It seems simple: Keep your customers happy and they’ll keep coming back for more (and they’ll tell their friends about your business). So why is it that some businesses are wowing their customers, while others are leaving them less than satisfied? Many businesses underestimate the importance of customer satisfaction to their detriment.
Why is customer satisfaction so important?
It’s a leading indicator of future intentions
Customer satisfaction is the best way for you to measure whether a customer is likely to make a purchase from you in the future. Asking your customers to rate their satisfaction out of 10 is a good way to know whether they’ll become repeat customers or even the type of customer that tells their friends about your business.
Customers who rate you above 7 can be considered satisfied and you can expect them to make a repeat purchase from you in the future. If customers are rating you 9 or 10, they could potentially be advocates for your company, while a score below 6 is a warning sign that your customers are unhappy and may leave you for your competition.
It’s a point of difference
We live in a cutthroat world, and businesses are competing globally against each other for customers.
Customer satisfaction is usually seen as a key differentiator, and businesses that are succeeding are the ones that ensure customer satisfaction is a key part of their business plan.
If two businesses offer the exact same product, but a friend specifically recommended one of them to you, you would probably choose that business. That recommendation would be because your friend enjoyed their experience with that business and felt satisfied with the way it went.
Word-of-mouth works both ways- negative and positive experiences will be passed on, and while a negative experience is far more likely to be told to many different people, when someone is asked to refer a company for a specific good or service, they’re only going to refer companies that they feel have treated them well.
It increases your profit
Infoquest performed a study that looked at the surveys of more than 20,000 customers in 40 different countries. The results showed that a customer who is totally satisfied will contribute 2.6 times the amount of revenue to a company as a customer who is only somewhat satisfied.
A customer who is totally satisfied will contribute a huge 14 times more revenue than a customer who describes themselves as “somewhat dissatisfied”.
In today’s increasingly interconnected world, negative word of mouth can kill a company. A totally dissatisfied customer will decrease revenue at a rate that’s equal to 1.8 times what your totally satisfied customers would contribute, since it’s now so much easier for negative reviews to be spread across various social media platforms (how often have we seen posts on Facebook about a business who treated a customer poorly?)
Keeping your customers satisfied will ensure they stay loyal to your business, and it’s much less expensive to keep a current customer happy than it is to find new customers.
According to Econsultancy, 70% of the companies surveyed agreed that it’s cheaper to retain customers than acquire them, and the companies also said that they achieve a better return on investment when they invest in relationship marketing compared to acquisition marketing.
So how do you increase customer satisfaction?
Without customers, your company wouldn’t exist. So treating them like the backbone of your business is critical, and investing in your customers simply makes good business sense.
Customer satisfaction starts from the ground up, and all employees should be hired and trained with the expectation that excellent customer service is mandatory. Training your employees to be understanding, kind, courteous, and to go the extra mile will ensure that customers interacting with these staff members will get the best possible service.
It’s also crucial to get to know your customers, to know what they think about your business and to understand how you can improve. One of the best ways to do this is with a customer satisfaction survey, which can be completed online, over the phone, through the mail or in-person. Offering a reward for customers completing the survey will ensure that you get a wide range of people answering your questions.
By asking your customers about themselves, you can keep up-to-date on your target market and their needs. You should also ask them about their experiences with your company and how they think you can improve. This data should then be analysed and surveys should be completed regularly so you will know whether or not your customer satisfaction is improving.
Get in touch with Intergy today to learn more.