It's not just you: Industry research shows that customer satisfaction has steadily declined since 2018. Customer expectations are up, and customer satisfaction metrics are going down.
The good news is that companies that invest in customer experience see 1.7x faster revenue and 2.3x higher customer lifetime value. To keep your business healthy and your customers happy, we'll break down exactly what customer satisfaction metrics you should focus on. Then we'll show you a few examples of companies that are doing this well.
Are you ready to delight your customers? Let's get started!
What are customer satisfaction metrics? Customer satisfaction metrics measure how pleased customers are with your business. Metrics are useful for measuring customer service's progress towards satisfying customers.
In order to fully understand what these metrics are, what they measure, and how to use them, let's dive into each one.
Customer satisfaction is measured with Net Promoter Score, or NPS. It provides both quantitative and qualitative data about the customer's experience with your business because it is a simple, one-question survey.
By combining both types of data into one metric, businesses can categorize and identify specific trends in customer reviews. An NPS survey measures how likely customers are to recommend your brand to others. Customers are asked to rate their experience numerically and give a brief explanation of their rating.
By organizing and reviewing the highest and lowest ratings, you can find out what customers like and don't like.
In order to measure customer sentiment, you can survey your customers to find out their customer satisfaction score (CSAT). Customer satisfaction scores are similar to NPS in that they ask customers to rate their experience on a scale. Rather than asking about referrals, CSAT asks about specific products, services, or interactions.
How to Use the Customer Satisfaction Score (CSAT) Metric
Customer satisfaction surveys are one of the most fundamental ways to measure customer satisfaction. In contrast to NPS, CSAT allows businesses to ask multiple questions about different aspects of the customer experience. As a result, you will be able to get feedback about specific features of your product or service from your customers.
A customer effort score (CES) measures how user-friendly your products and services are. An initial customer experience survey is typically a one-question prompt that appears immediately after a customer has completed an action.
Ecommerce sites, for example, may ask customers how difficult it was to locate and purchase an item. You can use this information to remove any roadblocks that are impeding a customer's journey on your website or app.
The customer effort score provides your company with immediate feedback about the usability of your product or service. You may find that customers who are having trouble with your product are reluctant to provide feedback that specifically addresses their problems. The majority of people will either give up and cancel their subscription without ever explaining why, or they'll say your product is too confusing.
You can reach out to these customers and resolve usability issues before they churn because customer effort scores are proactive.
An abandonment rate is the percentage of customers who leave your company without completing an action or request. Abandonment rates can measure several aspects of your business, depending on your services.
Most call centers measure the queue abandonment rate for customer service calls and chats, for instance. According to LiveChat, 24.8% of customers leave a customer service queue before connecting to an agent.
You can measure the abandonment rate of shopping carts on your online store if you have an ecommerce site.
According to Baymard Institute, 70% of ecommerce shopping carts are abandoned due to a long or difficult checkout process or unexpected fees. Regardless of the product or service you offer, abandonment rates tell you about the quality of your customer service.
You can determine whether your business provides a consistent, omni-channel experience for customers by comparing abandonment rates across different components. You can pinpoint where exactly customers are dropping off and remove any roadblocks preventing their success if your rates are high.
Customer health scores provide an overview of a customer's satisfaction with your company.
Your historical customer data - such as CES, CSAT, and more - will be combined, and a color will represent how the customer feels. Red means they are at risk of churning, yellow means they have room to improve, and green means they are satisfied. Customer-facing employees can use this code to ensure they're providing the best service to unhappy customers.
It is also possible to retain customers who are in the yellow or red categories by using customer health scores. Your sales, marketing, and customer service teams can target these customers and provide them with offers that improve their opinion of your company.
You can convert these customers into customer advocates who will refer your company to other potential customers if you succeed.
In customer service, the first response time refers to the time it takes for the customer to receive a response or acknowledgement. It is directly related to how satisfied your customer is with your customer service response time.
According to LiveChat, companies using its software reply within 40 seconds on average. The average CSAT is 85% when a customer receives a response within five seconds. CSAT drops to 60% when a response takes more than two minutes.
Your first contact resolution rate shows how often support cases are resolved on the first attempt. Customers may become dissatisfied if their cases are not resolved quickly, or if they have to revisit the problem.
Support should be focused on getting this number as close to 100% as possible. Be consistent in entering metrics from a specific time period - such as a year, a month, all time, etc. - to ensure accuracy.
Customer service complaint resolution time is measured by this customer satisfaction metric. The time it takes to resolve a ticket is measured from the moment a customer submits a request to the moment it is closed.
According to LiveChat research, customer satisfaction decreases slightly with longer ticket resolution times. Even though you should track and aim to decrease ticket resolution time, it's not as important as first response time and first contact resolution.
Average ticket time, on the other hand, measures how long it took your team to resolve a complaint. The purpose of this is to help you determine how effective your team is and how you can appropriately staff it.
You can measure this by dividing your total labor hours by the number of complaints resolved during a given week.
As an example, you may have 80 labor hours if you had two part-time employees and one full-time employee. In a week, if you resolve 40 tickets, your average ticket time is two hours.
