A complete guide to measuring customer satisfaction

Customer Analytics

background_image background_image

Michael LeBoeuf once said that “a satisfied customer is the best business strategy of all” and we agree.

Satisfied customers often turn into repeat customers and become advocates for your brand. They’re the social proof and word-of-mouth your business needs to compete and outrank competitors.

But how do you measure customer satisfaction? And once you measure it, how do you use the data to make beneficial improvements to your business?

We’ll discuss everything you need to know about customer satisfaction, how to measure it, how to analyze the data, how to find actionable insights, and how to make the entire process easier on your team.

Let’s get started.

  • What is customer satisfaction?
  • Why should we measure customer satisfaction?
  • How to measure customer satisfaction 
  • How to analyze customer satisfaction data
  • How to automate customer satisfaction analysis

What is customer satisfaction?

Customer satisfaction is a measure of how happy customers are with a company’s products, services, and capabilities and the company’s ability to meet or surpass customer expectations.

Why should we measure customer satisfaction?

Measuring customer satisfaction allows companies to better understand the needs and expectations of their customers, enhance the customer experience, save money, and retain customers. It reduces costs related to direct and indirect customer dissatisfaction. You’re also able to better respond to customer acquisition challenges and build customer loyalty while boosting brand image and reputation.

How to measure customer satisfaction 

To measure customer satisfaction, you first need to determine your goal and what exactly it is that you’re trying to measure. Next, you’ll need to determine your style of questioning, then the mediums you’ll use to collect the information. Lastly, you’ll need to calculate and analyze the results. We’ll go into each of these key sections in detail below.

  1. Define your goals
  2. Determine your medium
  3. Ask your questions or monitor for insights
  4. Analyze the results

1. Define your goals

First, you’ll need to determine what you’d like to measure. Do you want to know how satisfied customers are with a specific product, service, or interaction, or are you after their overall satisfaction levels with your brand? Deciding what kind of data you’d like to collect will help steer you in the right direction when selecting the format of your question (or questions). 

2. Determine your mediums

Once you’ve defined your goals, you’ll then want to decide how you’ll be asking or monitoring customer satisfaction levels. Will you ask them in person via a focus group or interview? Will you be polling them via email or phone? Or will you be monitoring review sites and online forums? There are many tools you can use to measure customer satisfaction. 

We’ll elaborate on each tool for measuring customer satisfaction below:

What are the tools for measuring customer satisfaction?

The best tools for measuring customer satisfaction include survey software, call monitoring software, live chats, review sites, social media, customer relationship management software, and more.

We’ve included the complete list of mediums and tools for monitoring and measuring customer satisfaction below:

Survey software

Customer feedback surveys are made possible through survey software such as SurveyMonkey or Google Surveys. These platforms allow you to create open or closed-ended surveys for you to gather direct customer satisfaction data.

Call monitoring software

Call monitoring software such as CallRail allows you to collect direct and indirect customer satisfaction data. For example, you can prompt callers to participate in a short survey at the end of the call to gather direct customer satisfaction data. You can also monitor call recordings to understand whether or not customers have positive or negative experiences with your staff. 

Live chats

Live chats are a great place to gather customer satisfaction data as you can prompt the user to rate their live chat experience after they have ended the session. This can be in the form of a poll or a short survey.

Review sites

If you want to know how satisfied (or unsatisfied) your customers really are with your company, monitor your online reviews. Reviews on Google, Yelp, and any other industry-specific review sites are a great place to start.

Online forums

Another place to find honest reviews of your business is on forum pages (such as Reddit). Here, you’ll find unfiltered reviews of the customer’s experience with your brand.

Social media platforms

If your business uses social media as part of its customer engagement strategy, you’ll be able to gather valuable customer satisfaction data from your social media accounts. Platforms such as Facebook, Twitter, Instagram, and LinkedIn allow you to monitor positive and negative engagements and even ask followers to participate in surveys and polls directly on the platform. You can even integrate your social media platforms with customer feedback analyzing solutions such as Idiomatic.

Emails

Emails can provide you with insight into the positive or negative experiences your customers are having with your staff. You can also email surveys, polls, and other customer satisfaction measurement assessments to customers to collect the data you’re after.

Short Message Service (SMS)

Short Message Service (SMS) is an incredibly effective and quick way to poll customers. You can send quick closed-ended questions to customers to get a sense of their satisfaction levels with your company, product, services, or interactions. Just don’t forget to give the recipient an “opt-out” option from the start and be sure you have the right permissions to send SMS messages to the customer beforehand.

