Home Blog Customer experience What is customer satisfaction and why is it important?

What is customer satisfaction and why is it important?

Are your customers happy with what your brand brings to the table? How likely are they to come running back to you? And what are the chances of them recommending you to family and friends? 

Whether you’re selling a service in finance, a product in retail, or an experience in hospitality, you need to keep your customers satisfied. If you don’t, you won’t see them for dust. 

Not sure where to start? Then it’s a good job you’ve found your way here, because we’re about to take a deep-dive on all things customer satisfaction.  

What is customer satisfaction?  

Customer satisfaction is simply how consumers feel following any experience with your brand, product or service – but this doesn’t happen in silos. Every interaction helps to build a picture in the mind of your customer that ultimately ends in a measurement of customer satisfaction – from how easy your website is to navigate, to the quality of aftercare offered by your teams. But that only comes when you know your customer’s full story; from the very first time you meet to the living, breathing relationship you have together. When you know their human experience.

Customer satisfaction can be influenced by a number of factors, such as customer expectation, the perceived quality of your product or service, how you handle your complaints, whether your communication is up to par, and the convenience of everything from how to place an order through to delivery, and perceived value for money.  

You’ll note the use of ‘perceived’. As with customer expectation, not every factor is within your control when it comes to influencing customer satisfaction, or even brand perception. For those factors that are? That’s where your energy needs to lie. 

The real bummer here is that even with the best product or service this side of the stratosphere, your customer satisfaction scores can very quickly plummet if you throw a poor website experience, rude staff member, or delayed shipping time into the mix. Because customer satisfaction is all about the TTP (total package, for anyone who bypassed Usher back in the noughties).  

But why does any of this matter? 

Why is customer satisfaction important?  

73% of businesses with above-average customer experience perform better financially than their competitors. We could leave this section at that, but we won’t (it’d do nothing for our rankings). 

Customer loyalty takes a long time to build, and seconds to destroy. Why? Because it all boils down to trust. When you’re building customer loyalty through positive brand experiences, you’re proving to your customers that they can trust you; if you break that trust, your customers won’t hesitate to head on over to a competitor waiting in the wings. 

Customer satisfaction is at the heart of customer loyalty; you won’t ever see loyalty if your customers aren’t happy. Most businesses understand this in theory (which is why 81%  view customer experience as a competitive differentiator), but not all of them manage to nail it.  

There are, however, some pretty compelling reasons for making sure that you’re one of the businesses that does.  

Benefits of customer satisfaction 

Every company, no matter how successful, profitable, or well-publicized, should be working to continually improve on their customer satisfaction scores – because the customer is king, and their approval can literally make or break your business. Without that commitment, you might still be successful in making one-off sales, but you’re not going to secure repeat business, or the sort of reputation you can capitalize on.  

We could wax lyrical about the benefits of customer satisfaction all day long, but you’d get really bored – so here are the five key benefits for your business.  

  1. Loyal customers 

    Research has shown that loyal customers are five times more likely to make a repeat purchase, and four times more likely to refer a friend – and as we’ve just covered, you’re unlikely to nurture loyalty if your customers aren’t satisfied. In fact, an overwhelming 96% of customers say customer service is important in their choice of loyalty to a brand. So, if you want repeat customers, a focus on customer satisfaction is where it’s at. In fact, 65% of a company’s business comes from its existing customers
  2. Engaged employees 

    The value of engaged employees is well documented, but did you know that companies who lead the way in customer experience have 1.5 times more engaged employees than less customer-focused companies? Or that companies with engaged employees outperform the competition by 147%? When your people are highly engaged, they make truly fantastic brand ambassadors; this means they’re far more likely to deliver great customer service, and your customers are more likely to feel satisfied. The perfect circle.  
  3. Word of mouth recommendations 

    What do people do when they’re happy with a product or service? They tell people about it! Investing in customer satisfaction is unbeatable marketing – but keep in mind that customers tell an average of nine people about a positive experience, but 16 people about a negative experience. Even more reason to keep customers happy! It’s also why you should act quickly on any negative feedback and do your utmost to restore confidence in your brand.  
  4. Increased revenue 

    You’re a business, which means you care about the bottom line. Of course, you want your customers to be happy, but you also want to know how this translates into profits, right? Money isn’t a dirty word, so try this on for size: customers are likely to spend a whopping 140% more after a positive experience than customers who report negative experiences. No one wants to give their hard-earned cash to a company that hasn’t made them feel valued, but when their experience is on point? Well, that’s a whole different story. In fact, 70% of consumers have admitted to spending more money to do business with a company that offers great service
  5. Valuable insight 

    Customer satisfaction is a great marker of how well you’re doing as a business, how happy people are with your brand, and whether you need to make any improvements to the customer journey. When your customer satisfaction levels are high, you know you’re doing something right – but starred reviews can only tell you so much. If you really want to get deep enough to influence customer satisfaction across the board, you need to seek our customer feedback on every part of the buying journey. 

Not sure how? We’ve got you covered. 