Customer retention is an excellent metric for measuring customer satisfaction. Using this rate, you can determine how many customers you have retained over a given period of time. You can assume your customers are more satisfied if your rate is higher.
You can calculate this by subtracting the number of customers you have at the end of a period from the number you have at the beginning of the period.
You can calculate your customer retention rate by dividing this number by the number of customers you had at the beginning of the period, multiplying it by 100.
Customer churn is the opposite of customer retention, measured as a percentage of lost customers. This number should be kept low since new customer acquisition is costly.
Depending on the industry, customer churn and retention can vary greatly. According to CustomerGuage, the Energy/Utilities industry has the lowest average churn rate at 11%. At 89%, they have the highest customer retention rate.
A high level of customer churn can be caused by a number of factors, including customer service, pricing, and product quality. You need to investigate what's impacting your customer satisfaction if your customer churn percentage is increasing.
Retaining customers has already been discussed. In addition to touchy-feely reasons, customer satisfaction can have real financial impacts.
A simple way to calculate customer lifetime value (CLV) is to multiply the average annual revenue per customer by the average lifespan. If your average customer stays for 36 months and generates $12,000 in revenue per year, then your CLV would be $432,000.
Calculate your CLV to show your company how much customer support contributes to profits.
LiveChat's Customer Service Report 2023 shows that customer satisfaction dropped by more than 11% between 2018 and 2022. Over the past three years, industries and consumer patterns have seen enormous changes, leading to higher customer expectations.
Here are some statistics from Genesys' State of Customer Experience report:
- There is a change in the channels customers prefer for customer support. Your customer satisfaction metrics may suffer if your team isn't prepared for the influx of live assistance requests.
- By using the existing resources on your team, you can not only measure customer satisfaction but also improve customer service. Read on to find out how.
It is possible for people to do several tasks simultaneously, but are they able to do them all effectively? Usually not. In customer service, it's sometimes necessary.
Let's say you're live chatting with John, one of your customers. As soon as you became aware of his case, you were eager to resolve it. Another customer, Sapir, asks if you can send her an invoice for your product right away.
It is best for you to take a break from John's case to answer Sapir: "Hi Sapir, yes, I can do it for you. Give me a moment so I can download the invoice." As you return to Sapir, you also download Sapir's invoice in the meantime.
What makes it so important to respond so quickly to Sapir? Getting back to customers quickly is crucial for building trust and avoiding overusing their patience. This is one of the first steps that contribute to the overall customer experience.
In order to satisfy your customers, you must acknowledge their presence and respond to their needs right away, even if you can't solve their problem right away.
It has been shown that customer priorities and company priorities differ in customer service interactions.
It is reported that customer service teams prioritize professionalism, speed, and trustworthiness, but it is customers who prioritize first contact resolution (54%) the most.
That's an important point worth highlighting. Customer service agents believed that a quick handle time made customers happy - but the data proves otherwise.
Customer satisfaction is not significantly impacted by resolution time. Rather than back-and-forth or multiple tickets, it is more important that the issue is resolved quickly.
It's common for customer support teams to hire more agents when things start picking up - and when more customer tickets are coming in. When it comes to meeting customer demand, that's not always the best approach.
In the short term, this strategy may be effective. When your organization experiences hyper-growth, customer churn increases when there aren't enough reps to meet demand.
Plan to scale your team before the demand storm arrives - use this formula to determine how many reps you need. The ability to adapt to consumer preferences is another key element of customer service. Be open to modifying your service model to adapt to new technology and practices. We have shown how rapidly channel preferences can change.
You will need customer feedback software to create surveys and compile reports with customer insights in order to gather feedback and track all these metrics.A customer feedback tool should be powerful, easy to use, and integrated with your CRM.
Using HubSpot’s free customer satisfaction survey templates, you can start tracking customer satisfaction.Invest in more sophisticated analytics tools when you're ready to scale your customer satisfaction strategy.
The Flywheel model is a concept that describes the momentum your business will gain when your entire company is aligned around the customer experience.
Flywheels consist of three parts: attracting customers, engaging them, and delighting them. Your customer satisfaction metrics will improve significantly when all three of these pieces are in motion.
Take a look around your company to get your flywheel spinning.
When you understand the answers to these questions, you will be able to solve problems for your customers and delight them every time they interact with you. You may be wondering, "How can I collect customer satisfaction data?" now that you understand the metrics.
In order to determine if your efforts are actually meeting your customers' needs, you can measure customer satisfaction metrics. Check out the next section for examples of how role model businesses monitor these metrics.
You won't find a better example of customer satisfaction metrics than The Hustle's newsletter. At the end of every newsletter, there is a section asking for feedback.
Upon clicking an option, the user is prompted to share more about their experience. Once the responses are collected, the Hustle's team can measure reader satisfaction.
A customer satisfaction score and a customer health score are measured in this example.
SMS isn't just for promoting new products and services. In order to monitor the satisfaction of your customers, you can use this method of gathering customer feedback.
Below is an example of a survey sent to a patient by Care Station Medical Group. As part of the survey, several customer satisfaction metrics are measured, such as the customer effort score and the net promoter score.
You should be able to get a complete picture of customer satisfaction at your business using these metrics. Your customer satisfaction will significantly improve if you can come up with an effective customer service strategy.
** Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.