Measuring Customer Satisfaction as a Foundation for Success

April 3rd at 2:30pm by Susan Levermann

For many companies, the saying "the customer is king" is much more than just lip service – and that's a good thing, because satisfied customers can determine the success of a product, a brand and even an entire company. If buyers are happy, they return, turn into fans or even regular customers. As a result, the company's sales and awareness grow, which in turn attracts new customers.

To put it another way, if you want to be successful in business, you can't ignore the fact that customer satisfaction is a decisive factor. If you don't know exactly what’s behind the term or would like to know more, you should read the article on customer satisfaction now. For those who know, the following explanation should serve as a reminder: customer satisfaction arises when the target and actual states are matched. The target state corresponds to the expectations of a customer; the actual to the experience with the product, service and operation. If the target state has not been reached, the customer is dissatisfied, but if their expectations are exceeded, the buyer is happy with their decision to purchase. If the experience simply meets expectations, the customer is neutral to satisfied.

High customer satisfaction strengthens customer loyalty to the company. This in turn leads to further purchases, recommendations and thus more sales. From this it can be inferred that a company should always aim at the wow effect of the customer. There are already numerous customer loyalty programs for consumers. From this starting position, one is perfectly equipped to address another important topic in this area: measuring customer satisfaction.

Why Should you Measure Customer Satisfaction? Here’s why!

It’s like you can’t repeat it enough: customer satisfaction is fundamental for success. Satisfied customers are emotionally attached to the company, buy again, and carry their positive emotions to the outside world - for example in conversations with friends, in reviews online or on their own online channels. In order to build, promote and strengthen customer satisfaction, management and marketing meet to brainstorm lots of possible strategies (and a few impossible ones), discard concepts and finally agree on decisive measures that they jointly implement. Now everyone is waiting with bated breath for the campaign success into which has had so much passion put into it.

But how do companies even begin to know if their customers are satisfied? Some certainly refer back to well-known sources, such as rating portals or social media. Here you get to read lots of reviews from all sorts of buyers. However, if you only rely on ratings to assess customer satisfaction, you’re taking a dangerous path. One home truth about customer satisfaction puts a spanner in the works: studies show that in most cases, dissatisfied customers simply leave – no complaint, no negative criticism; they're just gone. And business suffers.

Before that happens, the company must already know how satisfied the customers are and where they have potential for improvement. This is precisely why a company has to measure customer satisfaction. A survey or a questionnaire achieves this perfectly. It gives management and marketing the necessary facts and figures to adapt their strategies with the aim of further increasing customer satisfaction.

These are good reasons why customers should be regularly contacted and surveyed. Only by regularly measuring customer satisfaction can you get a good overview of the rise and fall of satisfaction and can react to it promptly. Of course, this raises the question of how customer satisfaction should be accurately measured. The answer? There are several ways...

Preparing to Measure Customer Satisfaction

You would like to ask your customers about their attitude towards your company, brand or product. So far so good. Before simply sending out an e-mail with a questionnaire, you should consider a few things in advance in order to optimize the customer survey. First of all, it is necessary for as many customers as possible to participate. It is therefore advisable to increase the acceptance of the measures by announcing them. It should be remembered that your own company is certainly not the only one that sends surveys to its customers. However, you go unnoticed in the multitude of e-mails, surveys and newsletters. Therefore, you can personalize your email with a small appropriate thank you, such as a discount for the next purchase on a frequently purchased product.

In addition, it is important for your own company that in advance you determine what exactly you want to measure with your survey and what you want to achieve. It is obvious that the questionnaire should determine how many customers have which level of satisfaction. It is also recommended to make sure that this measurement is not the only data collected. Rather, it is important that the results show how well the strategies implemented are being adopted and where there is room for improvement. It is only in this way you can start with relevant data and have survey results that do not end up in the "good to know" drawer!

Once the objectives have been correctly set, measurements can be analysed in such a way that the results give you recommendations for action, suitable for tackling the current challenges.

Three Methods to Measure Customer Satisfaction

Management and marketing have come together and decided what they want to query. In most organizations, these are the following three scenarios, and each has its own best way to measure customer satisfaction:

  1. Satisfaction with the entire company/evaluation of basic expectations - Customer-Effort-Score

The Customer Effort Score (CES) would be described in German as a customer effort or a customer effort. The CES (Customer Effort Score) is a metric that gives a statement about the efforts a customer had to exert in order to solve a problem or get an answer. For this reason, it is mostly used in any service processes that a business offers to the customer in order to check their satisfaction with the service offered.

The key figure can be obtained either by a scale or by concise answers. In this context, a company may usually ask a question like this: How quickly or slowly has our customer service responded to your request? The scale would range from one to seven (sometimes five or ten), with one one a low and seven a very high effort. The answer fields would be: very slow, slow, neutral, fast, very fast.

Questions such as the following are also suitable: “please rate the following statement: company XY has made it easy for you to solve your issue.”After that, the choices follow: agree in full, agree, somewhat agree, neither agree nor disagree, somewhat disagree, do not agree, do not agree, do not agree at all. It is important that both the question and the answers are clear and easy to understand. In order to derive future actions, one can also ask detailed questions with the option of an open answer, such as "What can we improve?". This provides feedback that can be used as a basis for recommendations for action.

These questionnaires should be used as soon as the scenario has occurred. In plain language: if a customer has made use of the service, they will then immediately be asked this question in order to check their satisfaction. In this way, authentic key figures can be quickly analyzed in a timely manner and be incorporated into the optimization process. As a process to measure customer satisfaction, the CES is essentially a foundation for its focus, which aims to evaluate customers’ basic expectations. Therefore, it ideally suited to provide an initial overview of the state of play in terms of satisfaction.

