Customer Satisfaction- Meaning & Definition

It is a measure of how products and services supplied by a company meet or

surpass customer expectation. Customer satisfaction is defined as "the number
of customers, or percentage of total customers, whose reported experience with a firm, its
products, or its services (ratings) exceeds specified satisfaction goals."

What is customer satisfaction and why is it important?

Customer satisfaction plays an important role within your business. Not only is it the
leading indicator to measure customer loyalty, identify unhappy customers, reduce churn
and increase revenue; it is also a key point of differentiation that helps you to attract
new customers in competitive business environments.
What is Customer Satisfaction ?
Business always starts and closes with customers and hence the customers must be treated
as the King of the market. All the business enhancements, profit, status, image etc of the
organization depends on customers. Hence it is important for all the organizations to meet all
the customers’ expectations and identify that they are satisfied customer.

Customer satisfaction is the measure of how the needs and responses are
collaborated and delivered to excel customer expectation. It can only be attained if the
customer has an overall good relationship with the supplier. In today’s competitive business
marketplace, customer satisfaction is an important performance exponent and basic
differentiator of business strategies. Hence, the more is customer satisfaction; more is the
business and the bonding with customer.

Customer satisfaction is a part of customer’s experience that exposes a supplier’s

behavior on customer’s expectation. It also depends on how efficiently it is managed and
how promptly services are provided. This satisfaction could be related to various business
aspects like marketing, product manufacturing, engineering, quality of products and services,
responses customer’s problems and queries, completion of project, post delivery services,
complaint management etc.

Customer satisfaction is the overall essence of the impression about the supplier by the
customers. This impression which a customer makes regarding supplier is the sum total of
all the process he goes through, right from communicating supplier before doing any
marketing to post delivery options and services and managing queries or complaints post
delivery. During this process the customer comes across working environment of various
departments and the type of strategies involved in the organization. This helps the customer
to make strong opinion about the supplier which finally results in satisfaction or
dissatisfaction.

Customer’s perception on supplier helps the customer choose among the supplier on basis
of money value and how well the delivered products suit all the requirements. The supplier’s
services never diminishes after the delivery as customer seeks high values post marketing
services which could help them use and customize the delivered product more efficiently. If
he is satisfied with the post marketing services then there are good chances for supplier to
retain the customers to enhance repeated purchases and make good business profits.

It is necessarily required for an organization to interact and communicate with

customers on a regular basis to increase customer satisfaction. In these interactions
and communications it is required to learn and determine all individual customer needs and
respond accordingly. Even if the products are identical in competing markets, satisfaction
provides high retention rates. For example, shoppers and retailers are engaged with
frequent shopping and credit cards to gain customer satisfaction, many high end retailers
also provide membership cards and discount benefits on those cards so that the customer
remain loyal to them.

Higher the satisfaction level, higher is the sentimental attachment of customers with the
specific brand of product and also with the supplier. This helps in making a strong and
healthy customer-supplier bonding. This bonding forces the customer to be tied up with that
particular supplier and chances of defection very less. Hence customer satisfaction is very
important panorama that every supplier should focus on to establish a renounced position in
the global market and enhance business and profit.
Significance

You should never ignore the importance of customer satisfaction. There are dozens of factors
contributing to the success (or failure) of a business, customer satisfaction is one of them. It’s
important to track this factor and work on improving it in order to make your customers more
loyal and eventually turn them into brand ambassadors. If you don’t care about customers’
satisfaction, don’t expect them to care about your services or products. Sad, but true. The
sooner you face it, the better you’ll perform.

High-standard customer service can win your clients’ hearts and make you recognizable
within your target group. Nowadays when social media play such an important role in
making decisions it’s crucial to keep an eye on a quality of customer service you provide. Not
convinced yet? What if we provide you with 5 more solid reasons why customer satisfaction
is not only important but also beneficial for your brand?

1. A Loyal customer is a treasure you should keep and hide

from the world
According to White House Office of Consumer Affairs, on average, loyal customers are
worth up to 10 times as much as their first purchase. Some research says that it is 6-7 times
more expensive to acquire a new customer than it is to keep a current one. Banks or mobile
providers know it best, so they don’t have any problem with going an extra mile for a
customer who is not quite satisfied and often offer him something special. Not only it is more
expensive but also much more difficult to keep existing and loyal clients (let alone keeping
them fully satisfied and happy!) than to gain some new ones. Take this rule into account
while organizing your customer service processes and do your best to look after them.

2. They can stop being your clients in a heartbeat

Is not rocket science, nowadays clients easily switch their love brands. It is often caused by
terrible customer service. Clients waiting for ages to get feedback or comment from a brand?
Unacceptable! But it still happens. And gaining clients’ trust takes up to 12 positive
experiences to make up for one unresolved negative experience.

“When customers share their story, they’re not just sharing pain points. They’re actually
teaching you how to make your product, service, and business better. Your customer service
organization should be designed to effectively communicate those issues.” – Kristin Smaby,
“Being Human is Good Business”.

You can’t gain customers’ satisfaction for ever, you need to look after them all the time. Try
to talk with them, instead of to them. Ask questions, offer constant support, send personalized
messages or offers, use targeted website surveys, email surveys or any other technique that
will help you communicate with your customers. Take care of each and every of your clients’
need and you’ll be rewarded with their gratitude and loyalty. Sounds like a good deal, doesn’t
it? Brands often take their audience for granted, and they’ve never been so wrong – one
decision, or lack of it, can result in losing a lot of clients and their respect. That’s why
measuring clients’ satisfaction is so important.
3. It’s (all) about the money, too
It shouldn’t be surprising, but the customer satisfaction is also reflected in your revenue.
Customers’ opinion and feelings about the brand can affect, in both positive and negative
way, the essential metrics – such as the number mentions and repeated transactions, and also
customer lifetime value or customer churn. Happy customers won’t look at your competitors
offers – they will happily interact with your brand again, make a purchase and recommend
the product further. If you meet all of their requirements and answer their needs while
delivering the best quality of your services, they will be fully satisfied. Not to mention your
brand will increase sales revenue!

Measuring customer satisfaction should become your daily habit – not something you do
from time to time and only if you’re about to face a crisis management. If you don’t know
how to do it right, you can take a look at our guide to measuring customer satisfaction to
make things easier.

