How to measure customer satisfaction: 4 key metrics

Customer satisfaction is a common method used to determine how well you meet – or exceed – customer expectations. It is used as a key performance indicator of customer service and product quality.

Customer satisfaction may be best understood in terms of customer experience. Customer experience (or CX) is the total sum of a customer’s perceptions, interactions, and thoughts about your business.

Customer satisfaction is a composite of many different aspects, and it is likely to change over time. Here’s a model of the various facets that contribute to customer satisfaction (or not):

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Why should you measure customer satisfaction?

Customers who develop attitudinal brand loyalty – that is, they have a positive emotional connection to a brand – have been shown to be less price sensitive than their less-loyal counterparts. They’re also more likely to convert when they buy from you. Highly satisfied customers are also likely to tell friends and family about their experiences and to promote your brand.

According to Mckinsey, you can see the impact when you improve customer satisfaction below:

The cost of serving customers decreases, while revenue increases when customer satisfaction improves.

Customer centricity pays off, as meeting – or better yet exceeding – customer’ expectations makes you more competitive. You’ll be more likely to keep your customers, and prevent them from going to a competitor. Merkle found that 66% of consumers care more about their experience than the costs when making a brand decision. But in times of economic uncertainty, if the experience isn’t worth the cost, they’ll go elsewhere. The Word of Mouth Marketing Association (WOMMA) estimates that good experience reviews spread by word of mouth recommendations account for 13% of consumer sales and represent $6 trillion in yearly consumer spending. It’s clear there are tangible benefits to improving customer satisfaction.

These are good reasons to aim for a level of customer experience and customer satisfaction that exceeds rather than simply meets customers’ expectations. But accurately knowing that you provide great customer service can be difficult without measuring customer satisfaction.

So how do we start effectively measuring customer satisfaction?

4 key customer satisfaction metrics to track

Here are 4 key customer satisfaction measurements that are critical to your business success. They take into account the different dimensions of customer satisfaction, such as affective (emotional) and cognitive (rationally judged) reactions to a product or service and behavioral intentions (such as likelihood to recommend or repurchase) as well as taking overall scores of satisfaction as judged by the respondents.

1. Overall Satisfaction Measure (Attitudinal)

This question reflects the overall opinion of a consumer’s satisfaction experience with a product he or she has used.

The single greatest predictors of customer satisfaction are the customer experiences that result in attributions of quality.

Perceived quality is often measured in one of three contexts:

• Overall quality
• Perceived reliability
• Extent of customer’s needs fulfilled

It is commonly believed that dissatisfaction is synonymous with purchase regret while satisfaction is linked to positive ideas such as “it was a good choice” or “I am glad that I bought it.”

By using the perception of quality and product satisfaction as a guide, we can better measure customer satisfaction as a whole.

2. Customer Loyalty Measurement (Affective, Behavioural)

This single-question measure is the core NPS (Net Promoter Score) measure.

Customer loyalty reflects the likelihood of repurchasing products and services. Customer satisfaction is a major predictor of repurchase but is strongly influenced by explicit performance evaluations of product performance, quality, and value.

Loyalty is often measured as a combination of measures including overall satisfaction, the likelihood of repurchase, and the likelihood of recommending the brand to a friend (as measured by Net Promoter Score).

A common measure of loyalty might be the sum of scores for the following three questions:

• Overall, how satisfied are you with [brand]?
• How likely are you to continue to choose/repurchase [brand]?
• How likely are you to recommend [brand] to a friend or family member?

Understanding customer loyalty in this form of metric helps you to measure customer satisfaction from the angle of future behavior. It can be helpful not only for understanding customer satisfaction now but also for developing future purchase predictions.

3. A series of Attribute Satisfaction Measurements (Affective and Cognitive)

Affect (liking/disliking) is best measured in the context of product attributes or benefits. Customer satisfaction is influenced by the perceived quality of product and service attributes and is moderated by expectations of the product or service. The researcher must define and develop measures for each attribute that is important for customer satisfaction.

Consumer attitudes toward a product developed as a result of product information or any experience with the product, whether perceived or real.

Again, it may be meaningful to measure attitudes towards a product or service that a consumer has never used, but it is not meaningful to measure customer satisfaction when a product or service has not been used.

Cognition refers to judgment: the product was useful (or not useful); fit the situation (or did not fit); exceeded the requirements of the problem/situation (or did not exceed), or was an important part of the product experience (or was unimportant).

Judgments are often specific to the intended use application and use occasion for which the product is purchased, regardless of whether that use is correct or incorrect.

Affect and satisfaction are closely related concepts. The distinction is that satisfaction is “post-experience” and represents the emotional effect produced by the product’s quality or value.

Using this metric to measure customer satisfaction helps you to narrow down the causes of customer satisfaction levels. Unhappy customers may have a particular emotive response to products and services, rather than quality being the issue, for example.

4. Intentions to Repurchase Measurements (Behavioural Measures)

When wording questions about future or hypothetical behavior, consumers often indicate that “purchasing this product would be a good choice” or “I would be glad to purchase this product.” Behavioral measures also reflect the consumer’s past experience with customer service representatives.

