It is one of the first things you learn in marketing: it is cheaper to retain a current customer than to acquire a new customer.

In most industries, this is true. In my experience managing marketing and advertising budgets for both B2C and B2B companies of all sizes, the math was always the same. The best performing acquisition tactic was paid search. Even with really good ROIs, the cost to acquire that first purchase was always higher than a repeat purchase I could obtain via email – my top retention tactic. The difference in results made it hard to put the results into graphs together. Retention tactics were by far the most efficient marketing campaigns.

And yet as marketers, we spend most of our time, energy, and budgets on acquisition tactics. Feeding the funnel profitably with new customers is our main focus. But if the average conversion rate for e-commerce is three percent, shifting some of the focus and budget from acquisition to retention could be more profitable in the end. If it costs six or seven times more to acquire a new customer than to retain a customer, increasing customer retention, or customer lifetime value, has to be a focus for marketers working to efficiently manage their budgets. One of the best ways to increase customer retention is through customer satisfaction. And at a time when companies are finding it harder and harder to compete on price, creating a great customer experience can be the differentiator between a one-time customer and a loyal customer.

But how do companies begin to tackle the process measuring and addressing customer satisfaction? Creating a culture of putting customer first can be daunting – especially if there is not buy-in from the top. Results speak louder than any industry statistics. Creating a business case with supporting data is the first step in the process.

There are many ways to go about gathering information on customer satisfaction. Do a search on Google for “customer satisfaction tools” and there are more than 70 million results. Companies can begin to tackle customer satisfaction in several ways. Monitoring social media can provide insights into specific problems or overall sentiment. There are tools that will execute online surveys while on the website. Emails with links to surveys can be deployed after predetermined events, like post-purchase or a customer service call. Customers can be surveyed over the phone. Focus groups can provide feedback in-person. All these actions generate data and insights that can help your organization be successful.

Customer Satisfaction Surveys

Customer satisfaction surveys can be a quick and relatively inexpensive way to start to track and measure customer satisfaction. Basic survey tools provide intuitive interfaces to create survey questions. Customer lists can be loaded via a file into the survey tool and an email deployed with a survey link. And this isn’t a huge investment in time — it can be done in a matter of hours.

Customer Satisfaction Metrics

Surveys provide data. Ensuring that the right data is being collected is key. Finding the key question that summarizes customer satisfaction is the Holy Grail and measuring results over time speaks to customer satisfaction changes.

Many companies rely on the Net Promoter Score (NPS®) for this purpose. NPS was developed by Satmetrix and is used by leading companies around the world to measure customer satisfaction. NPS is one question and a calculation of results.

Question: How likely are you to recommend us to a colleague or friend?
Answers are 0-Not Likely at All to 10-Extremely Likely.
You calculate the score by taking your percentage of promoters minus the percentage of detractors.

NPS survey

Tracking changes in the NPS over time can be a leading indicator of overall customer satisfaction and changes in relation to satisfaction.

Forrester Research has developed its own strategy that takes NPS a step further. Forrester Customer Experience Index (CXi) seeks to answer the “why” of customer satisfaction. CXi explores customer perceptions in regards to needs being met, ease of use, and enjoyment.

Whether companies leverage the NPS or Forrester system, asking the same question over a period of time and monitoring the results will lead to greater insights into customer satisfaction.

Survey Development

When crafting a customer satisfaction survey, determine what is to be measured. Overall satisfaction, website usage, customer service engagements, and product performance can all be topics to explore. But explore them one at a time. Create a survey that is focused on one area to start. Once the goal of the survey is set, questions can be developed that will help to determine satisfaction and identify areas for improvement.

When developing a customer survey, there are some best practices to keep in mind.

  • Determine your satisfaction question. If using NPS, ask that question first and include that question in every survey to determine changes over time.
  • Ask how satisfied the customer was with their overall experience. This can be a secondary measurement question.
  • Limit the number of questions. 10-15 questions are the norm.
  • Be consistent with the rating scales. Pick 1-10, 1-5, Very Satisfied/Very Unsatisfied.
  • Make the rating scales quantifiable for reporting.
  • Limit the number of open-ended questions.
  • If “Other” is an answer option, provide a text field to gather additional information.
  • Ask for contact information for follow up, but don’t require it.

Deploying the Survey

Getting people to fill out your survey can be a challenge. People are busy and have short memories. The survey process needs to be quick and painless.

  • If possible, deploy a survey quickly following the interaction to be measured, i.e. purchase, customer service call, or live chat.
  •  Incent survey completion. Achieving statistical significance requires a number of survey completions. Test which incentive is the most cost effective for your customers. This can include entries to win prizes, gift cards upon completion, or discounts for a future purchase.
  • Make sure the survey data can be exported for further analysis.

Survey Results

Regularly look at your survey results. Don’t waste customers’ time if survey results are not going to be reviewed. Develop a standard format in which to report and review survey results to quickly identify changes over time and issues that need to be immediately addressed.

  • Develop a plan to address detractors’ issues immediately. Follow up on issues and find resolutions.
  • Create a dashboard of high-level information that can be shared among departments.
  • Track survey response rates over time and plan tactics to improve response rates. Average response rates are 10-15 percent.
  • Deploy reminder emails to increase response rates.

Conclusion

Increased customer satisfaction can lead to increased customer lifetime value. Increased customer lifetime value and satisfaction leads to higher growth rates. Tracking customer satisfaction over time can identify areas for improvement for companies and lead to higher profitability and revenue. These are some easy ways to get started on the path toward a more customer-centric organization.

The ultimate goal in measuring customer satisfaction is a chart that shows the increase in customer satisfaction over time and the resulting revenue or profitability. Who can argue with those results?

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