Customer satisfaction is a telling metric for every aspect of your business — will you retain your customers, or have to invest in acquiring new ones? And how does the answer affect your bottom line — and whether your brand has potential for long term success?
These may seem like long-term questions with answers that have far-away consequences, but customer satisfaction affects customer lifetime value and that affects you each and every day. Because customer satisfaction can be fluid with customer sentiments changing on a dime, brands need to keep an eye on it in the short term as well.
If levels dip, action needs to be taken immediately to prevent further decline. If they rise, figuring out what changed and replicating it across your business can help you double down on that success.
And even if your customer satisfaction has long been in decline, we’re big believers that it’s never too late to try and create a better experience for your customers — the kind that will help you gain more loyal customers and see more success in the long run.
Measuring such important data can feel a little intimidating, but it’s simpler than it sounds with the right customer satisfaction metrics at your fingertips. When you’re looking at something as complex as customer satisfaction, it’s important to remember that any areas where you’re falling short are an opportunity for improvement. After all, it’s much better to understand why your customers are unhappy so you can resolve the issue.
So, how to measure customer satisfaction so that you can increase customer lifetime value? It all begins with the most important customer satisfaction metrics for gauging how you’re already doing so you know where to improve. Even a tiny improvement in these powerful metrics can mean a better experience for your customers, and a better bottom line for your business.
These are the top 6 customer satisfaction metrics to improve your business in 2024
But ultimately, it’s up to you to decide which ones make the most sense for your business.
You don’t necessarily need to focus on all of them, but committing to monitoring a few of them can bring you great results for your business. The more of them that you can focus on, the more likely it is that your customer satisfaction metrics will improve.
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Customer retention, churn rates, and customer lifetime value– do customers stay or do they go?
Customer retention looks at which of your customers stay with your business over any given period of time. You can figure out how to calculate yours here.
Because acquiring new customers is generally more expensive than retaining your current customers, customer retention rates can have a huge impact on your bottom line in both the long and short term.
Customer lifetime value strategy relies on a few different strategies for boosting customer retention. Offering subscriptions or starting a customer loyalty program can be an excellent way to incentivize customers to keep spending with your brand and so can offering a discount towards their next purchase at the end of their transaction.
Personalized email campaigns can help keep customers coming back for more — but don’t overlook the potential of winback campaigns to bring back the customers who have already moved on, as well.
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Repeat purchase rate — do customers buy from you time and time again?
To figure out your repeat purchase rate, simply divide your total number of customers by your return customers. This is an excellent way to measure customer satisfaction because the metric speaks for itself — let’s just say it’s not the unhappy customers who keep coming back to make another purchase.
Granted, this customer satisfaction metric is less relevant if you’re selling an item that lasts for a long time, or that people truly only need one of. But in most cases, a low repeat purchase rate is a red flag for business health — and a sign that you have to dig into the reason why your customers aren’t coming back.
Unless you’re selling something where people truly only need one or can use the same product for a long period of time, a low repeat purchase rate is typically a bad sign for your business. It means it’s time to ask why your customers aren’t coming back.
Never forget: repeat customers are responsible for 40% of a brand’s revenue — even though they only make up 8% of the customer base.
If you’re suffering from a lower repeat purchase rate, there are plenty of ways to help improve it. And even if yours is doing pretty well, any improvements to this will only translate into large financial gains for your brand.
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Customer lifetime value — are customers spending as much with your brand as they could be?
Closely tied to repeat purchase rate, your customer lifetime value is the total amount of sales your business will typically see per customer. A good customer lifetime value strategy is mission critical for understanding how close or far you are from profitable growth, especially when you compare it to the cost of acquiring new customers using the CAC to LTV ratio.
The bottom line is that the better your customer experience, the better the value you can expect from each customer. So, this is a great metric to keep an eye on as you make changes to your customer experience strategy in hopes of improving customer satisfaction. You’ll know customer satisfaction is on the up and up when customer lifetime value is on the up and up.