Customer satisfaction can influence other post-purchase/post-experience actions like communicating to others through word of mouth and social networks.

Additional post-experience actions might reflect heightened levels of product involvement that in turn result in an increased search for the product or information, reduced trial of alternative products, and even changes in preferences for shopping locations and choice behavior.

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How to use these metrics to develop customers satisfaction KPIs

Measuring customer satisfaction to gather your customer feedback, illuminate the risk of customer churn, and discern loyal customers is useful, particularly over time.

However, it is better to measure customer satisfaction with particular goals in mind. By having scores you’re aiming to meet, whether that is an internal or industry benchmark, you’re able to track your progress over time and react to how you’re doing. If your actions aren’t improving your CSAT score, you might need to re-evaluate where you’re going wrong.

So how do you set a realistic goal for your customer satisfaction score that can act as your KPI?

Improve on your past customer satisfaction score

The most obvious answer is to consistently be improving customer satisfaction feedback. Taking an initial score as a benchmark and taking stock at regular intervals will help to not only measure customer satisfaction over time but to constantly improve your service. Your score might refer to one part of the customer journey – for example, ordering a new car, or picking it up. Try to figure out what is causing the scores you’re receiving – speak to customers, product teams, frontline staff – all of them have useful insights to help you improve. Of course, customer satisfaction will continue to change and evolve and you should treat it as such.

Just because your score is high doesn’t mean it will stay that way – constantly look to improve customer satisfaction! Customer expectations will flux and evolve, and your efforts to create happy customers will need to follow suit.

Take a look at the competition

Your competition will almost certainly be measuring customer satisfaction. Understanding – to whatever extent you can – where you stand in comparison to your competitors will help you to set yourself customer satisfaction goals for the future. They are likely seeing the importance of customer satisfaction – so don’t get left behind.

Judge by industry benchmarks

Your industry will almost certainly have customer satisfaction benchmarks that will provide you with a solid guideline for measuring customer satisfaction. If you’re not meeting your industry’s baseline, then it’s likely that your customer experience is falling short of the expectations of your consumer base.

How to measure customer satisfaction for increased performance

You understand each customer satisfaction metric you need to score – but how do you actively gather your data on the customer experience? What are the best practices for gathering customer satisfaction information, and once you have it, what do you do with it?

Here are ways of measuring customer satisfaction for more happy customers and business growth, as well as recommendations for best practice:

Use agile customer satisfaction surveys to gauge success and take action

Gathering customer satisfaction data and developing KPIs is an important process, but measuring customer satisfaction is often seen as a rote exercise to complete.

A customer satisfaction survey is a useful tool in a brand’s arsenal for gauging success, but it is often seen as a “must-do” action rather than a useful tool. Instead, to prioritize customer success, brands need to develop an agile, adaptable approach to customer surveys.

Developing a system of delivering customer surveys that is agile and well-targeted will help you to not only take the pulse of customer sentiment, but it will also help to create targeted actionable insights on an ongoing basis.

A quarterly or an annual measurement will only provide you with a snapshot of customer success. It won’t help you to measure the reaction to a new launch, or the integration of a new system. It also won’t help you to narrow down whether overall customer sentiment has changed, or whether specific actions you’re taking have had an effect.

Collecting customer feedback in an ongoing approach will help you to see the micro-trends of customer satisfaction. You can quickly adjust your customer journey to help new customers experience the best of your brand, rather than take delayed action.

Always be listening to your customers, no matter where they are

Your customer satisfaction scores aren’t everything. Though they’re very useful, improving customer satisfaction is about understanding the underlying reasons why loyal customers and satisfied customers feel the way they do – as well as finding out what would make dissatisfied customers stay.

For example, using natural language understanding (NLU) and conversational analytics to gauge how customers are feeling in real time as they speak to you or about you allows you to see the reasons behind the scores. Is it that your customer support efforts are lacking, causing feelings of frustration? Have you provided a particularly exceptional customer experience that left customers feeling elated?

Understanding this type of customer feedback gives you more detail and background information than metrics or customer surveys can. It gives you insight into how customers feel, and that is vital when looking to increase customer satisfaction. Positive customer emotions can lead to a high customer satisfaction score and repeat customers, while failing to make customers happy can drive down customer satisfaction scores.

Taking action to improve customer satisfaction

As outlined previously in this article, there are four key metrics that you should use to help you improve customer satisfaction.

However, simply gathering this customer satisfaction data isn’t enough to help your business thrive. Narrowing down the key triggers for unhappy customers and taking action to improve customer satisfaction is the most vital part of the process.

Whether it’s poor customer service or customer frustration at a particular ordering process, finding the core causes of customer dissatisfaction – and conversely, what makes customers happy – is the right approach. Ideally, you’re completing these actions in real-time, using conversation analytics and other tools to resolve issues in the moment.

The customer satisfaction process will constantly need improvement to meet new demands and to avoid stagnation in a highly competitive market.

For example, this diagram shows a potential customer satisfaction process improvement cycle:

Here, customer follow-ups and customer satisfaction surveys are a fundamental part of the development of customer experience. At each stage of the customer interaction, gathering customer data and formulating a response is a given part of the process – meaning your customers’ satisfaction is never left to chance.