4. Customer satisfaction is a factor that helps you stand out

of the competition
Kate Zabriskie once said that “Although your customers won’t love you if you give bad
service, your competitors will.” and we couldn’t agree more. Your competitive rivals are just
waiting for you to make a wrong move. What is more, they can often play a role of
an instigator. Being prepared for their provocations is not enough if you don’t know how to
deal with the negative backlash. However, if you provide your customers with an amazing
customer service, you will gain arguments to convince those uncertain of your services.

5. Great customer experience can take your brand places

The importance of customer satisfaction should never be neglected. You should consider it
especially while planning your marketing and positioning campaigns. Satisfied customers are
more likely to share your content across the social media. They will also more keenly interact
with your posts, leaving some delightful and admirable comments. Later you can use it as the
source for case studies and success stories. Being an example of a company that provides a
ravishing customer satisfaction? Every brand should aim for it.

Final thought
Providing a great customer service will satisfy both you and your targets. They get a proper
service, you get a proper revenue and everyone is happy. As simple as that. Think, is there
something more you can do to better treat your audience? That’s why you should never forget
the importance of customer satisfaction. It’s high time to face the truth – your brand can
always do better!

Customer Satisfaction: Examining the Rationale

 Customer Satisfaction Rut?
Over the last twenty years, there has been a progressively larger focus on customer
satisfaction. For good reason: keeping customers, the data show, is the least expensive, most
effective way to a healthy bottom line.
Keeping customers satisfied has become even more critical since 2010 when the corner turned
from “buyer beware” to “seller beware.” In the current situation, customers have much more
information than the seller, lots of choices about product/service and they have a way to “talk
back.” (See “” by Matt Dixon et al from Harvard Business Review. )
What we are witnessing is an unprecedented change in how companies go to market and retain
customers as well as attract new ones. Buyers are less loyal and their loyalty has more to do
with intangibles than at any other time in history. (Dan Pink, )
Since little is really known about how satisfaction is created, let’s look at one of the facts that
could be very helpful: Satisfaction is a function of Performance and Expectations. S = P/E. Do
we have control over performance? Yes, we do.
Do we have control over expectations? A qualified “yes” but it depends: the customer comes to
us, in most cases, with previous experiences that impact their expectations of us. If we’re smart,
we figure out what those are and, if possible, do some education on what s/he can expect from
us.
Why? If we can influence expectations, we can have a role in the customer’s degree of
satisfaction. If not, we’re out of luck and subject to the whims of the market that define what our
customers can and do expect from us.

Measuring Customer Satisfaction

Customer satisfaction is difficult to measure due to several reasons. Counting on customer

satisfaction owing to their feedback is not the case because most people prefer keeping quiet
when satisfied.
Some people see no need of contacting the service provider while others seek to pass their
complaints.
Requirements for customer satisfaction are not only unique but difficult to quantify. Setting
standards and improving employee relationships with customers is central strategy of measuring
customer satisfaction and ensuring that success is determined.

Ways of measuring customer satisfaction include:

Survey customers
Surveying customers is the only probable way of getting customer feedback unless they contact
you.
Most people are busy and have no time to pass redress.
You can provide survey through several ways such as emails and use of phone calls.
To get credible feedback you need to allow customers to answer questions on weighted scale.
You can conduct repeated surveys, over time, to measure changing comments from customers.

Understand expectations
Understanding what customers expect from you will provide ground to satisfy their expectations
by giving them enjoyable service.
Making an effort to discover what customers expect from you in terms of service and products is
the way to satisfying their needs.

Find out where you are failing

On situations where you are not fulfilling customer requirements, it is credible to find out where
you are failing.
Incidences where products are less than advertised should not arise.
Find out if employees are making promises that cannot be met.
Take strides and attend seminars that will equip you with better managerial skills.
Know the chain of communication so as to know where communication faults are and foster
amendments.

Pinpoint specifics
Whether a customer is satisfied or not, you need to collect information to help you assess the
situation.
Collect information about what customers purchased, what they liked and they did not like, their
actual purchase expectation and their suggestions for improvement.

Assess the competition

Have the initiative to know why customers consider other brands above yours.
Through the survey, invite customers to come and compare and contrast your services and
products and make judgment on what you are not offering.

Try to measure the emotional aspect

Customer experiences after buying a given product are attributed to quality.
Feedback from customers in relation to quality, reliability and extent satisfaction should be
matched.
Comments customers make are a measure of their satisfaction.
Customers showing dissatisfaction prompts change of strategy.

Loyalty measurement
Customer loyalty is the likelihood of repurchasing products or services.
Customer satisfaction is a major predictor for repurchasing and it is influenced by explicit
performance of the product, value and quality.
 Loyalty is basically measured when a customer recommends to a friend, family member about
given product.
Overall satisfaction, repurchasing and likelihood of recommending to a friend are indicators of
customer satisfaction.

A series of attribute satisfaction measurement

This strategy takes into account the affective and cognitive pattern.
Affective behavior is intrigued to liking and disliking owing the benefits the product is attached
with.
Customer satisfaction is influenced by perceived quality the product is attached with and it is
regulated by expectations of the product or service.
Customer attitude towards a product are as a result of product information through advertisement
and any experience with the product whether perceived or real.
Cognition is the judgment on whether the product is useful or not useful.
Judgment is always intended use of application and use of occasions for which the product is
purchased.

Intentions to repurchase
Future hypothetical behavior that indicates repurchasing the product is a measure of satisfaction.
Satisfaction can influence other post purchasing trend through use of the word of mouth or social
media platform.

Monitoring
Monitoring can be directed at phone, email and chat communications.
Monitoring includes automated phone interactions designed by companies to help give real world
glimpse.
Feedback cards
Dishing out cards will help gauge customer comments.

How to Measure Customer Satisfaction

1. Outline your goals, and make a plan.
2. Create a customer satisfaction survey.
3. Choose your survey's trigger and timing.
4. Analyze the survey data.
5. Make adjustments and repeat.
Unsatisfied customers are probably costing you a lot of money.
The first step to overcoming this is to admit that you have room for improvement. The
second step is to measure customer satisfaction to find out where you currently stand.

Start solving for the customer today with the help of these 17 helpful templates.
Measuring customer satisfaction doesn't have to be complicated or expensive. In fact, it's
fairly simple to incorporate customer satisfaction measurement into your current customer
success strategy.

