How to measure customer satisfaction

Determining customer satisfaction isn’t as easy as going door to door asking people how they feel about your brand. Depending on the goals you’re trying to achieve, though, you could use one or more of the popular methods below.

Surveys are a fairly simple option for finding out what your customers really think. Here are a few examples of surveys you might use to gauge customer satisfaction.

→ CSAT (customer satisfaction score)

A CSAT survey lets customers rate your products or services on a scale, such as 1 to 10 or 😢 to 😃. It’s a great option because it requires minimal effort on your customers’ part, and you can share it quickly by text or email.

CSAT scores allow you to turn something subjective—how happy or sad a customer is—into a quantitative metric. For a snapshot of how well you’re performing with customers, just take the average of all the responses.

The CSAT survey’s limitation, however, is that it doesn’t allow customers to explain their ratings. Someone may give you a sad face or thumbs-down emoji, but that alone doesn’t provide much information about why a customer feels the way they do. That’s why the CSAT is a good first step: once you have a general sense of how your customers feel, you can start figuring out why they feel that way and how to improve your ratings.

→ NPS (Net Promoter Score)

Customers being satisfied with your brand is one thing; having them rave to their friends and family about you is another. One sure way to know if they’re doing it? Ask. By using an NPS survey, you can ask customers how likely they are to recommend you to others, generally on a scale of 1 to 10.

Like the CSAT, this survey helps you translate customers’ feelings and experiences into hard numerical data. It also helps provide a better window into your customers’ true feelings about your company.

→ CES (customer effort score)

If you want to determine the root of your customers’ dissatisfaction, you might try a CES survey. This asks how easy or difficult your customers found a certain action, like purchasing an item, changing their account information, or receiving online support. To collect this score, provide customers with a survey right after they complete an action, and ask them to rate its ease or difficulty on a scale of 1 to 10.

You can make this easy for your customers with a one-click survey, but since it still requires extra effort, your customers may choose not to participate. That’s why you’ll want to use other metrics, like behavioral data, also.

Actions speak louder than words, and the way a customer acts can tell you more than any survey result. Below are a few metrics that can help you understand customers’ actions and translate them into behavioral data.

→ Customer retention rate

Generally, a satisfied customer will stick around. To find your customer retention rate, or the percentage of customers you’re able to keep over a set period of time, you’ll need the following:

1. A specific timeframe, such as a month or a year
2. The number of customers you had at the beginning of that time (E)
3. The total number of customers you had at the end of that time (T)
4. The number of new customers who joined during that time (N)

Once you have those numbers, perform this equation:

Customer retention rate = [ (T-N) / E ] x 100

If you don’t offer a subscription product or loyalty program, it may be harder to determine how many customers you have, as there may be no clear moment of cancellation to let you know when you’ve lost an existing customer. In that case, you may want to use typical order frequency to estimate your number of customers.

→ CLTV (customer lifetime value)

Let’s say you operate a grocery store and one of your customers makes weekly orders worth about $100 each. In one year, that customer’s value would be $5,200. If you can keep them coming to your store for 10 years, they’ll be worth $52,000.

That number represents a customer’s lifetime value, or CLTV. CLTV helps you determine what each customer will be worth to you if you can keep their loyalty long-term.

To find your CLTV:

1. Calculate the amount your customer spends per year
2. Multiply that by the number of years you can expect to keep them as a customer

Here’s the equation:

CLTV = customer spending per year x number of years you can expect to keep them as a customer

While the CLTV metric gives you a good idea of what to expect, it’s just an estimate. A lot of unpredictable factors influence how long a customer will do business with your company and why, but this metric can still be useful since it helps you assign a value to retaining customer loyalty.

→ Abandonment rate

When a customer stops just short of making a purchase or becoming a subscriber, that may be a sign that something’s wrong. An abandonment rate measures the total number of customers who fall short of converting or completing the desired action. Most businesses will see this in one of 2 forms:

• Conversion funnel: Typically, several steps go into a sale. For example, a customer may visit your website, read product info, add an item to their cart, create an account, and confirm the purchase. A high abandonment rate at a certain point in the sales process may point to a specific problem that needs solving. If customers often add items to their shopping cart without checking out, for instance, that may signal that the checkout process is too complicated or shipping fees are too high.

• Customer service: Everyone has had the experience of being on hold for so long they just hang up. In customer service, the abandonment rate is the percentage of customers who give up before their problem gets solved—and if a customer stuck on hold hangs up before reaching an agent, you can bet they aren’t satisfied. A high customer service abandonment rate means your support process could use improvement.

Much like some of the other metrics we’ve discussed, abandonment rates reveal only numbers, not causes or possible solutions. You’ll need to do more work to understand why it’s happening and how to solve it.

→ Churn rate

If one or 2 customers are dissatisfied, you can usually chalk it up to personal preference or a one-off mistake. But if customers are leaving in droves, that’s a sign that your brand isn’t doing what it needs to. Your churn rate measures how many customers stop doing business with your company, and a high churn rate means you have a problem.

