Customer satisfaction

What is customer satisfaction?

Marc Thomas
Co-founder

Customer satisfaction helps businesses and organisations to get a picture of how they're doing according to their customers. It can be used to improve your business. This post gives you an intro into the idea.

Say what you like about them, but Amazon have great customer service. A few years ago, I bought an electric toothbrush on their site. I used it for about 6 months and then the battery life started to dwindle.

‌I jumped onto live chat through my Amazon account and told the customer service representative what was happening. Within 10 minutes, they had sent out a new toothbrush to me and also arranged for someone to come to my house and pick up the broken toothbrush. I didn't even need the packaging.‌

If I were a bricks and mortar toothbrush store (a pharmacy, I guess), I'd be shaking in my boots? And why's that?

92% of consumers trust recommendations from friends and family. And now, if I ever hear anyone mention an electric toothbrush in future, I'll be sure to tell them they should buy from Amazon. The main motivation for me telling them is because I was, and continue to be, a satisfied customer.

And that's not the only important stat. According to research, a repeat customer spends67% more than a new customer.

What is the simplest definition of customer satisfaction?

There's a whole range of great definitions of customer satisfaction but because there's a massive range of people writing about the topic, there's also a great variation in the kinds of definition you get:

The Marketing Study Guide says that a 'nice, easy' definition might be:

Customer satisfaction is a consumer’s perception of how well an organisation has delivered on their communicated value proposition.

WOW! What a mouthful. Let's look at some other definitions instead.

For Hubspot, the simplest definition is:

Customer satisfaction is a metric used to quantify the degree to which a customer is happy with a product, service, or experience.

This works but it's maybe a little over-simplified because it doesn't take into account that you might also have poor customer satisfaction.‌

I really like what Neil Patel boils it down to here:

Customer satisfaction measures how your product, service, and overall experience either falls short, meets, or exceeds customer expectations.

This is good because it takes a holistic view and makes it quite simple to understand. You could be good in one area but bad in others.

What’s the difference between customer service and customer satisfaction?

You often hear customer service/experience mentioned in the same breath as customer satisfaction. So what’s the difference?

Customer service is focused on improving the experience of interacting with the brand. Customer satisfaction is about ensuring high levels of general satisfaction – including customer service. They’re almost always linked. If your customer service ranks high, you’re likely to have a high customer satisfaction score too.

Some people think of customer satisfaction as a ‘lag’ indicator – meaning that any negative effects have been felt by the time you discover them through a survey or similar. That doesn’t have to be true as we’ll see in this guide on creating a customer satisfaction strategy.

We’ll use the terms interchangeably in this guide. It’s just easier like that because they are so closely linked.

Customer satisfaction is like a weighing scale

A good visual metaphor for this would be a weighing scale. On one tray, you've got all the dissatisfied customers and on the other tray, you'e got all the satisfied customers.

Here are three things you might see:

Bad customer satisfaction

Weighing scales tipped to bad customer satisfaction

In this scenario, you've got way more customers who are dissatisfied with your product or service. They're unhappy about any number of things and if you don't do something to change it, you're going to see a decrease in turnover pretty soon. Poor customer service (which correlates with customer satisfaction) cost businesses $75 billion in 2018.

In order to get to a better state, you should focus on a combination of three things:

  1. Get dissatisfied customers to become satisfied (Main focus)
  2. Increasing the number of new satisfied customers
  3. Increasing the satisfaction of existing satisfied customers

Average customer satisfaction

Balanced scales showing equal number of satisfied and dissatisfied customers

Average customer service looks like a balanced scale. It's deceptive because despite balance looking good in most areas of life, when it comes to growing a business, you want the balance firmly tilted towards the positive – think profits, new customers, referrals.

In this scenario, you've got a good number of satisfied customers but also an equal number of dissatisfied customers. While your customer satisfaction may have improved, it is now very much in the 'meh' territory: it's not bad, but it's also not good. It's just... beige.

The strategy for overcoming average customer satisfaction is almost exactly the same as the strategy for overcoming bad customer satisfaction with one crucial difference:

When the scales are balanced, it is incredibly easy to tip them into your favour

Unlike before when getting the scales from bad to balance was tough and required a lot of work in the three different areas (fewer dissatisfied customers, more satisfied customers, more satisfaction for existing customers), now you can produce a positive impact by focusing on just one of those areas.

‌You're still not going to be outstanding until you make some big changes but at least you're on the right path once you start improving any one of those three factors affecting customer satisfaction.

Good customer satisfaction

Good customer satisfaction levels shown by a weighing scale tipped to positive

The nirvana of customer satisfaction is to achieve 100% satisfaction levels. This would be equivalent to your scales being tipped entirely to the 'Satisfied' end of the pivot.

In reality, 99%+ of organisations will never be able to achieve total satisfaction from their customer base. Perfection is really hard™️.

In order to maintain this good standing, you should focus on a combination of three things:

  1. Get dissatisfied customers to become satisfied
  2. Increasing the number of new satisfied customers (Main focus)
  3. Increasing the satisfaction of existing satisfied customers

Why should increasing the number of new satisfied customers be your main focus?

The most basic idea at this point is that if the majority of your existing customers are satisfied, then it's a good indicator that you're doing well already. In practice, this is a good indicator that if you add more customers to your company, they're likely to feel satisfied.

Of course, increasing satisfaction of existing customers is also great, as is decreasing the number of dissatisfied customers, but unfortunately, keeping new customers requires a lot of effort and you'll need to shift your focus onto them.

In fact, research shows that 55% no longer trust the companies they buy from as much as they used to. Getting a new customer to overcome that trust barrier is going to be a huge task but one that will pay off: 40% of business revenue in the US comes from repeat customers.

What does that mean?

If you create customers who are satisfied with your product or service, they will be more loyal and will spend more over the course of their time with your company.

What's next?

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