Your internal process should include a number of stages that will form an understanding of  customer sentiment and take appropriate action:

1. Customer satisfaction data gathering

Listen to what your customers are saying on a rolling basis. This data can be gathered effectively through customer satisfaction surveys, but it can be bolstered by social listening and unsolicited customer feedback (customer lifetime value, etc). Conversational analytics can be used to analyze customer emotion, sentiment and intent in real time, no matter where the conversations are being had or with whom.

Often, a customer satisfaction survey will return insights at the extremes, such as highly negative feedback and a very positive review. Customer interactions at particular points in the customer service journey (such as customer service conversations) may also generate more extreme results. Gathering further data, particularly in real time, and collating it all within one platform can help you to tease out the truth of customer satisfaction.

2. Understanding customer journey touchpoints and their effect

Knowing the particular journey your customer has experienced is important for determining touchpoint value. This is again why ongoing customer satisfaction surveys or conversational analytics can be more effective than taking a static, scheduled approach. When you track customer satisfaction across the customer journey, you’re able to take the best action, rather than applying the same approach to the pre, during and post-checkout experiences.

Once you understand how customer satisfaction is tied to particular touchpoints, you can prioritize action more effectively. Fixing issues in the moment – such as increasing customer support efforts when emotions are volatile – can go a long way to get more positive reviews and achieve customer satisfaction.

 3. Narrowing down the drivers of customers satisfaction

It’s not enough to know how your customer base feelsl – discovering the drivers of their satisfaction is key for progress. There are many deciding factors behind customer satisfaction, and they’re likely to differ between customers. Determining which drivers affect each audience segment helps you to better meet their needs and expectations.

For example, a key driver could be communication. How long has it taken for a customer to get a response? How quickly was their query resolved? Did you provide status updates throughout, and were they given on the channel they’d prefer? Customers might expect that you’ll acknowledge and resolve issues quickly – but if you’re only getting back to them a week after they reach out and they’re constantly asking you for updates, you’ll get negative customer feedback from dissatisfied customers.

4. Empowering your employees to take action

Brands need to evolve their internal processes to help drive customer satisfaction, but they also need to empower their employees to take action. Employee coaching can also help to create customer experiences that are not only satisfactory, but memorable.

Creating a culture of action – where issues are identified and closing the loop is consistently achieved – will help your employees to be proactive in their approach to making customer satisfaction important. Enable your entire company, from frontline employees to sales team to marketing and more, to see relevant insights that will improve your overall customer satisfaction.

For example, it’s no good if your customer service team is the only one seeing a disconnect between what you promise your company’s products can do and how they actually perform. Your marketing team, sales team and product teams should know if repeat issues are being flagged in customer feedback, word of mouth reviews or social media posts. Use the right tools to not only track customer satisfaction, but share key insights as well.

5. Automating your actions

Another way to ensure your employees are able to take quick, effective action is to automate the process. Rather than relying on human effort to ensure that tickets, alerts, and follow-up actions are scheduled, use technology to improve customer satisfaction at scale.

You can deliver actionable insights to the right teams at the right time automatically – meaning you’re never missing a step when it comes to addressing customer dissatisfaction. By uncovering and taking actions for problems on a micro level, your team has the time to tackle wider strategic and macro issues more effectively.

Why you should use customer satisfaction measurement tools

Learning how to measure customer satisfaction is only part of the wider customer experience picture. Customer satisfaction is complex and ever-changing, and as a result, it’s important to take frequent measurements across a range of metrics in order to get the most accurate picture possible.

The wider measurement picture

Your customer satisfaction score should always be considered among a broader picture of data, including customer effort score, Net Promoter Score (NPS), conversational analytics and more. This will help you to understand customer sentiment and customer loyalty in relation to the service you’re providing.

As mentioned, there are more ways of measuring customer satisfaction than a customer satisfaction survey. Social media monitoring, focus groups, customer retention data, and more can help you to establish why existing customers stay and why new customers might not develop their customer relationship with you.

But how do you keep track of all those customer satisfaction metrics, and how do you analyze them relative to one another to one-another and gather actionable insights?

Measure customer satisfaction with Qualtrics

As mentioned, we recommend taking an ongoing approach to customer satisfaction along with other metrics as part of a broader customer experience program.

Increase satisfaction, boost loyalty and lower customer churn by listening to what customers are saying to or about you, all the time. Using Qualtrics XM™ allows you to listen 24/7, schedule surveys, automate tickets, send actionable insights and more to ensure you’re tracking satisfaction at every part of the journey, and improving broken experiences in real-time. Use our customer service support products like XM Discover to understand how customers feel in real-time to enhance your customer satisfaction efforts.

By measuring and analyzing your customer satisfaction metrics within a single platform, you’ll not only benefit from powerful analytic tools and easy-to-interpret results, but you’ll also be able to integrate your findings with other elements of your customer experience data. But most importantly, you’ll be able to take action on your insights across the organization far more easily, resulting in more satisfied customers.