  1. Customer Satisfaction/Service/Total Satisfaction Score

The Customer Satisfaction Score is also a measure, with the customer evaluating the products and services on an adjusted scale. The scales typically range from one - three , one - five or even one - ten. Larger and smaller scales are usually not considered useful because they do not produce clearly usable results. In addition to numerical values, you can work with asterisks, smilies or any other scale which seems appropriate. In addition, there are variations in evaluation depending on country, as some population groups tend to select the extreme poles of a scale. Simpler scales are therefore less susceptible to variations in response due to cultural differences. On the basis of this key figure, one can then assess the general customer satisfaction with the product and therefore interpret and plan future strategies.

  1. Probability that a customer would recommend your products or services/What excites customers – Net Promoter Score®

The Net Promoter Score® (NPS®) is the metric that makes a statement about the willingness of customers to recommend your company, product or brand. Here, too, one works with a scale where the respondent can give marks from zero to ten.

In NPS®, respondents are divided into groups according to their answers: if they answer from zero to six, they are detractors, from seven to eight, indifferents, and from nine to ten, promoters. The evaluation counts the detractors and the promoters, and the calculation of the NPS® itself takes place in several steps. NPS® gives you an index of -100 to 100, indicating the average willingness to recommend. In addition, an open ended question for feedback can be sent along, so that you can directly query the customer's opinion in your own words. We will look at why this is of value later.

Each of these methods is tailored to a specific scenario. Therefore, marketing should choose the appropriate method for your situation, as only then do the individual evaluations have a meaningful effect. The following section shows exactly which evaluations these are.

Measuring Customer Satisfaction - the Evaluation

Management level and marketing have opted for and implemented one, several or all the suggested measures. A lot of replies came in, and now your data can be evaluated according to your chosen method. But now what do you do now with the resulting figures? What do they say about your company?

  1. Customer-Effort Score (CES)

    CES queries basic expectations, those which are assumed by the customer as a matter of course. If these are not fulfilled, this is reflected in dissatisfaction or even the exodus of customers to the competition. If these are met, it doesn’t positively affect customer binding, as they take these measures for granted. The language used should be simple and customer-oriented. In fact, the language used affects the applicability of the entire survey.

For the calculation, all ratings are added and the average is obtained. The higher this value, the greater the customer's effort. The calculation can also be based on the NPS® by dividing the customers into three categories, such as one to two - small effort, three to four - medium effort and five to seven - high effort. Then you calculate the CES using the formula:

percentage high effort - percentage low effort = CES in percent

When calculating the value, of course, one must always pay attention to how the initial question was asked. This prevents the scale from being misjudged. In this example, it is desirable to get a lower percentage, with zero percent hard to reach.

  1. Customer Satisfaction Score

    The CSAT is intended to improve the performance of the company and to check whether the performance characteristics are consciously perceived by the buyers. For this purpose, all obtained figures are evaluated and from their average the CSAT score is calculated as a percentage:

positive answers / total responses x 100 = CSAT in percent

In this way, the CSAT, i.e. the proportion of satisfied customers, can be determined in comparison with the total. In principle, the higher the proportion, the better; the lower, the more potential for improvement there is in the strategies used so far.

  1. Net Promoter Score®

    The NPS ® is the key figure to capture the enthusiasm of customers and the addition of as many promoters as possible. This naturally requires special added value or benefits for customers. How well or badly they arrive is determined by the key figure obtained:

-100 to 0 - dangerous: With this score, you may already be losing customers and have a rather negative public image. There is a great need for action here.

0 to 50 - all right: The average NPS is just under 30. Most companies range from 20 to 40. Here you are meeting your customers’ requirements. In this area, there are good expansion opportunities to implement your own strategy even more effectively.

50 to 75 - good: In this area, the service is well offered and regularly exceeds the expectations of its customers. That's very good, but you should keep going and keep improving to reach higher levels.

75 to 100 - very good: The customer experience and the general customer orientation are an integral part of the brand and serve as unique sales incentives. This is great, of course, but here you should be careful: resting on your laurels is a bad idea as only those who continue to improve will win over the customer in the long-term.

These three key figures for measuring customer satisfaction provide a good insight into the defined areas and into what customer satisfaction looks like. Of course, we must not sit back and do nothing when we have good values. There is always a need to improve, because the competition does not sleep! Basically, these bundled key figures give a good insight into the current state of affairs.

Measuring Customer Satisfaction, Increasing Business Success

At this point, your head may already be filled with a lot of important information about the topic "Measuring customer satisfaction". It is ideal if you are already trying to work out the optimal survey in order to perfectly address your own customers. After all, only when buyers can be specifically asked, is the data obtained authentic and can therefore used for further strategies.

If, on the other hand, you still ask yourself why it is important to measure customer satisfaction, you should consider one thing: measuring customer satisfaction can determine the success of the company. Why this is so is already evident when looking at the methods. Each of the three methods presented has its specific field of application, such as the evaluation of basic expectations, overall customer satisfaction and the likelihood of referral. Each of these areas is critical to the overall success of the company. Only when one knows on the basis of a sophisticated survey how high or even low customer satisfaction in these areas is, can one proceed accordingly.

But we are far from the end of the comprehensive issue of customer satisfaction. There are other chapters that are worth reading in order to capture customer satisfaction in all its facets and to be able to define individual strategies for yourself. You don't have to read the articles in any particular order, but you can choose the parts that are of interest for your own business:

Susan Levermann

Content Marketing Manager