How to Measure Customer Satisfaction in 5 Simple Steps

No matter how you cut it, measuring customer satisfaction comes down to
gathering customer feedback via surveys. To accurately gauge customer sentiment, we'll
simply need to ask them how their experience was.

Of course, there are multiple ways you can execute said survey, from the survey design to
timing, sample, and even how you analyze the data.

I like to simplify things, so I find it's nice to think in terms of a framework, for which we can
conveniently use the acronym "OCCAM" (think Occam's Razor).
 Outline Goals and Plan
 Create Customer Survey
 Choose Survey Timing or Trigger
 Analyze Survey Data
 Make Adjustments

Let's briefly cover the five steps to easily measuring customer satisfaction.

1. Outline Goals and Plan

When embarking on any sort of campaign, it's helpful to take a step back and ask, "Why are
we doing this?"

In business, one must weigh the value of additional information (i.e. the customer
satisfaction data) in relation to the cost of collecting it (i.e. the survey process). To be honest,
if you won't change anything after collecting your customer satisfaction data, you're better off
not collecting it. It's going to take time and effort, so you need to put it to use.
Depending on your business or organizational capabilities, there is a lot you can do with the
information. One use is simply to wake you up to the reality of any business: A portion of
your customers is going to have an unsatisfactory experience. Every business faces this
problem.

When you wake up to that fact, you can choose from many routes to correction. You can:

 Improve key UX bottlenecks that contribute to poor customer experience.

 Expedite customer support interactions with the most frustrated customers.
 Operationalize proactive support like a knowledge base and customer education.
 Test different live chat scripts and support strategies.

The specific solution isn't necessarily the important part here. The important part is stepping
back and saying, "If we see that a segment of our customers is unsatisfied, what will we do
about it?"

You can also create an action based on your segment of highly satisfied customers, by the
way. Methodologies like NPS seek to segment your customers into promoters, passives, and
detractors for a few reasons. One, you can get an aggregate NPS score, thus providing a
health check and a longitudinal metric to track and improve over time.

But two, to give you the possibility of segmenting customers based on attitudinal metrics like
satisfaction. You can offer your promoters special perks or encourage them to spread the
word about their business; they're the most probable people to act as your "external sales
force" -- in other words, your willing and excited customer advocates.

Once you've sat down and discussed your goals with key stakeholders, you need to design
your survey.

2. Create Customer Survey

You can choose among a few different options for customer satisfaction surveys. There's no
unanimous agreement on which one is best. A few popular methods are:

 Customer Satisfaction Score (CSAT)

 Customer Effort Score (CES)
 Net Promoter Score® (NPS)

These are all "one-question" methods that vastly simplify the process of collecting customer
insights.

While you may not think the survey methodology matters much, how you ask the question
does seem to measure slightly different things.

For instance, a 2010 study found twenty percent of "satisfied" customers said they intended
to leave the company in question; 28% of the "dissatisfied" customers intended to stay. So
"satisfied" doesn't necessarily equate to "loyal."

1. Customer Satisfaction Score (CSAT)

Customer Satisfaction Score (CSAT) is the most commonly used satisfaction method. You just
ask your customers to rate their satisfaction on a linear scale. Your survey scale can be 1 – 3,
1 – 5, or 1 – 10, and there is no universal agreement on which scale is best to use.
CSAT is a metric used to immediately evaluate a customer's specific experience. Here's
how Vipin Thomas, Global Lead of Customer Success at Freshdesk, put it:

"CSAT is a transactional metric that is based on what's happening now to a user's

satisfaction with a product or service (we try and get a CSAT score within 15 minutes of an
interaction).

It is super helpful to improvise on the resolution, mode of delivery, channel, etc. It is ONE
(not the only) of the important metrics to evaluate the performance of the support desk. In
fact, we publish ours publicly as well."
2. Customer Effort Score (CES)

Customer Effort Score (CES) is very similar, but instead of asking how satisfied the
customer was, you ask them to gauge the ease of their experience.

You're still measuring satisfaction, but in this way, you're gauging effort (the assumption
being that the easier it is to complete a task, the better the experience). As it turns out,
making an experience a low-effort one is one of the greatest ways to reduce frustration and
disloyalty.

A CES survey may look something like this:

3. Net Promoter Score (NPS)

NPS asks the question, "How likely is it that you would recommend this company to a friend
or colleague?"

This attempts to measure customer satisfaction but also customer loyalty. In doing so, you
can come up with an aggregate score, but you can also easily segment your responses into
three categories: detractors, passives, and promoters.

You calculate your Net Promoter Score by subtracting the percentage of Detractors from the
percentage of Promoters.

NPS is often used as a more general indicator of customer loyalty and brand devotion.
Here's how Thomas explains it:

"NPS is consumed by various different teams to drive retention, sales, product

improvements & advocacy.

Some important things to consider would be the channel it is delivered (e.g. email, in-
product, phone, etc.), the frequency of delivery (may vary from business to business, ideally
a 6 months gap should be good), and the target audience within the customer base (e.g.
personas like influencers, decision makers, users, etc.)".

The above three are commonly used and simple, but that doesn't cover the scope of
customer satisfaction surveys. Depending on your goals you can also send longer email
surveys. Really, you can customize it to your desires (just remember that shorter surveys
tend to have better completion rates).

In general, don't ask questions if you won't do anything with the information.

Still, sometimes longer surveys can be useful.

Created using Google Forms

You can, of course, use more than one methodology, as well (since they all measure
something very slightly different).

Thomas explains how you can combine multiple scores for a greater picture:

"We take CSAT And NPS very seriously both independently and in conjunction since a
single measure alone won't show the true picture of why customers are detractors or
promoters (NPS) or why you have a lesser than expected CSAT.

CSAT in conjunction with NPS help with a very targeted approach & often are more accurate
indicators to spot an advocate or a customer at-risk.

For example, a customer that has had 3 continuous negative CSAT scores over a period
and is also a detractor on NPS would be an immediate at-risk customer, while a customer
with positive CSAT and a promoter on NPS are potentially the best source of advocates &
candidates to cross-sell/upsell since they already have seen the value in their interactions
with the process & product."

