The internal guidelines of many companies claim to have customer satisfaction as their highest goal. Customer expectations and wishes should play a major role in employee’s day to day actions, and management and marketing should constantly be developing new strategies to meet or exceed current customer expectations. So far so good, but how will you ever find out if all the measures, meetings and strategies are actually successful? Is it enough to take annual sales as an indication of whether customers are satisfied? Perhaps you should look at the volume of repeat purchases? Or maybe it’s to do with the number of positive reviews on the Internet and what your customers are suggesting for improvements?
All three of these approaches are headed in the right direction - companies really should consult with the customer satisfaction experts: the customers themselves. Therefore, it is advisable to look at customer satisfaction surveys and see how they can be used.
But what should you do with this flood of collected data? Of course, it all needs evaluation and this is exactly where the easily measurable Customer Satisfaction Key Figures help. We explore the benefits and advantages of each of these in the next section.
Key Figures are always expressed as numbers, and these results represent the essentials. They are mostly used in an internal context to help make comparisons, and are often known as benchmarks. Specific qualities of Key Figures include the following aspects:
First and foremost, they are used to make decisions taking easier and faster. They can also be used to control and check implemented strategies, as they display a meaningful and clear result. Another important point is their role as an early warning system. Due to their high significance, downtrends can also be detected earlier and easier and thus counteracted nearly as soon as they appear.
Those who have not yet worked with such figures may wonder why they should put their trust in them. This can be answered by means of three keywords:
As the definition shows, underlying data obtained from, for example, the survey of customers is simplified by Key Figures and merged into one value. Using the example of a customer survey, this means not all responses need to be evaluated in a meaningful way, as the Key Figures can be representative of the responses’ content. The answers can be summarized by means of the Key Figure, simplifying the analysis.
Since different values are usually merged into a Key Figure, the data set is automatically condensed. This reduction also allows you to keep an eye on values for a longer period of time without becoming confusing. Ideally, Key Figures help you understand and interpret important data faster.
Simplified presentation and precise answers? This is not a contradiction, because Key Figures are carefully shaped from different numbers. In doing so, the underlying formula must be able to withstand a simple economic test. If this is the case, Key Figures help to quickly interpret changes and thus formulate precise recommendations for action.
Mainly because of these three points, Key Figures are an effective business tool. In terms of customer satisfaction especially, they offer a great opportunity to make them measurable and to present them in a clear and comprehensible way.
Key Figures are based on collected data and assigns them a special value. The choice of data included depends on the company. In principle, you could easily compile your own metrics. All you have to do is consider which data would make understand and simplify, condense it and turn it into a clear value. At first, you have to think about what the number should say.
Suppose the number is meant to make a statement about customer satisfaction. The figure should be based on recent customer surveys as a source. If, for example, the survey contains three questions, you need to assign them a weighting. Are all 3 questions equally important, or is there a question where the answer is particularly significant? Then, understandably, it would have to be weighted more than the other two.
When it comes to customer satisfaction, experts assume that a referral has particularly high significance. If a customer is satisfied, they recommend the business, brand or product much more than someone who has not had their expectations met. For example, many satisfied customers pass on their experiences in private life to acquaintances, or in public on review portals.
Therefore, this point could be double-weighted. In addition, the question of overall satisfaction is crucial, because even if a customer is satisfied with the product, he or she does not have to be satisfied with the service or the brand itself. Hence, the total satisfaction score reflects all divisions and the corresponding points should be double-weighted. This is the only way to make the key figure really meaningful.g.
The mean is now calculated from the weighted results. Before doing this, it is advisable to remember which scale you are working on. Scales from zero to ten, one to three or one to five are common. In Germany, companies also like to work on a scale reminiscent of school grades, i.e. one to six. Here, of course, it is important to take into account which value corresponds to which meaning. If you're shocked by a score of two, you might have overlooked that one is the best score and six is the worst. Some companies go a step further and convert this value into percentages. This has the background that it is possible to make the differences clearer, as results are more granular on a scale of zero to 100 percent than on a scale of one to six.
In addition to these specially created Key Figures, there are of course many others that are generally understood, accepted, and implemented. These can be used to perfectly represent certain topics.
Key Performance Indicators or KPIs are the Key Figures used to evaluate successes, performance and other results-driven processes. These are therefore simple performance indicators. With this in mind, KPIs are often used in management and controlling to assess the success and progress of processes and departments. The aim of the KPIs is to make it clear whether the respective target has been achieved.
KPIs are also used in marketing, but here the focus is on customer relationships, communication metrics, and price management.
Typical KPIs are about...
Typical services that can be recorded with KPIs are...
All these figures are geared to the performance of the business and can be used to relate the resources used to achieve the target relative to the result. To this end, the appropriate conditions must be created at management level. This is where the goal of the KPI is determined, the key figure set and the entire process communicated to all employees. This is the only way in which KPIs can fulfil their purpose: improving internal processes and working practices in departments. Only when employees understand and can visualize this process involved can they use it to improve their own performance.
This in turn has a direct impact on the customer, because the more efficient the internal processes work, the better it is for the customer. After all, for most cases, this means better service, better product quality, trained contacts and even faster response times – all of these are fundamental factors for customer satisfaction.
