What is customer satisfaction? 5 reasons why it is important in service (2023)

If you want to retain more customers and increasecustomer lifetime value, it is important to keep customer satisfaction high. Otherwise, customers will not hesitate to switch to a competitor that offers better prices, better product options and bettercould serviceinteractions.

What is customer satisfaction? 5 reasons why it is important in service (1)

Customer satisfaction is a critical concept to understand and live by, especially if you are a customer success professional, a salesperson, or a marketer. It may sound simple, but it's about more than a money-back guarantee - it's about everythingcustomer experience.

This post will define customer satisfaction, explain why it is important and outline the benefits that understanding customer satisfaction can bring to your business.

What is customer satisfaction?

Customer Satisfaction Score (CSAT) is a measure used to quantify the degree to which a customer is satisfied with a product, service or experience related to your business. This metric is calculated via customer satisfaction surveys that ask how a customer feels about their experience, with responses ranging from 'very dissatisfied' to 'very satisfied'.

Customer satisfaction takes into account different facets of the customer experience, such as:

  • The availability of your products
  • The purchasing process
  • The steps after purchase
  • Your team's responsiveness when solving problems

Let's look at Trader Joe's as an example. One of my favorite things about shopping at Trader Joe's is its generous return policy. Customers can return any product if they are not satisfied with it, even if it has already been opened and consumed.

This policy is no doubt an expensive one for Trader Joe's, but customer satisfaction programs like these pay off for businesses—and end up earning them more revenue.

Customer satisfaction is ultimately a reflection of how a customer feels about interacting with your brand, and companies quantify these feelings with customer satisfaction surveys. These answers can give you a picture ofcustomer loyalty, which predicts the probability ofcustomer referrals.

It can all feel nebulous, especially if you're not used to sending CSAT surveys. To begin promoting customer satisfaction, you should start with the basics: a customer support strategy.

The good news is that you don't have to create it from scratch. Use the template below to get started.

Selected resource:Customer support strategy template

Download your free template

This customer support strategy template helps you outline important information about the customer experience in your business. You get space to create a customer support vision, a support process and a list of goals and metrics to measure success against. The template includes instructions for completing each section.

You will be able to create a support strategy that helps you methodically improve customer satisfaction.

Why is customer satisfaction important?

Customer satisfaction is important because it helps you solve problems, prevent churn, and identify happy customers who can become your advocates and evangelists. It is an essential step in the process of building customer loyalty, creating customer delight and creating positive word-of-mouth.

If you don'tmeasure customer satisfaction, you cannot identify dissatisfied customers who may withdraw or give you negative customer reviews. Nor can you identify happy customers you could activate as evangelists or referrals. Finally, you can't predict, prevent, and proactively plan to prevent churn without metrics to analyze.

To measure it correctly, it is important to avoid jointCSAT exam failure.

Still not convinced or think you can wing it? Below we will discuss the additional benefits of understanding and increasing customer satisfaction.

Benefits of customer satisfaction

1. Customer satisfaction helps you understand where you excel.

By tracking and measuring customer satisfaction, you can understand what your business is doing well and thus continue to do it. But you can't find out unless you performcustomer satisfaction surveys.

Growing companies prioritize customer success, and an essential way to identify satisfied customers is throughcould feedback.

Results will tell you who these customers are and what you are doing that makes them happy with their experiences with your brand. Once you have this information, you can continue to do the things they like in hopes of inspiring customer retention, and you'll reap the following benefits:

  • It is cheaper toretain an existing customerthan it is to acquire a new one.
  • Repeat, loyal customersspend more.
  • Satisfied customers engageword of mouth marketing, helps you withfree acquisition.

2. Customer satisfaction helps you understand where you can improve.

Where do you fall short? The gaps in customer satisfaction can help you identify where you can improve your customer service strategy.

If you don't understand why your customers are unhappy, you can't make changes to your product or services that make them happy and align with the experiences they want.

Make sure you send out customer satisfaction surveys, analyze the results and respond to negative customer feedback. This is especially important if the feedback is hard to hear, as it will help you ensure you take steps to prevent customer churn, negative reviews on your product pages or social media, or negative word-of-mouth reviews to family and friends.

3. Customer satisfaction leads to higher customer loyalty and advocacy.

If your business has positive customer satisfaction, then you have customers who are loyal to your brand. These customers will refer new leads to your business and generate more testimonials for your marketing team. You can createcustomer support programsfor these users and encourage them to advertise on your company's behalf.