In addition, I recommend always appending a qualitative open-ended question, regardless of

the customer satisfaction survey you use. Without an open-ended question, you risk limiting
your insight into "why" the dissatisfaction may be occurring. Qualitative user feedback can give
you tons of ideas when it comes to implementing solutions.
Here's how Luke Harris, Customer Success Director at Wayin, puts it:

"Qualitative data is the nirvana many of us are searching for, because it what provides us
with the most human version of customer satisfaction but with the added benefit of scale and
replicability.
 To be able to unbiasedly, capture and track qualitative data helps - especially a scaling
business - to quickly ascertain where it should focus, both in terms of product support and
development."

3. Choose Survey Timing or Trigger

This step is all about to whom you send the survey and when you send it.

If you go back to your goals outline, this shouldn't be too hard to determine, at least
strategically. People tend to forget this step, though, but it's of crucial importance and affects
the quality and utility of your data.

Tactically, you can trigger a survey pretty much anywhere at any time and to anyone
nowadays, but strategically, it matters specifically when and where.

Here's how Curtis Morris, CEO at Qualaroo, looks at sending satisfaction surveys:

"Although there is no "one size fits all" approach to customer satisfaction surveys, there are
3 factors that every company should consider before surveying: What event or action took
place before you asked for feedback (these can be time or action based events like
completing your onboarding campaign), the time since your last survey to the customer, and
is your team's ability to reply to feedback in a timely manner.

Good examples of event data that can be used to fire a survey are:

 Time since signup

 Key actions taken in your app (for instance, Qualaroo asks right after you receive your
10th survey response)
 Complete user onboarding

Surveying too often will result in low response rates, we recommend a customer satisfaction
(NPS) survey seven days after signup, 30 days after the first survey and every 90 days
during the customer lifecycle."

With all the options for triggering, though, let's start with some best practices:

 The closer the survey is to the experience, the better.

 People forget how they felt the longer you wait.
 Who you survey changes what insights you get. If you survey website visitors about their
satisfaction, the respondents are anonymous and may be a customer -- or may not be. This will bring
you different data than sending an email to recent customers will. Keep that in mind.
 You should survey your customers more than once to see how things change longitudinally.
Especially if you operate a SaaS company or a subscription service, regular NPS surveys can help you
analyze trends both at the aggregate and individual level.
 Survey people after a key moment of their customer journey.
 If a respondent gives you a high score, think about adding a follow-up ask. For instance,
Tinder asks you to rate their app in the app store if you give them a high score.

In general, there are three primary methods by which you can send customer satisfaction
surveys:

 In-App or On-Site Surveys

 Post-Service or Post-Purchase Surveys
 Long Email Surveys
Each of these may require a different software or tool. For instance, Usabilla or HotJar
specialize in triggered in-app surveys. But if you're sending post-purchase surveys, you may
need something that offers a web interface, like Typeform. Email surveys can usually be
performed with any survey tool, like SurveyMonkey or Google Forms.

Different business questions require different survey triggers. You also need to take into
account longitudinal data -- how customers' satisfaction scores change over time. Here's
how Nils Vinje, VP of Customer Success at Rainforest QA, put it:

"The best time to trigger/send a customer satisfaction survey is after a meaningful part of the
customer lifecycle is completed.

For example, sending a satisfaction survey at the end of the customer's onboarding will help
you capture valuable feedback on how to improve the onboarding experience. At this point,
the customer likely has made up their mind on whether or not your solution solves their
problem and if it doesn't, you need to know ASAP.

Another checkpoint to send a satisfaction survey is 6 months before renewal. The reason I
like the 6-month mark is that it gives you enough time to act on the feedback before you get
into the renewal phase.

You can always do something about a problem that you know about but you can't do
anything about a problem you don't know about."

Matt Hogan, Head of Customer Success at Intricately, also emphasizes the need to
collect continuous and real-time feedback, regardless of major feature launches or company-
based events:

"I recommend surveying in-app and on a rolling basis. This will keep the constant feedback
loop going. The technology available makes it easy to manage this.

This way you're getting a sense of people's feelings when you're not releasing products, or
doing anything. Most companies do it after releasing features or on a controlled schedule,
which will influence your responses."

4. Analyze Survey Data

Once you've collected your data, make sure it doesn't just sit there dormant and unused.
You've got all this customer insight, and it's just waiting to be uncovered!

Depending on the format you used, this could be a simple process or one that requires a
Ph.D. in statistics and survey design.

As I mentioned before, calculating Net Promoter Score (NPS) is straightforward. You just
subtract the percentage of Detractors from the percentage of Promoters.

Most NPS tools give you the ability to easily segment respondents based on their category
as well, and they usually integrate with products where you can take action based on that
category.

For instance, if you're a HubSpot user, you can easily integrate with your survey tool of
choice to trigger emails based on survey response score.
If you have a one-question method, simply use the analysis recommended by the
methodologies creators. You can usually find this info simply by Googling the survey method
+ how to analyze (e.g. "how to analyze CSAT").

If you have open-ended questions, you have a whole new world of analysis to enter (a more
time consuming one, but ultimately more valuable).
5. Make Adjustments

Back to my first point: Now that you have these insights, what are you going to do about it?

Ultimately, this is a personal decision that will reflect your own findings and capabilities. You
may find that a whole segment is dissatisfied because of a particular experience. In that
case, you may need to further investigate why that experience (or product) is causing
dissatisfaction and run experiments to try to improve upon it. You may find that you have a
small percentage of super fans.

Now that you can identify these people, perhaps you can work with your customer marketing
and customer success teams to plan advocacy programs.

The possibilities are endless, but it all starts with accurately measuring customer
satisfaction.

To learn more, make sure you're avoiding these customer satisfaction survey mistakes.
Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are
registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

What is Customer Satisfaction?

Customer satisfaction (CSAT) is a measurement that gauges the
degree to which a company’s products or services meet or surpass a
customer’s expectation.

As a key performance indicator (KPI), customer satisfaction should be

kept top of mind at all times by leadership as well as all other
employees throughout the organization.

By continuously measuring customer satisfaction, businesses are able

to highlight aspects of their products, services, or operational
processes that are leaving their customers less than satisfied.

Knowing a company’s customer satisfaction benchmark, depending

on their industry, helps to raise a flag when the CSAT score dips or
spikes compared to the benchmark. This can then inform strategic
action when necessary.

How to Measure Customer Satisfaction and Practices

Surveys are a fantastic method for keeping your finger on the pulse of
customer satisfaction.

Below we outline several types of surveys that can be used to

measure customer satisfaction.
Option #1: High-Level Customer Satisfaction Surveys
The first option for measuring customer satisfaction is fairly
straightforward -- simply ask your customers how satisfied they are!

