6 Customer Satisfaction Metrics To Create a Culture of Customer Care

Among the most crucial things to know are the kind of metrics you should be using, in what context they should be used, and who among your employees should use them. It’s also a good idea to develop an understandable language surrounding the metrics that simplifies things for your team. Your customer’s level of satisfaction should be measured just like you would measure your employees’ performance, your website’s traffic, and your revenue.

According to HubSpot:

“Customer satisfaction is important because it helps you solve problems, prevent churn, and identify happy customers that can become your advocates and evangelists. It’s an essential step in the process of building customer loyalty, creating customer delight, and generating positive word-of-mouth. If you don’t measure customer satisfaction, you can’t identify unsatisfied customers that could churn or leave you negative customer reviews. You also can’t identify happy customers you could activate as evangelists or referrers. Finally, you can’t predict, prevent, and proactively plan to prevent customer churn without metrics to analyze.”

At Millennial Services, we invest a lot of resources in helping our clients measure their customer satisfaction metrics. By studying these metrics, we’ve created a strong brand image, established loyalty among our audience, decreased churn, and reduced time and money invested in customer support.

In this article, we’ll go over the customer satisfaction metrics that we pay the closest attention to at Millennial Services. But first, let’s look at a few of the benefits that come with managing customer satisfaction metrics.

1. Customer Satisfaction Metrics Help You Know Where Your Business Excels and Where It Underperforms

By tracking and analyzing customer satisfaction metrics, companies can gain better insight into what they do well and what needs improvement. The best way to find out these things is to frequently conduct customer satisfaction surveys. Customer feedback is essential in identifying satisfied customers and what your business did that pleased them.

You can use this information to continue doing those things, as well as reward employees for going out of their way to satisfy customers. Improved customer retention will be the result of your efforts, including the following benefits:

• Your satisfied customers are more likely to include word-of-mouth marketing (or WOM marketing) in their daily dialogues with family, friends, and business associates. This is essentially free customer acquisition. Depending on which industry your company operates in, this could save you anywhere from $7 to nearly $1,000 per person, according to Startup Talky.
• Retaining your existing customers is a lot cheaper than acquiring new ones. Rather than spending money trying to get old customers back, it can be invested in acquiring new customers on top of the ones you already have. That’s because customer acquisition never stops, and not having to play catch-up helps a lot!
• Software as a Service (SaaS) ecommerce platform BigCommerce recently reported that “repeat customers are responsible for 40% of a store’s revenue.” The report further points out that 8% of loyal, repeat customers make up 40% of overall revenue. In other words, loyal, repeat customers spend more!

2. Customer Satisfaction Metrics Help You Close Gaps in Customer Satisfaction

Where is your company falling short when it comes to customer satisfaction? Is your brand falling short? Finding the gaps in customer satisfaction will outline where improvements can be made in your strategies. It’s difficult if not downright impossible to make changes to products or services when you don’t understand why your customers are unhappy. Once again, analyzing the results of customer satisfaction surveys and responding to negative feedback allows you to fill in those gaps.

Typically, the tougher the feedback is to read or hear, the more valuable it is to prevent customer churn. Also, providing customers with a venue to vent their frustrations may prevent them from doing so in online reviews. Negative reviews on product pages, review sites, social media, and negative word-of-mouth is particularly damaging to brands.

3. Good Customer Satisfaction Results in More Customer Loyalty and Endorsement

Organizations with positive customer satisfaction most likely have plenty of customers who are loyal to their brand. Many of them refer new, strong leads to that brand while generating testimonials for their marketing teams. Creating a customer advocacy program for your customers motivates them to promote your business.

Such programs reward your customers for their lead referrals. This incentivizes joining the program and providing special offers or gifts in exchange for testimonials and reviews. Creating mutually beneficial relationships with your best customers strengthens their loyalty, and there is nothing wrong with that!

4. Customer Satisfaction Helps Your Marketing and Sales Teams Work More Proactively

Without customer satisfaction metrics, customer success teams find it more challenging to prepare and advise other teams on the condition of their customer base. On top of that, customer satisfaction metrics are beneficial for the other departments in your company.

For example, sales teams can be provided the data to improve customers’ experiences. Research and development teams could incorporate customer feedback into improvements on products and services. Marketing teams could develop ways to enhance the end-to-end customer experience. If company leadership wishes to forecast team performance monthly, quarterly, and annually, data about trends is required to create a solid strategy.

Customer satisfaction metrics are numerical scores that represent the current state of customer experience. Common metrics used to evaluate customer satisfaction include the following:

• Customer Lifetime Value (CLTV)

• Customer Health Score (CHS)
• Customer Churn Rate (CCR)
• Customer Effort Score (CES)
• Net Promoter Score (NPS)
• Customer Satisfaction Score (CSAT)

1. Customer Lifetime Value Score (CLTV)

The CLTV metric represents the revenue that your company generates from customers over the expected lifespan of the customers’ relationship. Below is the data you will need to calculate your CLTV metric: 

• Start by calculating the Average Transaction Value (ATV) or Average Order Value (AOV) on a product and/or service over a year divided by the number of purchases.
• Calculate the number of times that customers make purchases in a specified period or Purchase Frequency (PF). For example, divide the total number of purchases by the number of people who made them. From that, you will know how many times each customer has made a purchase within the time you’ve specified, typically annually.
• Now multiply those two totals together to obtain the annual average customer value (ACV).
• Next, establish the Average Customer Lifespan (ACL) or the length of their relationship with your company.
• Lastly, multiply the average ACL by the annual ACV to get the CLTV.

2. Customer Health Score (CHS)

Your business’ CHS metric attempts to predict how likely it is that a customer will remain with your brand over a certain period. CHS allows you to pinpoint patterns of behavior such as:

• A customer’s willingness to respond to your surveys.
• The number of times a customer interacted with your support team.
• The amount of money a customer has spent with your brand over their lifespan.
• The product lifetime or product lifespan (the interval of time from when a product and/or service is sold to when it’s discarded).

While these parameters vary from one business to another, the objective is the same—categorize your customers into weak, at-risk, and healthy. After classifying them, determine purchase habits among specific kinds of customers and nurture your relationship with them appropriately.

3. Customer Churn Rate (CCR)

Your CCR is an essential metric that assesses the rate of how many customers have downgraded or canceled service subscriptions. Measurements are recorded over a predefined period. The CCR indicator is especially helpful to SaaS-based businesses that offer subscriptions. If you notice that customers are opting out before they compensate for acquisition costs, it’s a good idea to reconsider your approach and reexamine your playbook. To calculate your CCR metric, follow these steps:

• Specify the length of time you want to calculate customer churn. Companies typically set these periods at six to 12 months.
• Next, at the end of your chosen period, subtract the number of users from the number of users you had at the start of the period.
• Take the resulting number and divide it by the number of users you had at the start of the calculation period.

4. Customer Effort Score (CES)

The CES metric measures your customers’ effort in doing business with your organization. You calculate CES metrics using survey data that questions how straightforward or problematic it was for your customers to perform certain tasks and accomplish specific objectives with your brand. Examples include seeking support from customer support, resolving issues, and returning or replacing products. For SaaS-based businesses, this likely includes downgrading and canceling services.

We like to send a CES survey after any interactions our customer service agents have with a client’s customers. This includes utilizing CES surveys to measure how satisfied customers are with each of our agents. In this way, our customer service department can refine their performance. This helps us continue to provide our clients’ customers with superior customer support.

5. Net Promoter Score (NPS)

The NPS metric is widely used and gauges the brand loyalty of customers. It essentially conveys whether customers are willing to recommend your brand to people they know. It also shows you people who are everything from lukewarm to ice-cold when it comes to your company. Knowing about these types of consumers is equally as important as knowing about consumers who love your brand — you can learn just as much from detractors as you can from promoters!

• Customers who give your brand scores ranging from 0 to 6 should be considered “detractors”. A detractor is “a person who disparages someone or something,” according to the Oxford Dictionary. In other words, these individuals have no loyalty to your business and might even go as far as to say negative things about it.
• Customers who rate your brand with a score of 7 or 8 should be considered “passives”. Passives are conditionally loyal to brands, which means that they would likely switch brands if offered better options. Depending on what makes them passive towards your brand, you may or may not be able to turn them into loyal customers.
• Those customers who rate your brand with a score of 9 or 10 are referred to as “promoters”. Promoters are the holy grail in the world of business because they’re extremely devoted to brands they love, recommending them to family and friends.

The NPS metric is routinely used to gain an understanding of customers’ brand loyalty. Nonetheless, it’s used to gauge customers’ satisfaction with specific services and/or experiences. You might need to modify the questions in your surveys, depending on what you’re measuring. Below are a few examples:

• Please rate on a scale of 0 to 10 the likelihood of you recommending [product/service name] to others based on your experience. Thanks for helping us improve [product/service name]!
• On a scale of 0 to 10, based on the customer service you recently received, how likely is it that you will recommend our brand to others?
• On a scale of 0 to 10, how likely is it that you will recommend our business to others using our referral program?
• On a scale of 0 to 10, how likely is it that you will recommend our company to others after our latest software update?

6. Customer Satisfaction Score (CSAT)

The CSAT metric measures customers’ satisfaction surveys that prompt them to rate their experiences after purchases and customer service interactions. You’ve likely seen such surveys pop up on your computer screen after purchasing a product or service or preceding a customer service interaction. Many CSAT surveys incorporate emojis and numbers representing experiences ranging from poor to outstanding. CSAT metrics can be between 0% and 100% depending on the responses.

Whether customers give your company a low or high score, CSAT surveys often include follow-up questions. These questions are intended to help you understand why the customer gave a certain score. They’re typically open-ended questions that will be unique to your business. Here are a few examples.

• What, if anything, would you like to see us change concerning our [product/service/brand]?
• Thanks for participating in our survey. It helps us correct issues and improve on our [product/service/brand]. In our effort, we would like to know the reason for the score you gave us. Thanks!
• Did you encounter any issues while making your purchase? If you did, please share your experience with us! If you have any suggestions, we would love to hear them.
• Thanks for doing business with us! If there is anything we could do to make your experience even better, feel free to let us know!

There is an old saying that goes, “Only your best friends tell you what you really need to hear about yourself.” In a way, customer satisfaction metrics are similar to best friends that tell you the real truth, whether it hurts your feelings or not. With that said, it’s not a good idea to set up customer satisfaction metrics with a preconceived idea of what you want to see. You have to be ready to face facts when they are presented. This means that customer satisfaction metrics must be applied honestly and authentically.

While de-escalating tense situations, giving away freebies, and ensuring customer satisfaction is important, we believe in making emotional connections with customers. It’s true that many customers find filling out surveys and feedback somewhat of a headache. However, those customers that do take the time to fill out your surveys and provide feedback make the effort worthwhile. This makes treating each and every customer the same of the utmost importance because you never know which one of them will become your brand’s advocate.

If you feel that your brand needs assistance in fostering customer satisfaction and tracking your metrics, contact us today! Our team here at Millennial Services love to see our clients succeed. That is exactly why we tailor inbound client solutions to the customer, ensuring they are designed to bring the best results.