A Complete, Usable Guide to Customer Satisfaction

Customer satisfaction is integral to a thriving CX strategy and can be the defining difference for business growth. Learn how to measure, analyze, and grow in this guide.

Is solving a customer’s problem and then quickly moving on to the next good or bad? (Spoiler: It’s a little of both.) Good customer service is now the leading factor for consumers when dealing with a brand, with 93% of consumers stating that they would make repeat purchases with a company that has great customer service. And companies are noticing—89% of companies that focus on customer service and provide excellent customer experiences show a significant increase in revenue growth, and 90% report better profitability than competitors from the previous year.

In order to grow your company, expanding and improving your response to customer satisfaction should be a priority. This is the new trend of customer-first ideology, where your product or brand doesn’t matter as much as making sure your customers are happy and satisfied.

1.	Basics of customer satisfaction and CSAT scores
2.	Develop a customer service strategy based on customer satisfaction.
3.	Start with a great customer satisfaction survey.
4.	Drive customer service strategy with omnichannel support.

One

Basics of customer satisfaction and CSAT scores

At its core, the definition of customer satisfaction is about how effectively you fulfill the needs and expectations of your customer. But that definition covers a lot of ground. Satisfying the customer can involve everything from simply answering their questions and resolving their issues to directing them to the proper resources or channels.

Customer satisfaction is easily measurable with a few key metrics, the foremost being CSAT—customer satisfaction score. CSAT scores are determined by customer satisfaction surveys, where you’re basically asking a customer how much they like you or your product or service. Take your positive responses, divide them by the number of total responses you receive, multiply by 100, and your result will be a number that will equal your CSAT score percentage.

Understanding CSAT and why it’s important is pivotal to your business—if you don’t have satisfied customers, you can’t expect them to keep purchasing.

Why is customer satisfaction important?

Customer satisfaction will be one of the most important revenue drivers for companies in 2021 and beyond, with companies that focus on customer-first experiences seeing an 80% increase in revenue. Bad customer service may stagnate sales and haunt you for years.

Good customer experiences drive growth.

Customer satisfaction is quickly becoming even more important among consumers than ever before. In the US, 90% of consumers will use customer service as their deciding factor in doing business with you. If your customer relationship isn’t top-notch, customers will leave—and 38% of customers that have a “good” experience are more likely to recommend that company, while 92% are likely to make another purchase from you.

Will making a mistake in your customer expectations cost you? It could. But emphasizing customer-first relationships allows you to mitigate some mistakes. As long as you demonstrated great customer service in the past, 78% of consumers will do repeat business with you after a mistake.

Bad customer experiences will damage your brand, product, or service.

So if you have great customer service established, you get one pass. But if you’re not known for great customer service, you may face a more detrimental outcome—50% of customers will drop off and find a new brand after just one bad experience.

It’s another reason that shoring up your customer experience is so important. Overall, 58% of consumers switch companies because of bad customer service, and 78% of customers have stopped a purchase because of a poor customer experience.

Other customer satisfaction metrics

CSAT scores are just one part of the customer satisfaction puzzle. There are a variety of other metrics to choose from, which can point out KPIs like customer loyalty, customer lifetime value, whether your services are easy or difficult to use, and more. Here’s just a sample with the formulas you should use.

NPS CES CRR CCR CLTV AHT Resolution Hold Social

Net Promoter Score (NPS)

The NPS (or Net Promoter Score) targets brand loyalty with questions like “How likely are you to recommend us to others?” Customers are asked to rate (on a 0-10 point scale, where 0 is the lowest and 10 is the highest) whether or not they’ll recommend you to others. Then you assign that group as detractors, passives, and promoters.

Customer Effort Score (CES)

The Customer Effort Score measures how much effort a customer has to go through to get something done with your company (including interactions with your customer service teams, conflict resolution, or trying to offer feedback). The CES questions usually ask, “How easy was it to get your issue resolved today? ”

Why is customer effort important? Gartner reports that 96% of consumers that experienced “high effort” situations were disloyal to a brand, as compared to only 9% for low effort.

Visual of customer retention rate formula

Customer Retention Rate (CRR)

Customer retention rate is an easier metric—how many customers have you lost versus retained over time? Customer retention is good for business because it’s seven times as costly to attract a new customer as it is to keep an existing one. Repeat buyers also spend more than new customers and drive new customers to your product or service.

Customer Churn Rate (CCR)

Customer churn rate, or just churn rate, is another customer satisfaction metric that, like customer retention, basically lets you know how many customers you’re losing over a given period. Identifying a usable churn metric has to take a lot of other factors into consideration. Did you lose customers during a trial period? Over a seasonal shift? Everything from a downturn in the economy to a natural disaster can skew churn numbers, leaving you with a scary number and no strategy to fight it—which is why it’s important to balance CCR with other customer satisfaction metrics.

Visual of customer lifetime value formula: (customer yearly spend times number of years), then subtract acquisition costs

Customer Lifetime Value (CLV)

Customer lifetime value gives you a good picture of a customer’s journey with your brand. Instead of measuring what the customer is doing right now or recently, the CLV measures how much they’ve spent, on average, for how long—and measures more than loyalty. It maps out a definite fiscal relationship that can help customer service teams strategize retention.

Average Handle Time (AHT)

Average handle time measures the average amount of time an agent spends on each call or ticket they open. Call centers use it to measure chat and email queues but also to find areas of improvement. It’s also useful for determining resource allocation for your call center.

Average Resolution Time

Average resolution time speaks to customer satisfaction if there are many complaints about call center times and wait times. Long wait times are an absolute deal-breaker with customers. Calculations are simple – total resolution time for all tickets resolved, divided by the number of tickets resolved gives you your average resolution time.

Illustration of the ease of working with VHT

Average Hold Time

Since pioneering callback more than 25 years ago, we’ve found over the years that average hold time directly affects customer satisfaction and revenue. When customers have a positive phone experience, they’re more likely to recommend to a friend and buy again in the future.

NPS