Customer satisfaction is very important for the success and growth of any business. Satisfied and happy customers tend to stay loyal and can bring even more sales to your small business.
To gauge the level of satisfaction among your customers and how effective your customer support is, it’s essential to track and measure key metrics that reflect their experiences and perceptions. In this article, we will explore five customer satisfaction metrics that every small business should consider tracking. These metrics provide valuable insights into customer sentiments, help identify areas for improvement, and enable companies to deliver exceptional customer experiences.
Prioritizing customer satisfaction is the key to successful small businesses. By tracking different metrics like customer churn rate (CCR), net promoter score (NPS), and customer effort score (CES), small business owners like yourself can gain a better understanding of their customer’s experiences and the number of customers that are satisfied with your products or services. From the initial onboarding process to ongoing customer interactions, every touchpoint of your customer journey becomes an opportunity to enhance satisfaction levels.
Beyond CSAT: The 5 Key Customer Satisfaction Metrics You Need to Measure
Beyond the simple benchmark of customer satisfaction (CSAT) scores, small business owners are now recognizing the need for a more comprehensive approach to measuring customer satisfaction. While CSAT surveys are extremely valuable for small businesses, they can often fall short in providing certain insights and feedback for small business owners to address possible issues affecting customer retention and overall business success.
Customer satisfaction is influenced by many unique factors such as the quality of customer support, reliability, responsiveness, and the pricing of products or services. The limitations of CSAT scores become apparent as they fail to unveil the underlying and specific reasons behind customer ratings, leaving businesses in the dark about specific areas that require improvement or what service aspects contribute to customer happiness.
To understand customer satisfaction levels and drive impactful changes, small businesses must broaden their perspective beyond CSAT surveys. Let’s delve into 5 additional key customer metrics, each shedding light on different facets of customer satisfaction.
By incorporating these metrics into your strategy, you can gain a better understanding of customer satisfaction and implement targeted improvements for long-lasting success. Whether it’s understanding the dynamics of customer support teams, analyzing response rates, or improving touch points throughout the customer journey, these metrics may contribute to increasing happy customers.
What are customer satisfaction metrics?
Before discussing the 5 customer satisfaction metrics, your business should consider tracking today, let’s define customer satisfaction metrics in general.
These days, customer expectations are skyrocketing. They expect connected journeys, personalization, innovation, data protection, and seamless, hassle-free experiences from every business they interact with. If customers’ expectations are not met, they are unlikely to give you their business again. They may even hurt your reputation by spreading negative words about your company.
A customer satisfaction metric will help you know how pleased your customers are with your business. It can also give valuable insights into customer behaviors, perceptions, and preferences that you can use to make your offerings even better and improve customer loyalty.
What is customer churn rate (CCR)?
Customer Churn Rate (CCR) is the percentage of customers stopping their relationship with your business over a specific period. This metric acts as an important source for both your customer support and customer satisfaction levels. Customer churn rate (CCR) helps you identify issues, analyze customer feedback, and develop targeted strategies to get to your bottom line of decreasing churn rate levels.
CCR isn’t just a number. It’s a signal about how many happy customers you have and the number of customers you may be losing. This important metric is about whether your customers are feeling satisfied. When CCR points out that some are stepping away, it’s your sign to find out why, understand the reasons, and create a strategy to prevent losing more customers.
What is customer service satisfaction (CSS)?
Customer service satisfaction (CSS) is a report on how happy customers are with a business’s support. It’s not just about products or services; it’s about how well the business helps customers. You can measure CSS with surveys and feedback to see if you are doing a good job in customer support. It looks at how you handle questions, solve problems, and meet expectations. By keeping an eye on CSS, small businesses can figure out what they’re doing well and where they can improve.
5 Key Customer Satisfaction Metrics You Should Track
Here are 5 key customer satisfaction metrics that every small business owner should track.
1. Net Promoter Score (NPS)
Net Promoter Score (NPS) is a simple metric used to measure how likely a customer is to recommend your service or products.
With NPS, you send a one-question survey to your customers. The question can be a variation of this common format: “How likely are you to recommend (business) to a (colleague) or friend?” You can use a rating scale of 0 to 10 or be more creative and use emojis.
The best thing about NPS is its simplicity. That single question will let you know your customer’s sentiments. It also works for businesses of all shapes and sizes, no matter what industry you’re in. And since the survey is short and easy to answer, people will likely respond.
After customers are finished rating their likelihood of recommending your business, you can segment them into three groups: promoters, passives, and detractors.
- Promoter: They gave you a rating of 9 or 10. This group of customers is often loyal and is likely to go out of their way to follow your business and recommend your offers, often unprompted. They are likely to stick with you for the long haul.
- Passives: They gave you a rating of 7 or 8. This group of customers probably liked your service or product but did not see it as the best. They may have an issue or two about what they got. You cannot expect them to personally vouch for your service or product as the best in the market. They will either stick with your brand or go with competitors.
- Detractors: They gave you a rating of 6 or below. This group of customers is likely to churn and even spread negative things about your brand.
To calculate NPS, you simply subtract the percentage of detractors from the percentage of promoters. The result will show you where you stand with your customers. However, it will not reveal the reason behind your score. You can determine what to do next by looking at customer feedback.
NPS is quite like the benchmark of metrics, which is the CSAT score. But unlike CSAT, which focuses on client satisfaction, NPS measures each customer’s brand loyalty and experience.
2. Customer Effort Score (CES)
Customer Effort Score (CES) aims to determine how much effort a customer feels they must exert to use a service or product, resolve an issue, or accomplish whatever they set out to do. In simpler terms, this metric measures the ease of use of the products and services you offer.