Referral programs reward customers for referring your business to potential leads. Customers are incentivized to participate in the program and then receive gifts or offers in exchange for reviews and testimonials. This creates a mutually beneficial relationship that rewards your best customers and keeps them loyal.

4. Customer satisfaction increases customer retention and reduces churn.

It should come as no surprise that the happier your customers are, the better your customer retention will be. After all, happy customers won't have much reason to turn to the competition as long as you keep them happy. On the other hand, unhappy customers will have plenty of reasons to withdraw, and it's up to your team to convince them otherwise.

By measuring CSAT, you can look at individualcustomers' needsand create personalized offers for users who are likely to opt out. Since32 %of customers would stop doing business with a brand they loved after a bad experience, you may only get one chance to stop someone from screwing up. Customer satisfaction optimizes your chances by providing you with relevant information about the customer's experience with your brand.

5. Customer satisfaction leads to a longer customer lifetime value.

Customer Lifetime Value (CLTV)refers to the expected profit you can make from a single customer for as long as they stay with your business.

If a customer is dissatisfied with your products and services, they will likely never return to your business after the first purchase. Customer lifetime value is low, so you're missing out on potential revenue opportunities.

If your customers are satisfied, they are likely to stay with your business for longer, which will make repeat purchases and lead to a boost in profits.

It is clear that customer satisfaction is important in order to improveservice measurementsand ensure that your company delivers the best possible experience. But how does it affect other teams?

Let's see.

Customer satisfaction within marketing and sales

How does customer satisfaction affect other teams in your company, such as marketing, sales and product development? There are many reasons why customer satisfaction is important to marketing and other teams.

1. Customer satisfaction helps you predict and work proactively.

Without CSAT and the likecustomer success metrics, it is difficult for customer success teams to plan and inform other teams about the state of their customer base.

These metrics are useful for other departments in your company. You can provide sales teams with the information they need to improve customer experiences, work with product to incorporate customer feedback and make improvements, and marketing can improve the end-to-end customer experience.

Managers need data and trends to predict team performance over the next month, quarter and year to adjust strategy if necessary.

2. Customer satisfaction drives your inbound methodology.

Customer satisfaction does more than just measure your customer service – it optimizes the performance of other departments by providing them with useful customer insights. This information is used forimprove the customer experience, leading to a cyclical increase in customer satisfaction. You can visualize the process using the flywheel model below:

What is customer satisfaction? 5 reasons why it is important in service (4)

Marketing, sales and product development teams use CSAT to guide their work and interact with customers. Companies with excellent customer satisfaction can easily attract and engage with customers because they have proven that they can provide a delightful brand experience. If your company wants to adoptinbound method, you must integrate customer satisfaction into every function you perform.

3. Customer satisfaction helps marketers attract new leads.

Consumers are more likely to trust their peers than they are to trust marketing. Actually,9 out of 10consumers read reviews when making purchase decisions. Consumers see someone like them (other consumers) as14% more trustworthythan brand employees. Without excellent customer satisfaction, your business will not have these reviews to share.

Your marketers should rely on customer testimonials to attract new leads to your business. Since customers are more willing to trust other users, these reviews are effective in attracting leads. Positive reviews have also been provenincrease sales by 12.5%. The better your customer satisfaction, the more material your marketers have to advertise your brand.

4. Customer satisfaction is a selling point for marketing and sales teams.

Sales and marketing teams benefit from customer satisfaction because it serves as a selling point for collateral and pitches. As mentioned above, customers are more willing to pay for an experience they know is excellent. If your customer satisfaction is excellent, your marketing team should highlight it in their communications, and your sales team should highlight it during their pitches to leads.

In addition, CSAT helps sales teams understand customer expectations. They can analyze happy customer reviews to see what parts of your product or service they should highlight. That way, when they talk to customers, they can hammer home distinct advantages that set your business apart from its competitors.

5. Customer satisfaction guides product updates.

Negative customer reviews act as alerts that tell businesses when a product or service has a problem that needs to be fixed. Product development teams monitor CSAT to identify these issues and quickly resolve them.

This is especially important forSaaScompanies that regularly update their software. By keeping a close eye on CSAT, development teams can fix costly product roadblocks that can lead to churn.

Customer satisfaction is critical to business growth

Your customers are the most important part of your business. Not only are they a source of revenue potential, but they can spread positive word-of-mouth and influence others to try your products and services. By keeping customer satisfaction high, you reduce churn, increase customer lifetime value and ensure that your customers stay with your company for years and decades to come.

Editor's note: This post was originally published in October 2017 and has been updated for completeness.

Subjects: Customer satisfaction

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