For brands eager to grow, measuring customer satisfaction is vital. The cost of customer acquisition has increased substantially while the average lifetime value has declined.
According to Marketing Metrics, the probability of selling to an existing customer is 60-70% compared to just 5-20% for a new customer.
Customer attrition is at an all-time high in the e-commerce space because the market has reached a saturation point in terms of products. Faced with growing overheads, online businesses need to focus on differentiating themselves from the competition to survive in the $3.53 trillion US e-commerce industry.
Customer churn has sharply come into focus as businesses look for ways to re-engage with dissatisfied customers and hopefully keep their business.
How to Interpret Customer Satisfaction Data
According to a study by Aspect Software, 54% of customers chose to stop buying from a company due to poor service in 2017, up 5% from the year before.
It is clear from the findings of the study that customer experience drives revenue. For this reason, businesses need to shift focus from efficiency metrics like Average Handle Time or First Contact Resolution to customer impact metrics like Customer Satisfaction (CSAT) and Net Promoter Score (NPS).
In other words, listening (read measuring) to the Voice of the Customer (VOC) is now more important than ever before. While a lot of these metrics may sound like complicated jargon, they can help online businesses fundamentally shift their thinking about customer satisfaction.
Many companies interpret VoC data differently and even use different industry-specific terminology that can get confusing for an outsider. However, the tools for data collection used remain largely the same: surveys, reviews, data analytics, and social media monitoring.
Here are some best practices you can use to cut through the jargon and measure customer satisfaction objectively, improving ROI for your brand:
Net Promoter Score (NPS)
Developed in 2003 by Bain and Company, this metric can help you measure the overall customer satisfaction rate of your brand.
Under this method, respondents usually rate a company on a scale of 0-10 in response to the following question: How likely are you to recommend us to a friend?
Each point on the scale is assigned a value that is then used to segment the customer into one of three categories: Promoter (between 9 and 10), Passive (between 7 and 8), or Detractor (between 0 and 6).
Since NPS is not transaction-specific, you can get objective insights into the customer’s level of engagement with your brand. In addition, it is also a precise representation of the overall customer sentiment.
Calculating NPS is simple. All you need to do is subtract the detractors from the promoters to arrive at your NPS score.
So, Net Promoter Score = (% of Promoters) – (% of Detractors)
For example, you’d have an NPS of 5%, if there were 25% Promoters and 20% Detractors with the rest being Passives. However, NPS scores can change rapidly over a period of time and multiple passes may be required.
Customer Effort Score (CES)
CES is useful for assessing how easy customers find interacting with your store. This can give you an insight into the user-friendliness of your store, for example, how easy it is for customers to reach the support team or to navigate around your site. It is measured by asking customers a question like: On a scale of 1-7, how easy was it to find help today?
CES can help your team estimate the probability of future purchases from a given customer segment. According to the Harvard Business Review (HBR), 94% of customers who found the buying experience with a brand easy were likely to purchase from them again.
On the other hand, poor CES can negatively impact referrals and word of mouth publicity. HBR’s study further showed that 81% of customers were likely to spread the word about a bad experience. Unlike NPS, however, CES is not an effective measure of the overall relationship of a customer with your store and does not provide useful data for segmentation either.
CES can be calculated by dividing the total number of responses with the number of yes responses.
Therefore, CES = (Total number of Yes responses X 100)/All responses
Here’s what CES scores mean:
- O-3 Needs Improvement
- 4-5 Meets Customer Expectations
- 6-7 Exceeds Customer Expectations
It is important to read through the comments left by customers to put the CES scores into perspective. For example, some customers may give you a pass score based on the final outcome alone, disregarding the number of attempts they may have had to make to reach a customer support agent.
Customer Satisfaction Score (CSAT)
CSAT surveys can be tailored to a number of key business areas – from sales to product features – in order to understand the customer’s experience with your store. With it, you can measure the customer’s overall satisfaction with a specific transaction or overall. In this method, customers are asked to rate their experience of a scale of 1 to 5 to indicate whether they considered their experience to be satisfactory or not.
CSAT survey forms with a free text area can help your brand get objective feedback from customers about the specific reasons behind the ratings provided.
Correlated with NPS and CES, CSAT data can provide in-depth information about how customers perceive your service and help you identify the areas that need improvement.
CSAT can be calculated by dividing the number of satisfied customers with the total number of responses.
So, CSAT = (Satisfied CustomersX100)/Total number of Responses
For example, if 50 out of 100 respondents rate you a 5, then you’d have a 50% CSAT score.
Repeat Rate
For an online store, repeat customers are worth their weight in gold. Not only are they likely to give you the best reviews but they typically end up buying much more than the average visitor to your site. If you’re looking to grow your average order values, these are the customers to target. Therefore, Repeat Rate or the number of times a customer comes back to your online store to make another purchase is a metric that you’d need to watch very closely.
Calculating Repeat Rate is very simple, all you need to do is divide the number of repeat customers by the total customers who bought from you in a given month and multiply it by 100.
It follows that Repeat Rate = (Repeat Customers X100)/Total Customers
For example, if you had 12 customers buying for the second or third time from your store out of a total of 40 shoppers, your Repeat Rate would be 30%.
Final Words
To get the most value from your customer service satisfaction surveys – both quantitative and qualitative – give customers the opportunity to provide additional feedback through free-text responses. This can help you capture insights that you might have otherwise missed out on.
In fact, the best customer service surveys:
- Use everyday language to frame survey questions
- Limit the number of questions to no more than 7-10. Why? Attention spans are getting shorter by the day and too many questions can lead to customers’ opting out of the survey entirely.
- Don’t make the customer think too hard. Avoid misleading or assumptive questions.
- Offer something of value in return for the customer’s time. For example, reward points or discounts.
Measuring customer service satisfaction is only going to be worth your time and money if you act on the data you collect. Start with a SWOT analysis to identify the top 3 priorities in terms of process improvement and online user experience. Reevaluate your returns policy, warranty terms and conditions, and order fulfillment turn around times to keep up with the growing expectations of your customer base.
Regular customer satisfaction surveys are perhaps the last line of defense for online stores and small businesses. Failure to empathize with customer concerns can manifest in negative reviews across social media or review sites where they can cause much greater damage. Creating a positive customer experience requires an ongoing investment of time and effort.
If your existing priorities do not allow you to give your customers the attention they deserve, consider bringing in an experienced customer support outsourcing provider like SnagtheSale.
Our team takes charge of your customer support needs right away, helping you create better value in the process. Our USP is a team of US-based, multi-domain experts who know how to efficiently and confidently drive positive outcomes for your business, whether it is answering customer questions or closing sales. What’s more, we don’t sweat the small stuff – you get our 100% zero-risk guarantee for unmatched flexibility at an unbeatable price.