The term customer satisfaction analysis sounds scientific and complicated, but it should be an elementary building block on which company strategy stands. After all, with company revenues depending almost entirely on customer satisfaction, each company should strive to analyze the status quo of customer satisfaction for its own products or services.
The Importance of Customer Satisfaction in the Digital Age
On a scale from 0 to 10: How likely is it that you will read another zenloop article? Satisfaction spreads – but so does dissatisfaction too. In the digital age, reviewing products and spreading opinions is much easier – customers have lots of power on the internet, become brand ambassadors, and have an influence on whether other users buy a service or a product. Market research studies have also shown that a significantly above-average number of people trust the recommendations of friends. Therefore, recommendation marketing should not be underestimated, especially in the digital age. So far so good – but according to what criteria is customer satisfaction defined in the first place and how do you measure it? What is the link between NPS® and customer satisfaction analysis – and how exactly do they work?
Customer Satisfaction: The Definition
First of all, the concept of customer satisfaction needs to be explained in more detail: Customer satisfaction reflects the subjective assessment of a brand and its products. Customers have expectations of companies. How satisfied they ultimately depend on whether their needs are met. Companies should prioritize customer satisfaction, especially in this day and age, as success is directly dependent on it. This is not just about satisfying needs – providers should go the so-called extra mile to convince customers and stand out from the many competitors.
A happy online buyer can give a lot back to the company: devotion and loyalty. These result in a beneficial impact on sales. A satisfied e-commerce customer will most likely return, buy products again in the same shop, act as a multiplier by recommending the offer, and do not spend too much time scrutinizing your prices. Building and maintaining customer satisfaction are among the most important aspects of a corporate strategy because:
- Repeat purchases are more likely
- Customers talk to other potential customers (mouth-to-mouth propaganda)
- Additional purchases of other products in the same establishment likely (cross-buying)
- Prices receive justification
- Loyalty is worth more than a one-time conversion
Factors for Customer Satisfaction
Many factors influence customer satisfaction. The German Institute for Marketing highlights the following:
- Experience: Buying and other past user experiences
- Communication Recommendations and advice by family, friends, and acquaintances
- Needs: Subjective wishes and expectations of the customer himself
- Promise: Presentation of the company’s performance Or to put it another way: many factors influence the expectations (target performance) that the customer compares with their new experience (actual performance), determining the degree of satisfaction.
The Kano Model
IIn the context of customer satisfaction, experts often refer to the model conceived by Japanese professor Noriaki Kano. Kano’s model describes the relationship between satisfaction, products, and services. This results in three main factors: basic, performance, and enthusiasm factors.
- Basic Factors: If these product characteristics/company services do not exist or contradict subjective expectations, dissatisfaction arises. Basic factors can be described as minimal requirements, which are indispensable but do not guarantee customer satisfaction. This only achieves a neutral state that is more in the “non-dissatisfied” range.
- Performance Factors: These product characteristics and business performance can lead to satisfaction and dissatisfaction, depending on whether they are present or not. Performance factors and customer satisfaction are linearly related.
- Enthusiasm Factors: Existing products and services that are not within the range of expectations but exceed it leads to a strong level of satisfaction. The reversal does not mean dissatisfaction, but it slips back into the neutral range. Important: Enthusiasm factors cannot replace the absence of basic factors.
Increasing Customer Satisfaction – The How to
Are our customers really satisfied? If companies do not just casually ponder over this question during their lunch break, but instead manifest it as a pillar of strategy in their business plan, they have understood the innovations of digitalization. But if you want to completely arrive in the digital age, you should take a few more steps. Developing personas, which describe the potential target group in detail, help form the customer understanding. If you want to get to know them even more properly, you should then include feedback.
“If you want to affect other people, you have to talk to them in their language”
– Kurt Tucholsky
It is increasingly difficult to create unique selling points. Online business possibilities are so vast that every good idea seems to have been implemented several times over. How can a company stand out on the market, win out over the competition and get into the fast lane? The more competitors there are, the more possibilities customers have to orientate themselves elsewhere. This is exactly what dissatisfied and even averagely satisfied people do. Is mere customer satisfaction sufficient? Or should enthusiasm factors create value that leads to exceeded expectations?