In contrast to the KPIs current “what is” view, scorecards are about the target state, i.e. the company-internal processes dedicated to the pre-defined visions and goals. In order to record and evaluate these, the Balanced Scorecard (BSC) is used. The advantage of this method is the fixed orientation based on the strategy, transparency and holisticity. This means that the entire company is involved and all internal processes can be mapped.
The company’s visions and strategies and therefore the Balanced Scorecard, are generally based on four equally-valued pillars:
Goal: Increase in profit and growth
Possible readings: Profit, Return On Investment (ROI), Equity
Goal: Align strategies with target groups
Possible readings: Customer Loyalty and Customer Satisfaction
Goal: Optimization of internal processes
Possible readings: Reject rate, lead times, worker productivity
Goal: Doing a good job in the long term
Possible readings: Business climate, employee satisfaction, referral rate as employer r
How these four synergize can be seen in detail by means of an exemplary "Strategy Map":
Such a BSC is best developed in and by management, as all the threads linking the company visions come together here. However, marketing, sales and all other departments can also contribute internal knowledge to develop the BSC.
These inputs allow for the initial definition of company visions and internal goals. From these, other goals can be derived, defined as so-called "sub-objectives". All objectives now need a key figure and target value, used to see how successfully the goal is pursued and achieved. In addition, appropriate measures must be developed in order to achieve stated objectives.
But only one BSC is often not enough! A company usually has different business sectors, with each having individual goals. For this reason, a further BSC can be created to deal with these objectives. However, all the created BSCs must fit together and not contradict the overarching objectives in the Strategy Map. For example, there are special balanced scorecards, such as the Supervisory Board Scorecard, which is a tried and tested development of the original BSC.
With a well thought-out BSC, a company can position itself more purposefully and involve all employees. Risks arise from unrealistic goals or poorly chosen measures. Therefore, all employees should be involved and be given a vote.
The Customer Satisfaction Score (CSAT) reflects the satisfaction with the product or service received. This score can be determined by asking the customers directly. The Customer Satisfaction Score involves asking a question that reads as follows:
How do you assess your overall satisfaction with the received service/goods?
The respondent can answer on a scale that in most cases ranges from one to five. However, smaller scales such as one to three or larger scales such as one to ten are also used.
In the example with a one to five scale, one stands for extremely dissatisfied and five for very satisfied. As soon as the answers are received, the evaluation of the Customer Satisfaction Score can be initiated. For this purpose, the sum of the respondents and positive answers, i.e. the respondents who answered with a four or five, are required. The formula for the calculation is:
Respondents/sum of respondents x 100 = CSAT in percent
The CSAT is often used to ask customers directly after a purchase for their evaluation. Therefore this key figure always refers to the current situation. In addition, specific areas are also assessed. Hence, the satisfaction in other areas can look completely different again. It is therefore important to see the Customer Satisfaction Score only as a part of the overall picture. It is best used together with other key figures as a bundled strategy. For example, the Customer Satisfaction Score is perfect for receiving a first impression of the level of customer satisfaction which can then be deepened and extended with other scores.
One of the most important values is provided by the Net Promoter Score® (NPS®) because it makes a statement about the willingness of customers to recommend the respective company, brand or product to friends, family and colleagues. This willingness to recommend is a significant indicator of the satisfaction of the respondents. In principle, only satisfied customers recommend a product to people who are important to them.
Fur this purpose, as with the CSAT, a customer satisfaction survey is used. In order to determine the score, one question is sufficient, so that a company can rely on promising micro-surveys. The advantage: This survey is quick, easy and customers are happy to answer it.
In order to determine the NPS®, the following question is asked:
How likely is it that you will recommend us?
gain, the customer is presented a scale ranging from one to ten. Based on the score given, the respondents are divided into three groups:
For the calculation, those respondents who are indifferent are sorted out, as they do not offer any added value due to their neutrality. The NPS score results from the proportion of promoters minus the proportion of detractors. In order to do so, it is calculated what percentage each of the two groups represents. The percentages are then entered into this formula:
% share of promoters - % share of detractors = NPS®
Due to this formula, an NPS® must always be between -100 and 100. The higher the NPS, the better the customer satisfaction.
Additionally, the NPS® offers the respondents the opportunity to express their own opinion once more by using the empty text field, that is shown, after the rating was given. This feedback can be evaluated with appropriate software and used to publish good ratings on respective online pages. Such pages attract interested parties and potential new customers who research credible ratings and use them in order to make their purchase decisions.
This makes the NPS® one of the most important key figures for querying customer satisfaction. Using optimal software, the NPS® can be evaluated quickly and easily. Therefore, this score should definitely become an integral part of your own strategy.
IIn order to evaluate customer satisfaction and to optimize your own strategy, key figures play a major role. Only those who regularly question their customers as well as their internal processes can increase customer satisfaction. For this reason, it is necessary to deal with one’s own goals and objectives in detail internally and to define them in such a way that every employee understands their significance and acts accordingly. Key figures can be used across departments to improve the workflow in terms of the customers.
In order to not be drowned in a flood of numbers, the use and purpose of key figures should be constantly questioned, adjusted as well as optimized. After all, these figures must reflect the individual goal of the company, its mission and its vision in order to form a well-founded and meaningful statement.
Key figures are a small but serious factor in the overall construct of customer satisfaction. If you still have open questions, you may find answers in the following chapters: