What is Customer Satisfaction?
Definition: Customer satisfaction is the feeling of pleasure or disappointment that a customer faces as a result of comparing a product or service’s perceived performance or outcome to their expectations.
If the performance of a product matches the expectations then the customer is satisfied. A customer is dissatisfied if an experience or the performance of a product falls short of expectations. If a product or service manages to exceed customers expectations then the customer is delighted.
Benefits of Customer Satisfaction
- Stay loyal to the product and brand for a longer period of time.
- Continue to buy more products as the company introduces upgraded versions and new products.
- Talk positively about the product and the company to other potential customers.
- Be less sensitive to the price of the product.
- Payless attention to competing brands.
- It can potentially cost less to an old and loyal customer than a new customer because transactions can become routine.
Monitoring Customer Satisfaction
- Many companies try to measure their treatment towards their customers.
- They are trying to identify the factors that shape the satisfaction of a customer.
- According to those factors and depending on the feedback, companies try to change their operations and ways of marketing in order to have better sales.
- Smart firms make sure to measure customer satisfaction on a regular as it is the Most important Key to customer retention.
Methods to Monitor Customer Satisfaction
There are several Methods to Monitor Customer Satisfaction. Some of them are
- Regular repeat Orders
- Referrals by one customer to another
- Customer Satisfaction Surveys
- Complaints Trends
- Mystery Shopping
- Net Promoter Score (NPS)
- Customer Effort Score (CES)
Monitoring Satisfaction – Net Promoter Score
Companies find out what the customers think of them (good or bad or in between) through something called a net promoter score or NPS.
Fred Reichheld, the author creator and business strategist, Believes that one needs to ask customers a single question: “How likely is it that you would recommend this company to a friend or colleague?”
Customers need to answer the question with a number starting from 0 to 10. The higher the number, the more Satisfied the customers are and more admired the company is. If the NPS is low, the company is headed for trouble.
According to the data collected from various sources, scores of some companies are:
- Netflix’s NPS is well above the competition at the number 68.
- Starbuck’s is NPS is at a decent 77.
- Amazon’s NPS is relatively high at 62.
- Airbnb’s NPS is very strong at 74. Next point
- Tesla’s NPS is at an astounding 96
Net Promoter Score – Tesla NPS
With Tesla’s NPS at a crazy 96, a Bloomberg survey explains a lot about Tesla Sales and customer satisfaction and why they have such a high NPS.
The survey studied 5000 model 3 owners and says that nearly 99% of model 3 owners would recommend Tesla to Family and friends. Researchers found in the follow-up calls made later, that several respondents took their friends and family members on a test drive.
Customer Effort Score
- Customer effort score or CES refers to the amount of effort a customer needs to exert to get an issue solved or a product purchased/returned or their questions answered.
- You can generally be measured in a single-item metric.
- The service generally asks a question like how easy was it to interact with the company. Answers can range from scale or very easy to very difficult.
- The belief system is that customers will be more loyal to any service or product that will be easier to use.
Example – Amazon’s “1 Click” Patent
- Amazon secured their “1 click” patent idea in September 1999.
- This concept was unheard of that the consumers could enter their billing, shipping and payment information just once and then later any time could simply click a button to buy something Without having to re-enter the details
- This was a major breakthrough in the concept of hassle-free online shopping.
- The brands proprietary one click patent made it extremely famous and led on the path From bookseller to BECOMING digital mammoths
- The 1 click technology was extremely valuable because it was customer experience in action.
- The “1-click” patent for Amazon expired on 12th September 2017.