High-level customer satisfaction surveys can come in three forms.

Choose the one, or combination, that best suits your business insight
needs.

In-App Surveys
If you are in business of selling software, surveys that appear while
customers are using your product are a great way to capture feedback
from customers while they are using your product.

By catching survey respondents at the exact time that they are

interacting with your product, you’ll be able to maintain confidence
that you are receiving accurate and meaningful feedback.

Pro Tip: While customers are using your product, randomize a pop-up
survey that asks them about their experience, and how satisfied they
are with your product.

Post-Service Surveys
Post-service surveys are sent to respondents after the respondents
have had an interaction with your internal team, and focus on that
service interaction in particular.

This is a great way to receive direct and detailed feedback on how

satisfied your customers are with your client-facing employees.

Pro Tip: Post-service surveys are most impactful when distributed to

respondents via email, directly following an interaction with support, or
in a live chat box at the end of a support session.

Email Surveys
Email surveys are a great forum for asking questions that require
longer form answers. Your respondents will be able to provide
answers to these questions on their own time, and can thoroughly
think through their responses prior to providing them.
This is a great opportunity to ask your customers about their
happiness levels with open-ended questions, so that you can hear
their explanations in their own words.
Option #2: Net Promoter Score (NPS) Surveys
NPS® surveys allow businesses to efficiently measure customer
satisfaction by revealing insight into customer loyalty.
NPS surveys only require one question to be presented to
respondents: “How likely are you to recommend XX to a friend or
colleague?”

Respondents then arrange their answers on an 11-point continuum

ranging from “Not at All Likely” to “Very Likely,”

“Detractors” are respondents who answer on the “Not Likely” end of

the spectrum (0-6), “Passives” are respondents who answer in the 7
to 8 range, and “Promoters” are respondents who answer in the “Very
Likely” range (9 or 10).

To calculate your organization’s official NPS, all you need to do is

take the total percentage of Promoters and subtract the percentage of
Detractors.

You can then leave this metric as a percentage, such as 43%, or

change it to a whole number, in this case 43.

To begin distributing NPS surveys to your customers, install

SurveyGizmo’s NPS Survey Template today.

Option #3: Customer Efforts Score (CES) Surveys

In this survey, instead of asking your customers about their level of
satisfaction or their likeliness of referring your products or services to
others, you simply inquire about the effort that it took them to have
their latest issue resolved by your team.

Similar to the NPS survey outlined above, a CES survey leverages

a Likert Scale, however, this time respondents are typically asked to
plot their answer on a seven-point scale ranging from “Very Low
Effort” to “Very High Effort.”
Again, similar to your NPS survey results, the results from your CES
survey can then be turned into a percentage score, and your ultimate
goal is to bring that score down to as low as possible by focusing
efforts on enhancing customer experience when customers are trying
to get an issue resolved.
It’s important to note that while NPS surveys are a great tool for
measuring customer loyalty, CES surveys are the preferred
mechanism for predicting consumer behavior.

Option #4: Intention to Repurchase Surveys

Intention to repurchase surveys are fairly self explanatory -- they
simply consist of asking your customers, “Do you intend to return to
XX in the next 30 days?”

Depending on the product or service that you’re offering, you may

want to consider adjusting the window of time that is mentioned in
your question.

However, if you are a business such as a restaurant or gym, asking

customers if they plan on returning to your establishment in the next
month can reveal a lot about your levels of customer satisfaction.

If a large portion of your respondents indicate that they have no plan

to return and repurchase, then you’ll want to think about implementing
some strategies such as discounts or special offers for returning
customers.

Don’t Let Customer Satisfaction Slip Through The Cracks

Customer satisfaction should be top of mind for all employees across
your business. At the end of the day, businesses do not exist or
survive without a satisfied customer base.

By proactively asking customers about their satisfaction levels, you

are communicating the message that your customers truly matter, and
that their voices will be heard. This is a powerful method for
humanizing your brand, and showing that your business is customer-
centric in an age when the consumer holds the true power in the
business landscape.
 UNIT 2

6 Effective Methods for Measuring

Customer Loyalty

What if you could measure the loyalty of the people around you?
That’s impossible for friends, family, and partners – and
probably for the best. The loyalty of your customers,
however, can be measured.

The difficulty comes from loyalty being an intention. And one that people
aren’t always honest about. The benefits of loyalty are great, however.

A loyal customer is...

 Likely to refer you to her friends and contacts.

 Likely to continue buying from you as long as the need is there.

 Not actively looking for other suppliers.

 Not open to sales pitches from competitors.

 Open to other products and services that you offer.

 Easy going towards emerging issues and gives you time and trust to fix them.

 Likely to give feedback about how you could improve.

Measurement is the first step in customer loyalty management. By measuring

customer loyalty we can compare, aim, and improve. Here are the 5 most
effective methods.
 1

Net Promoter Score (NPS)

This metric indicates the likeliness of your customer referring you to her
friends. She answers this simple question with a value between 1 – 10.

This is a powerful metric. Firstly because it’s simple, but also because of the
fact that when you recommend a product, you put your own credibility on the
line. And you only do that for companies you support 100%.

NPS divides your customers into three categories:

Detractors. Customers answering with a score of 6 or lower are segmented

as “Detractors”. They won’t recommend you to anyone, will probably not
buy from you again, and might even hurt you through negative word-of-
mouth.

Passives. Those with a 7 or 8 are segmented as “Passives”. They are quite

satisfied, but not ecstatic enough to recommend you. They won’t hurt you,
they aren’t looking for alternatives, and they’ll likely stick around as long as
they don’t run into a supplier with a better value proposition.

Promoters. Those with a 9 or 10 fall into the “Promoters” segment. They are
your groupies, your equivalent of the people camping in front of the Apple
store. They’re likely to recommend you and buy from you again.

Your total Net Promoter Score is calculated by subtracting your “Detractors”

percentage from your “Promoters” percentage.
Most NPS tools work by importing a list of your customer contact data and
sending the questionnaire per email. Trustfuel NPS (free),
and Promoter.io (paid) are two popular tools. I personally like in-app tools
like Wootric (freemium). Instead of targeting your customer’s inbox, it
politely asks for feedback while she’s on your website or app.
 Through in-app questionnaires you can ask for feedback with minimal disruption

Your Promoter - Detractor ratio doesn’t depend on your service and product
quality, only. Some customers simply fit your company better than others.
Tying your NPS scores to customer information, like demographics and
industry, can also help you identify your ideal customer type.
To put your results in persepctive, you can have a look at the Net Promoter
Network. They offer a report on NPS benchmark scores per industry.

