, contributing to increased revenue.

4. Improved reputation

Satisfied customers contribute to a positive brand image and reputation, which can differentiate your business from competitors.

5. Reduced marketing costs

Word-of-mouth marketing from satisfied customers can reduce the need for costly paid advertising and marketing campaigns.

6. More feedback

Happy customers are more likely to provide valuable feedback, helping your business to improve products and services.

When to measure customer satisfaction

Knowing when to measure customer satisfaction is as important as knowing how. For example, measuring satisfaction after key interactions like a purchase or a customer service call can provide a detailed and accurate snapshot of how these experiences affect satisfaction.

Start by identifying key milestones in the customer journey. From there, you can decide which of these milestones you’ll target for gathering feedback and measuring satisfaction. 

Customer satisfaction metrics

These are the eight most common metrics for measuring customer satisfaction:

• Net Promoter Score (NPS): Measures customer loyalty and likelihood to recommend.
• Customer Satisfaction Score (CSAT): Gauges immediate satisfaction with a product/service.
• Customer Effort Score (CES): Assesses how easy it was for a customer to complete an action.
• Retention Rate: Tracks the percentage of customers who stick around.
• Churn Rate: Monitors the rate at which customers stop doing business with you.
• Customer Lifetime Value (CLV): Projects the total revenue a business can expect from a single customer.
• First Response Time: Measures how quickly customer service responds to inquiries.
• Resolution Time: Tracks the time it takes to resolve customer issues.

Taking action on insights

Merely collecting data on client satisfaction isn't enough; the real value lies in acting upon it to make tangible improvements. 

For instance, if feedback indicates a problem with your website's usability, addressing this issue not only resolves the immediate problem but also shows customers that their feedback is valued and impactful.

When a customer highlights a specific issue, responding with gratitude and an incentive, such as a discount on their next purchase, can significantly enhance their perception of your brand. 

Taking initiatives like these turns an initially negative interaction into a source of satisfaction, and maybe even delight. In the process of resolving the complaint, you’ve strengthened your relationship and demonstrated you value customer input.

How advocacy tools help increase customer satisfaction

Customer advocacy programs are instrumental in gathering and analysing data to identify not only your most satisfied customers but also those who might need extra attention. By using tools like Net Promoter Scores (NPS), customer feedback, and sentiment analysis, you can gain a comprehensive picture of customer sentiment across different segments.

An advocacy marketing strategy arms you with the knowledge you need to provide moments of delight at key points in the customer journey, encouraging them to share their experience with others. 

To provide genuinely high customer satisfaction, you need to know where, when and how to deploy your CX to maximise its value. Holistic customer data is the foundation of this endeavour. With it, you can build a business that delights customers, improves satisfaction, and builds a sustainable, loyal customer base that can grow for years into the future. Learn more.