Once you get to a point where you’re seeing higher lifetime value from each customer, you’ll be in a better place to invest in customer acquisition, the costs of which have jumped 222% in the last ten years. The beauty of customer lifetime value is that it offsets those acquisition costs, so while you don’t have to invest in getting new customers on board — you have the option to make it your competitive advantage by dialing it up when other brands are dialing it back.
The best part is that the happier your existing customers are, the easier (and cheaper) it will become to attract new customers. That’s what we call a virtuous cycle.
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NPS – are your customers promoting your brand?
Your Net Promoter Score, also known as NPS, measures how likely your customers are to recommend your business to a friend. This is done with a brief customer satisfaction survey asking your customers how likely they are to recommend your business on a scale of 1-10.
Sound familiar? Chances are, you’ve encountered this survey question embedded right into a software product you frequently use.
Answers between 0-6 reveal your detractors, 7-8 are your passives, and 9-10 are your promoters. Subtract the percentage of detractor responses from the percentage of your promoters and you’ve got your score.
This can be a great option for businesses because it’s a relatively simple survey that your customers are likely already familiar with — and that can make them more likely to engage with it. Not to mention, it takes just a moment to fill out.
But you can also get a lot more out of it by leaving a spot for your customers to be able to leave some qualitative feedback about how your business could improve.
Re-calculating your NPS score over time can help you see how your customer satisfaction levels are rising or falling. Assuming that you’re not dramatically changing your product or service offering multiple times per year, sending out an NPS survey and recalculating your score once or twice a year is all you need.
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Star ratings and customer sentiments from your reviews — what quantitative and qualitative feedback are customers sharing post-purchase?
Monitoring the star ratings and customer sentiments in your reviews is like going straight to the source to find out how your customers feel about you. And because they consist of both star ratings and the actual review, they unlock a unique combination of quantitative and qualitative feedback to enrich your understanding.
Reviews are also an avenue for you to make immediate improvements to your customer satisfaction levels right at the source.
Proactively responding to reviews to resolve customer issues is a good way to turn customer satisfaction around to keep each individual customer happier. But taking it a step further and making changes to your business based on common trends in your reviews helps ensure that future customers won’t face the same issues.
Because of this, customer reviews can work overtime for your business as you work on customer satisfaction. They’re a metric in their own right, but they’re also a great channel to engage customers and publicly demonstrate the quality of your customer service, all at the same time.
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CSAT scores for a quick and dirty pulse check on customer happiness
Similar to NPS, CSAT scores are another method of direct customer feedback. You survey your customers and give them a 1-5 scale to rank how satisfied or unsatisfied they are with your business. From there, you take the number of customers that gave you a four or five – satisfied or extremely satisfied – divide by your number of survey responses, and multiply by 100. That gives you your percentage of satisfied customers.
CSAT surveys can be emailed to your customer base as simple surveys, displayed as a popup at the end of checkout, be sent through SMS, or any other way you communicate with your customers.
While there’s lots to love about how straightforward they are — and how many different ways you can serve them up to customers — the main limitation is exactly that: they’re just a high-level pulse check on how your customers are feeling. Without the qualitative feedback to back up the ratings customers give you, it can be challenging to work out where you’re missing the mark — let alone how to make it better going forward.
Customer satisfaction: the linchpin of long-term business growth
When it comes to the long game of customer satisfaction, the work is never done — but it does pay in dividends. The more you know, the more you grow.
We know that negative feedback is never fun, but shying away from it only hurts your business in the long run. Confronting your negative feedback head on is the only way to improve your business moving forward and create a better experience for your customers.
If you’re looking to improve your customer satisfaction with rich qualitative and quantitative data, our experts are here to help you make customer reviews your go-to customer success metric — why not start today?.
Author
Joe Russell
B2B Content Marketing Manager