Repurchase Ratio
This measures the ratio of repeat purchasers over one-time purchasers. A
purchase is at the core of a commercial relationship, which makes this metric
a valid representation of customer loyalty.

This metric can be easily distorted, however. If it takes a big effort to switch
between providers, for example, you could have a large portion of
repurchasers who would nevertheless switch if this effort would be mitigated.

At Userlike, for example, we had been renewing our contract with a helpdesk
software for a long time. We didn’t think of switching, because all our
customer data was locked in the tool. When Help Scout showed up, however,
with the option to easily transfer all this data to their tool, we didn’t hesitate.
 Help Scout lowers the barrier for switching between suppliers

The way to calculate this repurchase ratio differs per business model. If you
have a subscription based model, you simply divide the number of customers
that extend after their first contract period by the ones that cancel after their
first contact period.

It’s a bit trickier for transaction based business models, because the intervals
between purchases aren't fixed. To know your number of repeat buyers, you
need to first calculate the average time between the first and second buys of
repeat customers, as well as its standard variation. By adding two times the
standard variation to the average time, you will have captured 95% of your
repeat customers. Divide this by the number of non-repeat buyers, and you
have your estimated repurchase ratio. Here is a tool to calculate your
standard deviation.
The 8 Core Principles of Good Customer Service
Performance in any field is guided by a few core principles. Here are the ones governing the quality of
customer service.

First principle thinking

Another way would be to measure the repurchase intention, which we cover

in method 4.

Upselling Ratio
This tracks the ratio of customers who’ve bought more than one type of
product divided by the customers who’ve bought only one. This sounds
similar to the Repurchase Ratio, but it’s different because it concerns another
product.

Buying new products is a clear indication of customer loyalty. The trust you
gained through your customer’s previous experiences has reflected on your
other product offerings.
 Apple afficionados trust whatever tool the tech giant brings out

The more different the added product is from the first product, the more
significant an indication for customer loyalty it is. Buying a kilo of pears at
the grocery shop you know to have great apples, for example, isn’t too big of
a leap. Buying a smartphone because you’re happy with your laptop,
however, does constitute a big leap.
 You calculate the upselling ration by dividing your number of customers
with multiple products by the number of customers with a single product.

Another way would be to measure the upselling intention, which we cover

next.

Customer Loyalty Index (CLI)

This is a standardized tool to track customer loyalty over time, and it
incorporates the values of NPS, repurchasing, and upselling.

It calculates all three values with an NPS-like questionnaire on a 6-point

scale. 1 stands for “Definitely Yes”, 6 stands for “Definitely No”.

1. How likely are you to recommend us to your friends or contacts?

2. How likely are you to buy from us again in the future?

3. How likely are you to try out other of our products/services?

Your total CLI is the average score of the 3 responses.

Answer scores:
1 = 100
2 = 80
3 = 60
4 = 40
5 = 20
6=0
The downside of this approach is that you ask directly for the customer’s
intention, which is less reliable than measuring actual behavior. The
advantage is that this score incorporates all of the loyalty values. Also, by
consistently sending this questionnaire over time, it allows you to
systematically track changes.

Here’s an example of a CLI Questionnaire that you can easily copy using
Google Forms.

Looking for better customer relationships?

Test Userlike for free and chat with your customers on your website, Facebook Messenger, and
Telegram.

Read more

How much would you miss us?

This is an alternative to the NPS score. You ask your customers how much
they’d miss you if your company would cease to exist tomorrow.

Like the NPS, customers choose a value between 1 (would not miss at all)
and 10 (I couldn’t do without you). This measures the strength of your
customer connections and the perceived value of your offering.
If you’re one of the many competitors that do more or less the same, for
example, your customers will likely not lose sleep about you disappearing.

I also wouldn’t care much if the pizza joint from around the corner would
close its doors. But if Facebook would declare bankruptcy tomorrow, I’d feel
terrible for all the lost social connections.

Customer Engagement Numbers

According to Curtis N. Bingham, customer engagement is the most effective
predictor of customer loyalty. He argues that compared to NPS and CLI,
customer engagement metrics are easier to measure, to influence, and that
they’re more strongly correlated with revenue and profits.
 Customer engagement is a strong predictor of loyalty

Bingham explains that customer loyalty results out of positive interactions

and experiences with your brand. These nurture emotional attachments that
shield your customers from competitor influence.

Through this, says Bingham, customer engagement:

1. Stimulates repurchasing

2. Lowers price sensitivity

3. Promotes referrals
 Customer engagement is indeed an interesting area, especially for online
businesses – for whom its metrics are relatively easy to track. For offline
products and services, though, the tracking is much harder.
When users explore new features and start to use them, the service is
growing on them, and they are happy to use it more.
Guy Nirpaz

Guy Nirpaz suggests a few metrics to measure customer engagement for

online apps:

 Activity Time. This is the average time your customers spend with your
service; per day, week, month, or year – whichever is most relevant for your
offering.

 Visit Frequency. This tracks how often a user returns to your service. Keep an
eye on patterns in returning user visits. If you have a brain training app,
probably your users should return a few times per week. While for website
analytics tools, for example, a few times per month should be fine.

 Core User Actions. Track whether user gets to experience the main features.
For us: adjust the Chat Widget coloring, set up operator picture, set up chat
macros, etc.

By keeping track of these metrics over time, you see whether the fit with
your user base is improving.

Champion of Customer Loyalty

When you search for “customer loyalty”, you soon run into case studies
about Apple Inc. Indeed, this company nailed it.
 Apple, a champion of customer loyalty

When Apple launches a fancy new device, its most fervent fans set up camp
in front of the Apple store a few days in advance. If Samsung would bring
out a phone that beats the iPhone in both functionality and price, people
would still buy buy from Apple.
Anyone can sell products by dropping their prices, but it does not breed
loyalty.
 Simon Sinek

That’s not rationality; that’s loyalty. Apple is number one in its category in
Brand Keys’ 19th Annual Customer Loyalty Engagement Index®, and its
part of what turned it into one of the world’s most valuable companies.

