Understanding whether customers are happy or satisfied with your products and services is essential for any small business. That’s why there are metrics to help you measure customer satisfaction and loyalty and understand how to use the information gained to improve customer experience.
However, with numerous customer satisfaction metrics available, small businesses may need help determining which ones to focus on for the best results.
In this post, we’ll guide you through 5 essential customer satisfaction metrics that your small business should focus on to gauge customers’ happiness, ensure retention, and drive growth.
Read: Why Customer Satisfaction Is Important in Business
What is Customer Satisfaction Metrics?
Customer satisfaction metrics are the quantitative measures that small businesses use to monitor and improve customer experience. These metrics help companies to assess customer service, product quality, and overall customer experience.
Why You Should Measure Customer Satisfaction
- Customer satisfaction metrics help you better understand what your customers want and expect from your business. This allows you to tailor your products, services, and overall experience to meet their needs.
- These metrics provide valuable insights into where your business may need to catch up. Hence, you can pinpoint specific areas that require improvement regarding customer satisfaction.
- Measuring their effectiveness is essential if you have implemented new customer service strategies. Customer satisfaction metrics allow you to track whether these new initiatives positively impact your customers’ experience.
- Happy customers are more likely to recommend your business to others and leave positive reviews. By monitoring customer satisfaction, you can identify opportunities to exceed expectations and create loyal brand advocates.
5 Key Customer Satisfaction Metrics
When measuring customer satisfaction, it’s crucial to have a balanced scorecard view. Thus, evaluating your performance with more than one metric is advisable. You must gain insight from several customer satisfaction metrics to fully understand customers’ needs and areas for improvement.
This section will discuss five customer satisfaction metrics you can use for your business.
1. Net Promoter Score (NPS)
The net promoter score is a customer loyalty metric that measures how willing customers are to recommend your product to others. It is calculated based on responses to a single question, usually on a scale from 0 to 10.
- Those who respond with a score of 9 or 10 are labeled as Promoters
- Respondents who provide a score of 7 or 8 are labeled as Passives
- Scores from 0 to 6 are labeled as Detractors
The NPS is then calculated by subtracting the Detractors’ percentage from the Promoters’. This score can range from -100 (everybody is a Detractor) to 100 (everyone is a Promoter), offering a clear and straightforward insight into your customer base’s loyalty and satisfaction levels.
For example, an NPS of 70 indicates a strong likelihood that a company’s customers would recommend its products or services, signaling high customer satisfaction and loyalty.
Why Should You Use NPS?
NPS is a widely used metric because it’s simple and effective. It gives you a clear indication of your customers’ sentiment towards your brand and can predict growth. It also allows for easy comparison with competitors and can uncover areas of improvement.
2. Customer Effort Score (CES)
The customer effort score measures the ease with which a customer can resolve his/her issue or complete a task, like making online purchases. CES focuses on the actual effort the customer has to exert, and it is intended to be a better indicator of customer loyalty than customer satisfaction.
CES is typically measured by asking customers to rate the ease of their experience on a scale from “Very Easy” to “Very Difficult.” A lower score indicates that customers found the process effortless, which implies higher satisfaction levels. By pinpointing moments of friction within the customer experience, businesses can identify areas for improvement, leading to a smoother customer journey and increased retention.
For example, if customers rate their experience of returning a product as “Very Easy,” this positive CES indicates that the return process is efficient and user-friendly. Hence, the customer will perceive the brand positively, increasing the chances of future purchases.
Why Should You Use CES?
High-effort experiences make customers more likely to go to a competitor, regardless of how satisfied they are in other ways. This makes CES a vital metric for businesses to track and improve upon. By reducing customer effort, companies can increase satisfaction and loyalty, leading to higher retention rates and, ultimately, increased revenue.
Moreover, since CES directly impacts customer loyalty, you can also use it to predict future behavior. Customers with a positive CES will likely continue doing business with the company and recommend it to others. On the other hand, those with a negative CES may intend to stop their patronage. Hence, you will need to take immediate action to retain them.
3. Customer Acquisition Cost (CAC)
Customer acquisition cost helps you understand how much your business will spend to acquire a new customer. It not only includes
direct marketing and advertising costs but also considers the salaries of your marketing and sales teams, the technology and tools used in the acquisition process, and any outsourced services that contribute to attracting new customers.
CAC is a crucial metric in evaluating the effectiveness of your marketing strategy and ensuring sustainable growth. By tracking CAC over time, businesses can identify trends, make informed budgeting decisions, and invest in the most efficient channels for customer acquisition.
You can calculate this metric by dividing all the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired after the acquisition process. For example, if a company spends $1000 on marketing in a month and receives 50 customers, the CAC for that month would be $20 per customer.