To calculate your churn rate:

1. Choose a specific period of time to review, such as a year
2. Find the number of customers you had at the beginning of that period
3. Find the number of customers at the end of the period
4. If your number of customers decreased over that time, calculate how many fewer customers you ended up with
5. Use this equation:

Churn rate (percentage) = number of lost customers ÷ original number of customers x 100

How you track a churn rate depends on your business model and tech stack. For example, if you operate on a subscription basis, you can track the number of customers who cancel their subscriptions. In other situations, you can track how often customers order from you. Someone who hasn’t ordered in several months may be at risk of churning.

Nothing can build or undermine brand loyalty like a customer service experience. Below are some methods for measuring the success (or failure) of your brand’s customer service and, by extension, customer satisfaction.

→ FRT (first response time)

Consumers today expect instant responses. Along those lines, FRT tracks how long it takes for your customer to get a response, starting from the moment they first reach out to your support team. Tracking FRT gives you an easy way to determine whether your support staff is taking too long to answer customers.

While first response time is important, it’s more important that customers get help solving their problems, which means FRT should be considered alongside other customer service metrics, such as the following two.

→ FCR (first contact resolution)

Too much back-and-forth communication is frustrating for customers and support staff, which is why first contact resolution is so crucial: FCR is the percentage of customer service inquiries that are resolved in a first response. The higher you can get your first contact resolution, the more satisfied customers will be with your service. Here’s the equation for FCR:

FCR (percentage) = number of support requests resolved in the first response ÷ total number of support requests x 100

Of course, not all problems can be solved right away, and some will require more back-and-forth than others. As such, you don’t want to put too much emphasis on speed at the expense of other factors. Still, resolving simple customer issues in your first response is a good goal.

→ TRT (ticket resolution time)

TRT, sometimes called TTR (time to resolution), is the total amount of time it takes to resolve a customer service inquiry. Considered alongside FRT and FCR, it helps provide a complete picture of how well you’re solving customer problems. A long TRT usually means your process could use some improvement in terms of speed and effectiveness.

Customer service metrics track the effectiveness of your support team, but not necessarily how happy your customers are with the experience—which is why it’s important to use customer service metrics in combination with the other metrics covered above.

Tracking metrics is only one part of the equation. To truly understand those numbers and the reasons behind them, you’ll want to use tools like those below.

Plenty of software products can help you measure customer satisfaction—and you’ll find it’s much easier than trying to track and calculate everything yourself. You may even find some of the metrics discussed above—or the values needed to calculate them—in tools you already have, such as:

• POS (point-of-sale systems). POS systems track sales data and can help you calculate your churn rate, retention rate, and CLTV.

• CRM (customer relationship management software). CRM software tracks the details of individual customer accounts and captures high-level trends in your customer relationship data.

• Customer service software. This software automates data collection for things like FRT, FCR, and TRT. Some products also help calculate your NPS and CSAT scores.

• Third-party delivery platforms. The delivery experience is vital to customer satisfaction. Many third-party delivery platforms include analytics—such as ratings, reviews, and customer retention—to track how satisfied customers are with their orders.

If you want to know how your customers truly feel, nothing beats talking to them. Conversations can help you understand the feelings behind the data and the reasons behind those feelings. Set up interviews with your customers and ask questions like these:

• Why did you choose this product/service?
• What are you using it for?
• Is it achieving what you want it to?
• What was the buying process like?
• Have you faced any problems with the buying process?
• How can we make your experience better?
• If you’ve received customer support, what was that experience like?

Another chance to peek into the customer experience is live chat, since customers use it to ask specific questions and it’s easy to track the questions and responses. You can also set your live chat tool to ask customers for feedback about their experience.

We may be living in the digital era, but for many businesses, old-fashioned in-store interactions are still the standard. You can learn a lot about customer satisfaction by simply observing how people act in your store and how they respond when asked about their experience. Train your employees to ask questions and make observations.

There’s a place where you can go to find out exactly what customers think about your product or service—the review section—and you’ll want to read it regularly. Positive reviews confirm you’re doing it right, but don’t neglect negative reviews, which may highlight specific issues you can address to improve.

You can also find out what your customers think on social media. When it comes to brand relations, customers use social media in 2 main ways:

• As an additional customer service channel when they have questions or complaints

• As a platform to voice their feelings about your brand

You’ll usually know when they’re using it for the first purpose, as they’ll reply to one of your posts or call you out directly. In that case, you can track the issue and how your team responds in real time.

Regarding the second purpose, you may want to use social listening tools to track brand and product mentions. Some social media tools even offer sentiment analysis to help you understand how people feel about your brand based on their posts. Of course, because people love to weigh in on social media, you can also start discussions about your brand by asking leading questions. Prompting people to share their favorite product or react to a new release, for example, is a good way to engage your base while gaining interesting insights in the process.

You can use surveys for more than just gaining quantitative data like CSAT and NPS; they’re also a great option for uncovering qualitative insights when you ask open-ended questions. Instead of just asking customers to rate your brand on a scale of 1 to 10, for instance, ask what they like best about your product or why they’d recommend you to their friends.

You can send surveys by:

• Email
• Phone call
• Text
• Your website
• Your mobile app

Because many software products, like email marketing or customer service programs, include a survey feature, you may already have an option for sending surveys. If not, plenty of software tools designed for surveys, like Google Forms and SurveyMonkey, offer free versions.