Customer loyalty is one of the main predictors of success. No company can

stay ahead of the herd all of the time. The loyalty of your customers
determines your breathing space for catching up.

Also check out our posts on the measuring of customer satisfaction, the
measuring of service quality, the most important customer service metrics,
and customer service KPIs.

What is Customer Loyalty? Part 2: A

Customer Loyalty Measurement
Framework

Read about the development of the RAPID Loyalty Approach. Click image to
download the article.
Last week, I reviewed several definitions of customer loyalty (see What is Customer Loyalty?
Part 1) that are being used in business today. It appears that definitions fall into two broad
categories of loyalty: emotionaland behavioral. Emotional loyalty is about how customers
generally feel about a company/brand (e.g., when somebody loves, trusts, willing to forgive
 the company/brand). Behavioral loyalty, on the other hand, is about the actions customers
engage in when dealing with the brand (e.g., when somebody recommends, continues to buy,
buys different products from the company/brand). Generally speaking, then, we might think
of customer loyalty in the following way:
Customer loyalty is the degree to which customers experience positive feelings for and
engage in positive behaviors toward a company/brand.

This week, I will propose a customer loyalty measurement framework to help you understand
how to conceptualize and measure customer loyalty. After all, to be of practical value to
business, customer loyalty needs to be operationalized (e.g., bringing the concept of loyalty
into the measurable world). Once created, these metrics can be used by businesses in a
variety of ways to improve marketing, sales, human resources, service and support processes,
to name a few. First, I will present two approaches to measuring customer loyalty.

Measurement Approaches
There are two general approaches to measuring customer loyalty: 1) objective approach and
2) subjective (self-reported) approach.

1. Objective measurement approach include system-captured metrics that involve hard

numbers regarding customer behaviors that are beneficial to the company. Data can be
obtained from historical records and other objective sources, including purchase records
(captured in a CRM system) and other online behavior. Examples of objective loyalty data
include computer generated records of “time spent on the Web site,” “number
of products/services purchased” and “whether a customer renewed their service contract.”
2. Subjective measurement approach involves “soft” numbers regarding customer
loyalty. Subjective loyalty metrics include customers’ self-reports of their feelings about the
company and behavior toward the company. Examples of subjective loyalty data include
customers’ ratings on standardized survey questions like, “How likely are you to recommend
<Company> to your friends/colleagues?”, “How likely are you to continue using
<Company>?” and “Overall, how satisfied are you with <Company>?”
Figure 1. Companies with higher levels of customer loyalty experience accelerated
business growth.
While I present two distinct customer loyalty measurement approaches, there are
likely gradients of the subjective measurement approach. On one end of the subjective
continuum, ratings are more perceptually based (what is typically used today) and, on the
other end of the subjective continuum, ratings are more behaviorally based that more closely
approximate the objective measurement approach. The objective/subjective dichotomy,
however, provides a good framework for discussing measurement approaches.
Before continuing on the measurement of customer loyalty, it is useful to first put customer
loyalty in context of how it impacts your business. Generally speaking, companies who have
higher levels of customer loyalty also experience faster business growth (See Figure
1). While I argue elsewhere that the customer loyalty metrics you use depend on your
business needs and the types of behaviors in which you want your customers to engage,
understanding how customer loyalty impacts business growth will help you determine the
types of loyalty metrics you need.
Three Ways to Grow a Business: Retention, Advocacy, Purchasing

Figure 2. Business models illustrate that there are three ways to grow your business.
Top Model is from Reichheld,1996; Bottom model is from Gupta, et al. 2006. Click
image to enlarge.
Let us take a look at two business models that incorporate customer loyalty as a key element
of business growth and company value (See Figure 2). The top graph is from Fred Reichheld
and illustrates the components that drive company profit. Of the components that contribute
to company profits, three of them reflect customer loyalty: retention (measured in years),
advocacy (measured as referrals) and expanding purchasing (measured through increased
purchases).

Similarly to Reichheld’s model, Gupta’s Customer Lifetime Value model focuses on

customer loyalty as a mediator between what a company does (e.g., business programs) and
the company value (see graph on the bottom of Figure 2). Again, customer loyalty plays a
central role in understanding how to increase firm value. Improving 1) retention behaviors, 2)
advocacy behaviors and 3) purchasing behaviors will increase company value.
 Customer Loyalty Measurement Framework: Operationalizing Customer
Loyalty
Our loyalty metrics need to reflect those attitudes and behaviors that will have a positive
impact on company profit/value. Knowing that customer loyalty impacts company
profits/value in three different ways, we can now begin to operationalize our customer loyalty
measurement strategy. Whether we use an objective measurement approach or a subjective
measurement approach, our customer loyalty metrics need to reflect retention loyalty,
advocacy loyalty and purchasing loyalty. Here are a few objective customer loyalty metrics
businesses can use:

 Churn rates
 Service contract renewal rates
 Number/Percent of new customers
 Usage metrics – frequency of use/visits, page views
 Sales records – number of products purchased
Here are a few subjective customer loyalty metrics businesses can use:

 likelihood to renew service

 likelihood to leave
 overall satisfaction
 likelihood to recommend
 likelihood to buy different/additional products
 likelihood to expand usage

Figure 3. Customer Loyalty Measurement Framework: You can measure emotional

(e.g., advocacy) and behavioral loyalty (e.g., retention and purchasing) using
different measurement approaches (e.g., subjective and objective).
Figure 3 illustrates how these loyalty metrics fit into the larger customer loyalty measurement
framework of loyalty types and measurement approaches. Each of the customer loyalty
metrics above falls into one of the four quadrants of Figure 3.

It is important to point out that the subjective measurement approach is not synonymous with
emotional loyalty. Survey questions can be used to measure both emotional loyalty (e.g.,
overall satisfaction) as well as behavioral loyalty (e.g., likelihood to leave, likelihood to buy
different products). In my prior research on measuring customer loyalty, I found that you
can reliably and validly measure the different types of loyalty using survey questions.
Looking at the lower left quadrant of Figure 3, you see that there are different ways to
measure advocacy loyalty. While you might question why “likelihood to recommend” and
“likelihood to buy same product” are measuring advocacy loyalty, research shows that they
are more closely associated with emotional rather than behavioral loyalty. Specifically, these
questions are highly related to “overall satisfaction.” Also, factor analysis of several loyalty
questions show that these three subjective metrics (sat, recommend, buy) loaded on the same
factor. This pattern of results suggests that these questions really are simply measures of the
customers’ emotional attachment to the company/brand.
I have include the metrics of “level of trust,” “willingness to consider” and “willingness to
forgive” as emotional loyalty metrics due to their strong emotional nature. Based on what I
know about how customers rate survey questions. I suspect these questions would essentially
provide the same information as the other questions in the quadrant. That, however, is an
empirical question that needs to be tested.