Of course, there are different types of customers and some are content to be satisfied in the most rudimentary way. But thanks to the market situation your rule of thumb should be: The happier, the better. Appropriate measures for optimization are therefore part of this strategy. How do companies improve the mood of their customers to create an optimal basis for managing customer loyalty and making them ambassadors of their brand? First, the actual state must be determined. In other words: Companies should measure customer satisfaction. This can be done in the traditional way with a customer survey, or the modern way with the support of software.
Effectively Measure Customer Satisfaction
From this point at the latest, it is advisable to get experts on board. Many companies do not know how to collect sound and thus helpful information about the views of their customers, whose satisfaction is a multidimensional construct. What kind of survey and methods are therefore available?
“96% of dissatisfied customers don’t complain, but 91% of these customers will just go and not return”
In this article, the focus is on the objective measurement methods and their key figures. Subjective questions on different topics such as image, offer, or processes are typical. The following subjective methods exist:
- Written questionnaires
- Personal customer surveys
- End of process questionnaires
- Telephone interviews
- Online surveys
How can customer satisfaction be measured separately from subjective perception? In short: by objective measurement methods. These are variables that are not dependent on individual customer perception and can instead be quantified. Of course, such magnitudes cannot be compared with data such as visitor numbers, page impressions, or the inclusion of personal contact in the service. The multidimensional character mentioned above makes it difficult to capture but does not make it impossible. The following are the most important key figures for the objective measurement of customer satisfaction.
Objective Customer Satisfaction KPIs
Customer Satisfaction Score
The question of the CSAT: How satisfied is a customer with a product, service, or customer service, for example on a scale of 1 to 10? The Customer Satisfaction Score calculates the average value of all responses to calculate average customer satisfaction. However, this very common method carries the risk of falsified responses, as there appear to be differences in the choice of answers: For example, some respondents tend to express their displeasure or satisfaction through the more extreme responses.
Customer Effort Score
Customers expect quick, friendly, and good solutions if they have problems. It is curious that many companies still fail to value customer service. Anyone who contacts a company would like to be well advised. Bad experiences tend to be all-encompassing and make the entire company appear in an unprofessional, unfriendly light. This is exactly the theme of the CES, which answers the question of how exhausting it was for a customer to get an answer or solve a problem: “very low” to “very high” or “completely agree” to “don’t agree at all”.
Net Promoter Score®
For many companies, this metric is the most interesting: How likely is it that customers recommend products, services, or the company in general? Returning customers are good, attracting others, and they are even better. The big difference of the Net Promoter Score to CSAT and CES? The customer’s response is associated with an action involving other people, mostly from their personal background. In this sense, the customer’s own reputation plays a role and a positive response has a higher value for many entrepreneurs for this reason alone.
Things Gone Wrong
Things Gone Wrong Like the name says: This metric approaches the topic consistently from the other side and measures what has gone wrong. Here, too, the focus is on customer service, as complaints usually end up there. The measured key figure is based on the complaints per 100, 1,000, or up to 1,000,000 units of products sold. A value of 1 or higher would be bad, as this would mean that the company would receive at least one complaint per unit.
“Social Sentiment” is a KPI (Key Performance Indicator) that technically evaluates the moods on social networks. Therefore, it is not absolutely necessary to conduct a customer survey in order to gain insight into their satisfaction. Companies that have a strong presence and relevance on social media automatically receive feedback in the form of comments, likes, or shares. However, the results should be assessed with caution, as the digital algorithms are not yet sufficiently capable of detecting irony or sarcasm.
NPS® and Customer Satisfaction
The Net Promoter Score directly captures the probability of a referral and indirectly the loyalty and satisfaction of customers with only one question:
“How likely is it that you would recommend our product/company/service?”
The NPS scale ranges from 0 (very unlikely) to 10 (very likely). According to their answers, customers are categorized into three categories: Promoters, passive-satisfied, and detractors (critics). The company derives tailor-made marketing measures from these figures and can prioritize them. Daniel Lang, Head of Marketing of “Parfumdreams” and satisfied zenloop customer, says:
“We ask for NPS feedback at five contact points. The surveys can be adjusted individually and thus achieve extremely high response rates.”