Like NPS, CES is typically gathered with a survey that has one question that reads, “How much effort did you personally have to put forth to handle your request?”
CES works by quantifying the perceived effort customers associate with specific interactions. The lower the effort required, the higher the CES score, indicating a positive customer experience. Organizations can use CES feedback to identify pain points, streamline processes, and proactively address customer needs, ultimately enhancing customer satisfaction and loyalty.
3. Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) measures how much a business spends to get new customers. It is the total cost of marketing and sales efforts, plus any other asset used to convince a lead to purchase a service or product.
CAC is an important business metric to measure. It helps businesses calculate the overall value of a customer and the resulting ROI of the acquisition. It can also give your business valuable insight into possible inefficiencies within the sales funnel, so you can avoid wasting money and effort on things that do not work.
CAC is calculated by adding up all sales and marketing expenses and dividing total cost by the number of new customers acquired within a specific period.
To know whether the CAC is too low or too high, you will need to find out the amount of revenue coming in from the existing customers, also called customer lifetime value (CLV). CLV is calculated by multiplying the business’ yearly revenue by the average revenue earned from a single customer.
CAC is also a good marketing metric every start-up should consider tracking.
4. Customer Health Score (CHS)
The customer health score is a metric you can use to determine whether a customer is planning to stick with your brand or leave. It’s particularly useful for customer service teams and account managers because it allows them to find unhappy customers who are at risk of churning and take any necessary action before it’s too late.
The customer health score combines all historical data on the customer, like CES and CSAT, and shows a color that symbolizes the customer’s feeling about the business. Businesses typically use green, yellow, and red. The red color means the customer is at risk of churning, yellow means there’s an opportunity for improvement, and green means the customer is satisfied.
5. Customer Satisfaction Score (CSAT)
The customer satisfaction score (CSAT) is a widely accepted metric to determine whether your customers are happy and content with your service or products. But unlike Net Promoter Score, CSAT measures the level of satisfaction customers have with a product, service, or overall experience provided by a company.
It is often measured through surveys where customers rate their satisfaction on a scale, typically ranging from 1 to 5. The average score is calculated to gauge the overall satisfaction level.
To calculate the CSAT score, you will need to count the number of survey responses and the number of “satisfied” (4) or “very satisfied” (5) ratings. Divide the number of respondents who rated you four or five by the total number of respondents. Multiply the result by 100, and the result would be the percentage of satisfied customers.
For example, there are 100 survey respondents. Suppose 40 of the respondents rated you four and 35 of them rated you five. To get your CSAT score, this will be the sample computation:
75 (40+35) x 100=0.75
If you multiply the result by 100, you’ll get 75%, which becomes the CSAT score.
This metric is important because it helps businesses understand how well they meet their customers’ expectations and needs. It provides insights into areas that require improvement and identifies opportunities for enhancing the customer experience. A high CSAT score indicates satisfied customers who are more likely to become loyal customers and recommend the business to others.
But what’s exactly a good CSAT score? It usually depends on the industry. Nevertheless, a good score is somewhere between 75% and 85%. Note that there are many other metrics your business can track to gauge customer satisfaction.
Benefits of Measuring Customer Satisfaction
Measuring customer satisfaction is crucial for businesses that want to thrive in a competitive market. By understanding how satisfied your customers are, you can make informed decisions to enhance their experience and drive business growth.
Here are 3 key benefits of measuring customer satisfaction:
1. Improve customer retention.
Customer satisfaction is closely linked to customer loyalty and retention. Satisfied customers are more likely to continue doing business with you, renew subscriptions, and make repeat purchases.
Measuring customer satisfaction allows you to identify areas where you may have fallen short and take proactive steps to address them. By resolving customer issues, improving product quality, and enhancing service delivery, you can increase customer retention and foster long-term relationships.
2. Identify opportunities for improvement.
Measuring customer satisfaction provides valuable insights into the strengths and weaknesses of your business. It helps you identify pain points, bottlenecks, and areas where customers may be dissatisfied.
You can pinpoint specific areas that need improvement by analyzing feedback and data from customer satisfaction surveys, reviews, and support interactions. It allows you to allocate resources effectively, implement targeted improvements, and enhance customer experience.
3. Increase customer advocacy.
Satisfied customers are more likely to become advocates for your brand. When customers have a positive experience, they are inclined to recommend your products or services to others online and through word-of-mouth.
You can identify your most loyal, happiest customers by consistently measuring customer satisfaction. Engaging with these customers, nurturing their loyalty, and leveraging their advocacy can increase brand visibility, new customer acquisition, and overall business growth.
Track Customer Satisfaction Metrics
When it comes to tracking customer satisfaction metrics, using effective and advanced tools like Podium, an all-in-one communication platform designed for small businesses, can significantly speed up the process. This amazing platform not only improves the efficiency of monitoring customer satisfaction but also offers features for comprehensive business communication.
One crucial aspect of utilizing Podium is its ability to help small businesses collect reviews, a vital component in improving your small business’s reputation and authority. Through its AI-powered features, Podium Reviews ensures better response rates to each customer review, contributing to enhanced customer satisfaction levels. By managing all customer communication within one inbox, small businesses gain a centralized platform to stay connected with their customer base and ensure they have even more happy customers.
Podium creates a seamless way to promote customer surveys, providing valuable insights into customer preferences and areas that may need improvement. These capabilities increase customer follow-up and show your clientele you care about their experiences with your small business.
Whether measuring CES Survey questions, customer satisfaction levels, or assessing response rates, Podium becomes a valuable tool in achieving key performance indicators (KPIs). By focusing on touchpoints and maintaining an efficient customer support team, small businesses can enhance their overall bottom line and ensure their position in delivering exceptional customer experiences.