Subjective vs. Objective Measurement Approach

While companies have both objective and subjective measurement approaches at their
disposal, surveys remain a popular approach to measuring customer loyalty. In fact, surveys
remain the cornerstone of most customer experience management programs.
Companies use customer surveys to measure customer loyalty rather than solely relying on
objective metrics of customer loyalty because: 1) Customer surveys allow companies to
quickly and easily gauge levels of customer loyalty, 2) Customer surveys can provide rich
information about the customer experience that can be used to more easily change
organizational business process and 3) Customer surveys provide a forward look into
customer loyalty.
RAPID Loyalty Approach
I have conducted research on the subjective approach to measuring customer loyalty over the
past few years. Based on the results of this research, I developed the RAPID
Loyalty approach that supports the three ways businesses can grow their
business: Retention, Advocacy and Purchasing loyalty. The RAPID loyalty approach
includes three metrics, each assessing one of three components of customer loyalty:
 Retention Loyalty Index (RLI): Degree to which customers will remain as customers or not
leave to competitors; contains loyalty questions like: renew service contract, leave to
competitor (reverse coded).
 Advocacy Loyalty Index (ALI): Degree to which customers feel positively toward/will
advocate your product/service/brand; contains loyalty questions like: overall satisfaction,
recommend, buy again.
 Purchasing Loyalty Index (PLI): Degree to which customers will increase their purchasing
behavior; contains loyalty questions like: buy additional products, expand use of product
throughout company.
Each of the RAPID loyalty indices has excellent measurement properties; that is, each index
is a reliable, valid and useful indicator of customer loyalty and is predictive of future business
growth. Specifically, in a nationwide study asking over 1000 customers (See Figure 4) about
their current network operator, each loyalty index was predictive of different business growth
metrics across several US network operators (Alltel, AT&T, Sprint/Nextel, T-Mobile, and
Verizon):
 Figure 4. The RAPID Loyalty indices (ALI, PLI and RLI), each predict different types
of business growth.
 RLI was the best predictor of future churn rate
 ALI was a good predictor of new customer growth
 PLI was the best predictor of Average Revenue per User (ARPU) growth
The bottom line is that there are three general ways to grow your business: keep customers
coming back (retention), recommending you to their friends/family (advocacy) and
expanding their relationship with you by buying different products/services (purchasing). To
increase company profits/firm value, it is imperative that you measure and optimize each type
of customer loyalty. Falling short on one type of customer loyalty will have a deleterious
effect on company profit/firm value.
State of Customer Loyalty Measurement
In an informal online poll taken during a talk, Asking the Right CX Questions (part of
CustomerThink’s Customer Experience Summit 2011), I asked participants about their CEM
program loyalty metrics. While a little over 75% of the respondents said their company uses
advocacy loyalty measures, only a third of the respondents indicated that their company uses
purchasing loyalty measures (33%) and retention loyalty measures (30%).
Benefits of Measuring Different Types of Customer Loyalty
It appears that most companies’ customer loyalty measurement approach is insufficient.
Companies who measure and understand different types of customer loyalty and how they are
impacted by the customer experience have several advantages over companies who narrowly
measure customer loyalty:

 Target solutions to optimize different types of customer loyalty. For example, including
retention loyalty questions (e.g., “likelihood to quit”) and a purchasing loyalty questions
(e.g., “likelihood to buy different”) can help companies understand why customers are
leaving and identify ways to increase customers’ purchasing behavior, respectively.
 Identify key performance indicators (KPIs) for each type of customer loyalty. Identification
of different KPIs (key drivers of customer loyalty) helps companies ensure they are
monitoring all important customer experience areas. Identifying and monitoring all KPIs
helps ensure the entire company is focused on matters that are important to the customer
and his/her loyalty.
 Obtain more accurate estimates of the Return on Investment (ROI) of improvement
initiatives. Because ROI is the ratio of additional revenue (from increased loyalty) to cost (of
initiative), the ROI of a specific improvement opportunity will depend on how the company
measures customer loyalty. If only advocacy loyalty is measured, the estimate of ROI is
based on revenue from new customer growth. When companies measure advocacy,
purchasing and retention loyalty, the estimate of ROI is based on revenue from
new and existing customer growth.
The primary goal of CEM is to improve customer loyalty. Companies that define and
measure customer loyalty narrowly are missing out on opportunities to fully understand the
impact that their CEM program has on the company’s bottom line. Companies need to ensure
they are comprehensively measuring all facets of customer loyalty. A poor customer loyalty
measurement approach can lead to sub-optimal business decisions, missed opportunities for
business growth and an incomplete picture of the health of the customer relationship.

Summary
Customer loyalty is a very fuzzy concept. With various definitions of customer loyalty
floating around in the literature, it is difficult to know what one is talking about when one
uses the term, “customer loyalty.” I tried to clarify the meaning of customer loyalty by
consolidating different customer loyalty definitions into two general customer loyalty types:
emotional loyalty and behavioral loyalty.

Additionally, I discussed two measurement approaches that companies can utilize to assess
customer loyalty: objective measurement approach and subjective measurement approach.

Finally, I offered a customer loyalty measurement framework to help companies think about
customer loyalty more broadly and help them identify customer loyalty metrics to help them
better measure and manage different types of business growth: acquiring new customers
(Advocacy), retaining existing customers (Retention) and expanding the relationship of
existing customers (Purchasing).

One of the biggest limitations in the field of customer experience management is the lack of a
coherent set of clearly defined variables with instruments to effectively measure those
variables. When we talk about customer loyalty, we talk past each other rather than to each
other. To advance our field and our understanding of what procedures and methods work, we
need precision in ideas and words. One way to start is to clearly define and measure
constructs like customer loyalty. While customer loyalty is one such vaguely defined and
measured variable, our field is full of others (e.g., customer engagement, employee
engagement). I hope I was able to provide some clarification on the notion of customer
loyalty, both in its meaning and its measurement.