Customer satisfaction and customer retention are two closely linked business metrics. Happy customers are loyal and can save you on marketing and sales costs. As it is 5 to 25 times cheaper to keep a customer than to find a new one. Satisfied customers can also become promoters, helping you grow your business and is an advantage of owning a franchise. However, while customer satisfaction and retention are correlated, they are not the same thing.
1. Customer Service
Customer service is the help and advice that a company gives to customers who buy or use its products. It’s an essential part of a business because it can increase loyalty and boost revenues. It also helps businesses differentiate themselves from competitors.
Customers expect good customer service from all companies. They want to be treated with courtesy and respect. They want to feel like their problems are important to the organization. Customers also want to feel like their experience with a brand is consistent across channels. They need to know that they can count on the organization to resolve issues quickly and efficiently.
While it might seem obvious that a high level of satisfaction is critical for creating customer retention. The relationship between the two metrics isn’t always straightforward. In fact, it’s possible that your satisfaction scores may rise while your retention rates fall. This could indicate that something is going wrong with your customer service strategy.
It’s a good idea to look for trends in your satisfaction and retention data and to track both over time. If you find that your customer retention is dropping while your satisfaction levels are rising. This indicates that your service team isn’t meeting the needs of your customers. In this case, you should consider using a voice of the customer survey to find out what’s going on and make adjustments. Refer and earn programs are a great way to make extra money by referring your friends and family to products or services you love.
2. Customer Satisfaction
Customer satisfaction is a key metric that drives business. It can be measured through surveys or more directly by monitoring loyalty. Customers who are satisfied will make repeat purchases, resulting in higher revenue for your business. Additionally, customers who are satisfied will become advocates for your brand by sharing their positive experiences with friends and family.
In addition to affecting your bottom line, satisfied customers also reduce the cost of acquiring new ones. Marketing and sales teams can use this data to target potential leads. For example, they can share happy customer reviews in their marketing materials and during pitches to new prospects. Social selling platforms like Nextdoor are another example of how a business can attract new customers by showcasing their customer satisfaction through user-generated content.
To keep your customers satisfied, it’s essential to communicate clear and concise information about products and services, pricing, or company policies. This can be done through the website and social media posts, email, or during customer support interactions. It’s also important to show your customers. That you care by responding to their feedback and addressing any concerns they may have. In doing so, you can build trust and strengthen the relationship. In fact, a recent study showed that businesses that respond to customer feedback are twice as likely to retain customers.
3. Customer Satisfaction Surveys for Profitable Franchise
Customer satisfaction surveys are one of the best ways to find out how your products or services are meeting — or failing — customers’ expectations. Although customer satisfaction is often perceived as a vague, intangible concept, there’s a lot of science behind measuring it and the data it can provide to your business.
Satisfaction surveys come in many forms, but they all have the same goal: to collect customer feedback and determine whether your company is on track to meet or exceed expectations. They can be deployed via email, app pop-ups (particularly useful for analyzing specific sections of an application, such as the checkout page or live chat widget), or landing pages on your website.
The types of questions asked in a survey can also have a huge impact on the quality of the data you receive. Using multiple-choice questions and scales can result in more accurate answers from respondents, but you’ll want to avoid asking too many closed-ended questions that could make the survey unnecessarily long and lead to abandonment. It’s also important to balance qualitative and quantitative data to get a full picture of the customer experience. Adding a few open-ended questions following quantitative ones can help you gather the most valuable insights from your survey responses.
4. Customer Feedback
Customer feedback is a big part of why businesses focus so much on customer satisfaction and retention. It provides a window into why some customers love your brand, and others are turned off, and it encourages targeted actions to alleviate those buyers’ pain points.
Customer feedback can come in the form of reviews, surveys, QBRs, social media posts, chat interactions, and spontaneous email messages. A good customer feedback platform will let you filter these and organize them in a way that makes it easy to identify specific themes, issues, or suggestions.
When you prioritize customer feedback, it can help you identify which areas to tackle first and what areas to double down on. It can also help you create a consistent experience for your customers, which has been shown to increase customer loyalty.
It’s also important to note that a high customer satisfaction score doesn’t necessarily translate into a high customer retention rate. This can be due to factors such as product availability, a lack of alternatives, and switching costs (i.e., the effort involved in onboarding a new product or service). However, it’s still a key metric to monitor because satisfied customers are more likely to become repeat customers and refer your products and services to others. As a result, focusing on boosting customer satisfaction will eventually lead to increased loyalty and sales. And, of course, more revenue for your business.
5. Customer Satisfaction Scores
While it’s a simple enough concept, customer satisfaction scores are not without their challenges. Customers can interpret survey questions in a way that skews results, and even when the score is high, it’s important to focus on identifying where improvement is needed. For example, a customer might be highly satisfied with a product or service but may still complain about how difficult it is to reach someone to get help when they need it. In this instance, it’s worth exploring the use of a customer effort score (CES) which is deployed directly after a support interaction or in a quarterly interval and asks how easy or hard it was to get a solution.
Satisfied customers stick around, which lowers marketing and sales costs—it’s widely accepted that it’s anywhere from five to 25 times cheaper to retain an existing customer than find a new one. Plus, loyal customers spend more on brands they love.
But that doesn’t mean customer satisfaction and retention always correlate. It’s common to see dissatisfied customers churn while happy ones stay put. And while it may seem counterintuitive, there are a few key reasons why this occurs. For example, your company’s cancellation policy could make it difficult to leave, or you might have the best products on the market but the worst customer support. This could make your customers feel like they’re being taken advantage of.
6. Customer Retention
Customer retention is the percentage of customers who continue to purchase a brand’s products or services over time. A high customer retention rate indicates that a company has successfully mapped out and executed an effective strategy to meet and even exceed customer expectations. This metric, along with customer lifetime value (CLV), is a critical indicator of a brand’s health and profitability.
Ideally, customer satisfaction and customer retention will correlate directly with each other. However, in reality, this isn’t always the case. Satisfied customers may still choose to shop elsewhere if they feel like their needs are not being met. This is why customer loyalty and ambassador programs are so important. Using loyalty programs to make satisfied customers feel valued and encourage them to spend more can help increase customer retention.
To boost customer retention, businesses should focus on making the experience as seamless as possible. This includes providing omnichannel support, offering various ways to communicate with the brand, and providing helpful resources for onboarding and education. Additionally, a CRM system that keeps track of past issues and communication is essential to ensuring customers receive a consistent experience.
It’s also worth noting that it’s six to seven times more expensive to acquire a new customer than it is to retain one, so investing in customer retention is a smart move for any business. Creating loyal customers will lead to increased revenue and referrals, which will ultimately drive more profit.