Promoters are customers who have given a 9 or 10. It is assumed that these groups (often regular customers) are particularly enthusiastic about the services or products and would therefore definitely recommend them. For companies, such customers are highly important.
Passive satisfied are customers who have given a 7 or 8. Although they are satisfied, they are considered unsafe and could therefore also switch to the competition. Negative mouth-to-mouth effects are not expected from this group – but neither are further recommendations, therefore such customers are not part of the Net Promoter Score calculation.
Critics or detractors are customers who have submitted a 6 or less in their review. For the purposes of the NPS here: These people are not enthusiastic, will most likely not buy something again from the company and a referral is extremely unrealistic. Instead, companies are more likely to expect negative valuations and the like that can cause lasting damage to the brand.
The information obtained is evaluated using a formula (% promoters – % critics = Net Promoter Score). But what conclusions can companies draw from the result? It is important that no group of people is completely excluded. Nevertheless, a focus is conceivable: Should customer satisfaction be stabilized first, or do measures need to be taken to drive expansion? Either way, there is a golden rule for a company’s success: The more critics and passives satisfied customers complement (not replace) the promoters, the more successful the business is.
Benefits of the Net Promoter Score
The NPS Model assumes that customer satisfaction correlates with recommendations. The Net Promoter Score is, therefore, a KPI for customer satisfaction and has the following advantages
- Simple questionnaire
- Quick to understand
- Easy to complete
- Automated asking
- Elementary calculation
Reasons for Customer Satisfaction Analysis
Any transformation of a prospect into a customer is a business success, but there is no reason to put that relationship aside. Customer satisfaction plays a central role in business – especially in market research – and should be nurtured or, better yet, encouraged. Regular reflection and constant measurement is the order of the day. This is the only way to demonstrate positive developments and the need for further optimization.
“A good customer doesn’t change business for three years. A good business doesn’t change customers for three years”
– Chinese proverb
Customer satisfaction analysis checks the current mood of customers and the success of measures to improve and increase it. These 12 reasons underscore the value of analysis on overall satisfaction:
- Customers return
- Willingness to buy is strengthened
- Acceptance of higher prices is expanded
- Loyalty is promoted
- Customer attachment increases
- Competitors get overtaken
- Reduced customer migration
- Increased sales
- Positive word of mouth achieved
- Probability of referral confirmed
- New customers won
- Optimization needs to be revealed
3 Steps Towards Your Own Customer Satisfaction Analysis
- Customer Group
A company needs to know exactly which customers it wants to approach and why. If you have proportionally more male customers than females, although the product can be considered gender-neutral, female customers could be targeted as the primary target group when creating a customer satisfaction analysis. The imbalance may come about from external representation, for example in the design of the website and advertising materials. In addition, a second male group should be asked to minimize the risk of losing existing satisfied customers through optimization measures. The example is intended to illustrate the importance of customer group definition, wherein practice more finely differentiated customer groups will be needed.
Different approaches and different customer groups require specific procedures. Whether Net Promoter Score, CES, or social media monitoring – both the method and content of the survey should match the defined audience and corporate strategy. Additional points to consider regarding an analysis of customer satisfaction: How long should data collection take and when should the results be available? Questionnaires should be tested internally in advance to identify ambiguities and estimate processing time.
Finally, the data is evaluated and analyzed. The results should then be reworded into instructions for action and communicated by management to the appropriate departments and competences. The goal is to optimize or expand processes in such a way that they pay directly into the new insights.
Summary: On a Scale from 0 to 10 – How Important Is This Analysis?
A clear 10 and is thus highly recommended to all companies that are ready to transform themselves digitally. Customers were also the carriers of companies in the pre-Internet era, but new technologies have increased their influence enormously. Companies can no longer afford to only focus on their offerings and marketing activities, and lose sight of customers. It is one thing to reach the target group, but quite another to inspire them with the services or products, the service, the image, the external representation, and transparency. The analysis offers the opportunity to better understand the customers and thus to take measures to lose as many critics and attract as many promoters as possible.