The Role of Customer Satisfaction
Customer service articles go to great lengths to explore the importance of customer satisfaction, and the role customer value plays in the success of an organization. For those looking for a satisfactory customer satisfaction definition, or a workable customer value definition, the answer might very well depend on the industry that they serve because each business sector will value their customers differently.
Simply stated, however, a customer satisfaction definition encompasses the entirety of how your products or services meet and exceed customer expectations. Additionally, the term serves a technical purpose that marketing professionals use to indicate a concrete metric on which to base managerial decisions regarding customer outreach efforts. Even more simply stated, a strong understanding of customer satisfaction is the same thing as knowing what makes your customers happy.
Closely married to this customer satisfaction explanation is the notion of what constitutes a proper customer service definition, or, in other words, what specific skill sets are required of your sales staff to augment customer satisfaction.
Professionals in the customer relationship management field routinely note in customer satisfaction articles that customer valuation efforts mean, “treating different customers differently.” This pithy notation recognizes the existence of the two components of customer valuation:
- Customers have different monetary value to the company
- Customers have different expectations of the business
In other words, when arriving at a customer value definition, it is best to consider it in terms of how much money can your business hope to earn from a client, and how much work will you need to go through to get that money.
What makes the customer tick? That question is at the heart of the debate when savvy business owners come together to figure out how they should attempt to expand their marketing outreach. Just like you, these men and women know the importance of customer satisfaction, and that’s because they also understand the benefits of customer satisfaction. Those paybacks include return business, a loyal clientele, positive word of mouth, and increased profits to your business among other advantages.
As a business professional operating in a competitive market, you understand the costs associated with drawing customers into your establishment. Marketing and advertising efforts can eat up an increasingly large proportion of any operating budget, so it just makes sense that you would want to keep those customers that you attract around longer than the time it takes to complete a single transaction.
Six factors showing the importance of customer satisfaction:
- Leading Indicator of customer loyalty
- High customer satisfaction sets a business apart in the mind’s of consumers
- Reduces customer turnover
- Eliminates negative word of mouth
- Boosts customer lifetime value through repeat business
- Retaining customers is cheaper than finding new ones
Transforming a portion of your marketing budget into customer retention efforts is an excellent use of finite marketing resources. Once you have attracted the notice of a customer, and have initially wowed them with great customer service, just a small continuing investment has the potential to keep that customer a lifelong contributor to your firm’s economic success. According to industry experts, a satisfied customer can contribute significantly to a company’s bottom line. Consider these facts when thinking about totally satisfied customers:
- Compared to a “somewhat satisfied” customer, a “totally satisfied” customer provides 2.6 times the revenue to the business
- A “totally satisfied” customer provides 14 times the revenue to company coffers than the “somewhat dissatisfied” customer
- A “totally dissatisfied” customer will actually decrease revenues equal to 1.8 times what a “totally satisfied” customer contributes to your profit margins.
Customer satisfaction drives in repeat business and repeating business drives up revenues at a substantially lower cost than acquiring new customers. When business owners keep this fact in mind, they do very well in even the most competitive of business environments, and that is one of the leading benefits of customer satisfaction.
Measuring Customer Service
Considering the importance of customer satisfaction, it behooves the nervous business owner to track the metrics that continually provide a feeling for the pulse of customer satisfaction rates. A myriad of metrics are available to track customer satisfaction rates, but care has to be taken on limiting the sheer barrage of information that will accompany following too many metrics. That being said, there is no stand-alone metric that will give you a cogent view of your entire customer service operation, so a judicious blend of metrics aimed at measuring customer satisfaction methods is necessary. As such, what is the best metric to measure?
A good starting point is discovering the value proposition of your company. Value proposition is a fancy way of saying what your company does well, and what your competitive advantage as compared to your competition. For instance, do you specialize in delivering an amazing customer experience, or cultivating an image of a cost effective and efficient operation? If the former, you will want to utilize customer satisfaction metrics that gauge the customer experience with an array of surveys designed to single out signs of customer loyalty, while the latter will build on metrics that look at efficiency and productivity as a measure of how customers view your pricing structure.
To judge customer satisfaction, many businesses turn to an analysis of their net promoter score. This index measures a customer’s willingness to recommend a company’s products or services to friends and family members. A numeral index that runs from -100 to 100, the net promoter score is used to gauge the overall loyalty of a customer and measure their satisfaction with your company.