One of my favorite thing about shopping at Trader Joe's -- besides the vegan cookie butter sold there -- is its generous return policy:
Customers can return any product if they're not happy with it -- even if it's already been opened and consumed.
Talk about customer satisfaction.
This policy is no doubt an expensive one for Trader Joe's, but customer satisfaction programs like these pay off for businesses -- and end up earning them more revenue.
I tell all of my friends and family about this policy because I'm so wowed by it, and now, I'm sharing it with everyone reading this blog post. In fact, I started shopping at Trader Joe's after hearing about the store's policy and affordable prices, and the business didn't have to spend any marketing or sales dollars to get me into the door.
Customer satisfaction is a critical concept for customer success professionals to understand and live by, and it's actually about more than a money-back guarantee. In this post, we'll start discussing customer satisfaction: what it is, and why it's important for your business to start measuring.
Customer Satisfaction Definition
Customer satisfaction (CSAT) is a metric used to quantify the degree to which a customer is happy with a product, service, or experience. This metric is usually calculated by deploying a customer satisfaction survey that asks on a five or seven-point scale how a customer feels about a support interaction, purchase, or overall customer experience, with answers between "highly unsatisfied" and "highly satisfied" to choose from.
When it comes down to it, customer satisfaction is a reflection of how a customer feels about interacting with your brand. And businesses and brands quantify this positive or negative feeling primarily using customer satisfaction surveys.
These responses can give you an idea of your average level of customer satisfaction -- along with a picture of customer loyalty, which predicts the likelihood of customer referrals (like the one Trader Joe's got when I first walked into the store).
Why is customer satisfaction important?
If you don't measure customer satisfaction, you can't identify unsatisfied customers that could churn or leave you negative customer reviews. You also can't identify happy customers you could activate as evangelists or referrers. Finally, you can't predict or prevent customer churn to plan proactively without metrics to analyze.
1. CSAT helps you identify unsatisfied customers.
You can't analyze unhappy customers' feedback, or make changes to your product or service to make them happy, if you don't know customers are unhappy in the first place. Make sure you're deploying CSAT surveys, analyzing, and acting on negative customer feedback, no matter how tough it is to hear, as your top priority, so you can prevent them from churning, leaving negative customer reviews, or warning against your brand to friends and colleagues.
2. CSAT helps you identify happy customers.
If you don't measure customer satisfaction, you can't identify your happy customers who are finding success with your product or service. And if you aren't prioritizing customer success, odds are, your company isn't growing -- at least,that's what we found in a surveyof nearly 1,000 business leaders across industries.
Growing companies prioritize customer success, and a key way to identify and activate successful customers is to requestcustomer feedbackto identify your satisfied customers.
These customers are the ones who will shout your praises to their friends and family, and they'll refer new customers -- growing your business faster than sales and marketing, at nocost of customer acquisition.
Without measuring CSAT and similar customer success metrics, it's hard for customer success teams to plan and inform priorities. Without metrics to inform how healthy (or unhealthy) your customer base is, customer success teams can't work with Sales to improve customer expectations, with Product to incorporate product feedback, or Marketing to improve the end-to-end customer experience. Leaders need data and trends to forecast team performance over the next month, quarter, and year to adapt strategy, if needed.
4. CSAT drives your inbound methodology.
Customer satisfaction does more than just measure customer service. It optimizes the performance of other departments by providing them with useful customer insights. This information is used to improve customer experience which leads to a cyclical increase in customer satisfaction. We can visualize this process using the flywheel model below:
Marketing, sales, and product development teams use CSAT to guide their work and interact with customers. Businesses with excellent customer satisfaction can easily attract and engage with customers because they've proven they can provide a delightful brand experience. If your company wants to adopt the Inbound Methodology, you'll need to integrate customer satisfaction into every function you perform.
5. CSAT helps marketers attract new leads.
Most customers are more likely to trust their peers than they are to trust marketing. In fact, 71% of customers are more comfortable with a purchase after reading a positive company review. But without great customer satisfaction, your company won't have these reviews to share.
Your marketers should rely on customer testimonials to attract new leads to your business. Since customers are more willing to trust other users, these reviews are effective in attracting prospects. That's because 55% of customers are willing to spend more money on a guaranteed good experience. The better your customer satisfaction, the more material your marketers will have to advertise your brand.
6. CSAT is a selling point for sales teams.
Sales teams benefit from customer satisfaction because it acts as a selling point for closing deals. As we mentioned above, customers are more willing to pay for an experience they know is great. If your customer satisfaction is superb, your team should highlight that during their pitch to leads.
Additionally, CSAT helps sales teams understand customer expectations. They can analyze happy customer reviews to see which parts of your product or service they should emphasize. That way, they can hammer home distinct advantages that differentiate your business from its competitors.
7. CSAT guides product updates.
Negative customer reviews act as alerts that let companies know when a product or service has a problem that needs to be fixed. Product development teams monitor CSAT to identify these issues and quickly resolve them. This is particularly important for SaaS businesses that regularly update their software. By keeping a close eye on CSAT, development teams can correct costly product roadblocks that may lead to churn.
8. CSAT leads to customer advocacy.
If your business has positive customer satisfaction, then you have customers who are loyal to your brand. These customers will refer new leads to your company and generate more testimonials for your marketing team. You can create customer advocacy programs for these users and encourage them to advertise on your business' behalf.
Customer advocacy programs reward customers for referring your business to potential leads. Customers are given incentives to join the program, then receive gifts or offers in exchange for reviews and testimonials. This creates a mutually beneficial relationship that rewards your best customers and keeps them loyal.
9. CSAT improves customer retention.
It should be no surprise that the happier your customers are, the better your customer retention will be. After all, happy customers won't have much reason to turn to competitors, so long as you keep them satisfied.
On the other hand, unhappy customers will have plenty of reasons to churn and it'll be up to your team to convince them otherwise. By measuring CSAT, you can look at individual customer needs and create personalized offers for users who are likely to churn. Since 60% of customers will leave a company due to a poor customer service experience, you may only get one opportunity to stop someone from churning. CSAT optimize your chances by providing you with relevant information about the customer's experience with your brand.
So, there you have it. Customer satisfaction is important because it helps you solve problems, prevent churn, and identify happy customers that can become your advocates and evangelists.