Why Should You Use CAC?
Knowing your CAC is essential for strategic planning. If acquiring a customer costs more than they’re worth, you’ll be on the fast track to bankruptcy. By calculating CAC, you can determine whether your customer acquisition costs are too high or too low and what adjustments need to be made.
4. Customer Health Score (CHS)
The customer health score looks at overall satisfaction, engagement, and likelihood of renewal in business-to-business contexts. It can help predict churn and give an overview of the customer lifecycle.
CHS is typically assessed using a combination of data points, including product usage frequency, customer support ticket activity, payment history, and survey feedback. This multifaceted approach allows companies to create a detailed profile of each customer’s engagement level and satisfaction.
For instance, a customer who frequently uses the product pays invoices on time and provides positive survey feedback would have a high CHS. Conversely, a customer who randomly uses the product makes late payments and gives negative survey responses, which signals a churn risk. By monitoring these indicators, businesses can proactively address potential issues to enhance satisfaction and retention.
For example, a software company might calculate a customer’s health score based on login frequency, feature usage, support ticket frequency, and NPS score responses. A high score could trigger an account manager to engage in upselling or advocacy efforts. In contrast, a low score may prompt a check-in to uncover and resolve any underlying problems.
Why Should You Use CHS?
CHS is a proactive way for businesses with subscription models to manage and retain customers. It often predicts when a customer relationship is at risk and addresses issues before they become problems.
5. Customer Satisfaction Score (CSAT)
CSAT is typically measured through customer surveys, asking customers to rate their satisfaction with a business’s product or service. These ratings are often on a scale from 1 to 5, where one represents “very dissatisfied” and five means “very satisfied.”
The CSAT score is then calculated as the percentage of customers who gave the top two ratings—4 for “satisfied” and 5 for “very satisfied.” For example, if a software company sends out a CSAT survey after a product update and 80% of the respondents rate their satisfaction as 4 or 5, the CSAT score would be 80%.
Why Should You Use CSAT?
CSAT is very versatile and easy to measure. It can gauge satisfaction with specific interactions, services, or products. It can also track customer satisfaction over time and monitor trends. CSAT can also provide valuable insights into customer needs and preferences, helping businesses improve their offerings.
Customer Satisfaction Metric Examples
Now that we have discussed the five customer satisfaction metrics you should focus on, here are two real-world customer satisfaction metrics examples.
1. MasterClass NPS Survey
MasterClass, an online education platform, sends users an NPS survey after they complete a course. The survey has one question: “How likely are you to recommend this course to someone like you?”
The scale ranges from one to ten, with one being “not likely” and ten meaning “very likely.” MasterClass sends in the survey immediately after the course. This way, the user’s experience is still fresh in their mind, ensuring the company gets the best results.
2. McDonald’s Customer Satisfaction Survey
McDonald’s, the number one burger brand, prioritizes customer feedback through surveys. A survey code on McDonald’s receipt leads customers to McDVoice, an online portal for customers to take surveys.
The survey asks customers to rate their satisfaction with the taste, temperature, speed of service, crew friendliness, restaurant cleanliness, and order accuracy. The rating system ranges from highly satisfied to highly dissatisfied.
It also requires customers to rate their satisfaction with the product from delighted to highly dissatisfied. Other parts of the survey focus on NPS. McDonald’s survey is detailed, enabling them to get in-depth insight into customer satisfaction levels to address the issue adequately.
Final Thoughts
Capturing customer satisfaction is an ongoing process, and customer satisfaction metrics are your means of doing it effectively. However, it’s more than just collecting data. How you interpret and use the data to drive actionable insights that enhance customer experiences also matters.
Identifying which metrics work best for your business model and consistently collecting and analyzing this data will help you satisfy your customers’ needs.
Read: Proven Strategies on How to Keep Customers Satisfied
Frequently Asked Questions
There isn’t a single ‘most important’ metric. It depends on your industry, business model, and goals. Instead of using a single metric, combining them provides the most valuable insight into measuring loyalty and satisfaction.
Measure and review customer satisfaction regularly. The frequency could depend on your business cycle or customer touchpoints. For example, you might measure NPS quarterly but the CSAT after each customer service interaction.
If your scores are consistently low, it signals a need for improvement. Always respond to feedback with actions, look for patterns in feedback, and consider customer service training, process improvements, or product enhancements.
Many survey and feedback tools, like SurveyMonkey, Typeform, or Google Forms, offer free or affordable plans. You can also use social media, email feedback requests, or direct website surveys. However, you must ensure your tool is easily accessible to your customers.
Yes, industry benchmarks can be helpful, but you must customize them to fit your business. While industry benchmarks can provide perspective, every business and the factors that affect customer satisfaction are unique.