Measuring customer satisfaction  

What is customer feedback, and why is it important? Essentially, customer feedback is an insight into what people love, and hate, about your business. Measuring customer satisfaction through first-hand feedback is incredibly important for figuring out the direction of your business, understanding which of your customer-centric efforts are converting into customer loyalty, and getting to the bottom of any gripes that are bringing your customer ratings down. 

It’s worth noting here that 77% of consumers view brands in a more favourable light if they seek out and act on customer feedback.  

So, what should you be asking if you want to measure customer satisfaction? 

  1. How satisfied are you with [company]? 

    CSAT (Customer Satisfaction Scores) are simple and to-the-point. A sliding scale will give you the robust numerical data you need, while adding a qualitative element by inviting customers to explain their score will give you something concrete to act on. 
  2. How likely are you to purchase from [company] in the future? 

    If customers are willing to buy from you again, you know you’re doing something right. We’ve already established that customer satisfaction leads to customer loyalty, so Net Promotor Scores (NPS) will give you a great insight. 
  3. How likely are you to recommend [company] to friends and family? 

    When your customers are happy enough with your product or service to tell other people about it, you’ve hit the jackpot. People tend to trust personal recommendations more than online reviews, so if you get a positive response here, keep doing what you’re doing.  

How to improve customer satisfaction  

As with any improvement measure, quality data is essential for making a change. First things first, you need to define who your customers are, and what makes them happy; that way, you’ll know the sort of data that you need to garner, and how to act on it. 

Here’s how to get to the bottom of what your customers really think, and what to do about it.  

  1. Harness the power of social listening 

    If you have a disgruntled customer, they’re probably going to head online and make their feelings known. Whether they take to social media, or write a negative review, people like to be heard in our digital age – so show that you’re listening. Whether you use Google alerts or social listening tools, it’s important to arm yourself with the ability to act on any negative mentions: show empathy and understanding, get to the root of the problem, and find out how you can make things better. Because everyone will be watching. 
  2. Carry out regular satisfaction surveys 

    Things move quickly in the world of business, retail, you name it. New competitors come along, people’s needs change, and before long, the feedback you gathered at the start of the year is no longer an accurate representation of how your customers feel. Choose meaningful questions that’ll give you actionable insight, avoid asking too many questions (response rates drop off after ten questions), and collect feedback through multiple touchpoints – from website to email to app surveys.  
  3. Take action on any and all feedback 

    As well as responding to reviews and mentions online, it’s absolutely crucial that you use the feedback you’ve gathered to implement positive changes throughout your company, and along the buyer journey. Customer satisfaction feedback should be shared across all of your teams, because the more people who are involved in responding and resolving, the better. Fostering a sense of company-wide customer-centricity can actually make you 60% more profitable than companies who don’t put the customer at the heart of their decisions. 

Customer satisfaction examples  

Now then, who’s killing it in the customer satisfaction stakes? These three UK companies are effortlessly outshining their competitors with their customer-centric approach. 

  1. NFU Mutual 

    Car insurance company NFU Mutual has left its competitors in the dust by accelerating to the top of the league table for customer experience in 2022. Improvements around transparency and complaint-handling pushed the company out of its 2021 ranking of third place. Customers cited NFU’s good reputation and ease of policy management amongst the reasons for being happy with the provider. 
  2. Bank of Scotland 

    Taking 2022’s gold award for customer satisfaction, Bank of Scotland has been celebrated for the quality of their app and website, the lack of any issues with the credit card provider, and the exemplary level of customer service. When you’re dealing with something as important as people’s finances, an absence of issues saves a great deal of stress for customers – but no matter what industry you’re operating in, issues should always be resolved promptly (or avoided entirely) if you want to safeguard satisfaction levels.  
  3. ManyPets 

    Demonstrating the importance of good customer service when it comes to ensuring high satisfaction levels, pet insurer ManyPets has topped the customer experience ranking for pet insurance providers since 2020, thanks to its focus on customer service, and fair pricing. Customers also cited the company’s app and website as contributing to their happiness with the brand. 

How can Forsta help?  

Ever heard of customer experience survey software? No? Prepare to have your mind blown! 

You might think we’re just making a shameless plug for our own services here but using software to develop a strong customer satisfaction score is one of the smartest business decisions you can make! 

When it comes to customer experience (CX) survey software, we’ve got the tools to put customer experience at the very heart of your culture – informing your decisions with the knowledge you need to understand, and act on, customer feedback. 

Taking you from data to insight to action, we present your data as a complete story (it’s one for the ages!), help you to deep dive on any issues, empower you to automate those really boring tasks that no one wants to do, and give you the insights you need to drive cultural change in your business.  

You get to see what your customers see and make the changes they actually care about.  

Customer is King 

82% of businesses agree that retention is cheaper than acquisition. That means investing in customer satisfaction is far more cost-effective than enticing new customers to your door.  And while the customer may not always be right, they will always be at the heart of the world’s most successful companies.  

Put them first, gather their insights, heed their feedback, and evolve with their guidance, and your customer satisfaction scores will start to soar. And then you’re laughing.  

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