Customer satisfaction should be considered a vital component of any business because it provides marketers and business owners with a metric that can be used to measure and improve business performance from a customer perspective. Not only is it a leading indicator of consumer repurchase intentions and loyalty, but it is also a great way to understand if they will become long term repeat customers or even advocates. On the other hand, it can also provide the initial warning signs that a customer is unhappy and potentially at risk of leaving. With all this considered, customer satisfaction can provide businesses with crucial information to understand what aspects are successful and where improvements need to be made.
Within a competitive marketplace where businesses are constantly competing for customers, customer satisfaction is often seen as a key differentiator often acting as a final purchase trigger point. Businesses that tend to succeed in these hostile environments are the ones that make customer satisfaction central to their business strategy. By regularly measuring and tracking customer satisfaction you can make informed decisions to put new processes in place to increase the overall quality of your customer service and elevate yourself above the competition. Therefore, it’s one of the leading metrics used to measure consumer repurchase and customer retention.
So what’s going to make you choose one over the other?
To elaborate on the point above, picture two businesses that both have very similar product offerings. If a friend or colleague had given you a recommendation for one of these businesses, would that have an impact upon your decision? Quite likely.
The important question here is how does that recommendation initially start? The chances are it follows on from a good or positive customer experience. Companies who go that extra mile and offer the best experiences will create environments where customer satisfaction is consistently high.
This example demonstrates the value customer satisfaction has when it goes full circle. Not only can customer satisfaction help you keep an ear to the ground with your existing customers, but it also acts as a crucial point of differentiation for new customers looking for a service or product within a competitive market.
Putting this into action within your business…
To begin elevating a business from the competition within a specific industry, start by emphasising on exceeding customer expectations and go above and beyond for customers at every opportunity. Ask your customers for feedback and use this information to put new processes in place that address any areas that were identified as requiring improvement. Set a benchmark of your current performance and measure customer satisfaction again in 6 months’ time and see whether your new initiatives have had a positive impact on satisfaction.
A ‘totally satisfied customer’ contributes 2.6 times more revenue than a ‘somewhat satisfied customer’. Furthermore, a ‘totally satisfied customer’ contributes 14 times more revenue than a ‘somewhat dissatisfied customer’.
Study by InfoQuest1
Clearly satisfaction plays a hugely significant role in how much revenue a customer or client generates for your business. But at the other end of the scale, customer dissatisfaction also has a massive impact upon a business. Research conducted by McKinsey2 found that an unhappy customer tells on average between 9-15 people about their negative experience. In fact, 13% of unhappy customers tell over 20 people about their experience.
The negative side of customer satisfaction is often disregarded or overlooked. Losing 20 prospective customers due to one person’s negative experience and bad word of mouth is a scary thought. This demonstrates the importance of measuring customer satisfaction on an ongoing basis, tracking any changes in satisfaction whether positive or negative will help you identify the quality of service your business provides and if customers are happy or left feeling disappointed.
Customer satisfaction plays a vital role within almost any business. It acts as a key differentiator that enables you to attract new customers in competitive business markets. Not only is it a leading indicator used to measure customer loyalty and retention, it enables businesses to identify unhappy customers, reduce customer losses and negative word of mouth whilst increasing revenue.
So, the question is now, what are you doing to improve customer satisfaction?
Follow my contributions to the blog to find out more about customer loyalty and retention strategies or sign up to the ThoughtShift Guest List, our monthly email, to keep up-to-date on all our blog posts and guides.