Focus groups

Through focus groups, you can gather qualitative and quantitative data through surveys, polls, and interviews. Focus groups are a great opportunity to probe customers for deeper insights than you’d normally get in a quick social media poll for example. Some examples of open-ended, qualitative questions you can ask in a focus group to gauge customer satisfaction include:

  • How long have you been using [the product or service]?
  • How could your experience with [company, product, or service] be improved?
  • Do you have any comments, concerns, or feedback you’d be willing to share about your experience with [company, product, or service]?
Data platforms

Data platforms such as Google Analytics are great for tracking overall customer satisfaction. For example, you can see how many returning users you have to your site and whether this number is increasing or decreasing over time. You can even incorporate the use of customizable dashboards such as Google Data Studio to visually understand what you’re measuring and identify trends or patterns.

Customer relationship management software

CRM software like Salesforce is a useful tool for tracking customer satisfaction and it gives you quantitative data on sales, cart abandonment, etc. You can even integrate your CRM with customer satisfaction analyzing software such as Idiomatic to better understand how your customers feel about your company.

3. Ask your questions or monitor for insights

You can collect customer satisfaction data by asking customers directly or monitoring specific metrics indirectly. Here is a quick breakdown of direct and indirect measurement systems:

  • Direct measurement systems: Measures data that is provided to you directly by the customer (e.g. through a customer satisfaction survey). Direct measurements can be both quantitative and qualitative in nature which opens up a lot of possibilities. Quantitative measurements can include things like surveys, polls, and interviews with closed-ended questions, whereas qualitative measurements can include things like surveys and interviews and use open-ended questions.
  • Indirect measurement systems: Measures indirect data that relates to the customer’s satisfaction that is gathered by you through monitoring various communication streams or data metrics. Indirect measurements such as sales numbers, abandoned cart rates, app engagement, and return visitors help you make assumptions about customer satisfaction levels.

How do you calculate satisfaction rate?

How you calculate satisfaction rate depends on how you measure it. For example, if you’re measuring customer satisfaction through closed-ended satisfaction surveys, you’ll need to calculate your satisfaction score using the specific formula assigned to that type of satisfaction survey. The formula for calculating your customer satisfaction score is different than the formula for calculating your net promoter score—both of which will give you insights into customer satisfaction.

There are many ways you can calculate customer satisfaction rate. We’ll go into them in greater detail below; however, the most common way to calculate satisfaction rate is by calculating your customer satisfaction score (CSAT score). You do this by asking customers to rate their satisfaction levels on a rating scale and use this formula to determine the score: CSATm = (Satisfied customers  / Total responses) x 100. 

To calculate satisfaction rate through direct measurements, you’ll need to use one of the following methods:

  1. Customer Satisfaction Score (CSAT)
  2. Customer Effort Score (CES)
  3. Net Promoter Score (NPS) 
  4. Customer Happiness Index (CHI)
  5. Customer Retention Rate (CRR)
1. Customer Satisfaction Score (CSAT)

To measure direct customer satisfaction, you need to determine your Customer Satisfaction Score (CSAT Score) by asking customers to rate their level of overall satisfaction with your company, product, service, capabilities, or specific interaction.

Customers can rate their satisfaction using different rating systems such as a 10-point scale, a 7-point scale, a 5-point scale, or by using an emoticon voting system, thumbs-up or thumbs-down rating system, or star ratings.

For example, a 5-point scale to measure customer satisfaction and calculate your CSAT score would look like the following. In this case, “satisfied” customers would include all those that chose 4 and 5 on the 5-points scale.

On a scale from 1 to 5, how satisfied are you with XYZ company?

  • 1 – Very unsatisfied
  • 2 – Unsatisfied
  • 3 – Neutral
  • 4 – Satisfied 
  • 5 – Very satisfied

To calculate your CSAT score, use the following formula:

CSAT = (Satisfied customers  / Total responses) x 100

Regardless of your CSAT score, you should always be striving to improve. Sometimes you just need a little help. Learn how Idiomatic helped Instacart increase positive CSAT scores by 35%. 

2. Customer Effort Score (CES)

Customer Effort Score (CES) tells companies how much effort a customer feels they have to put in to have their needs met. For example, this could mean how much effort they need to put in to get a question answered, have a request fulfilled, resolve an issue, or purchase or return an item.

CES surveys use different rating systems such as a 10-point scale, a 7-point scale, a 5-point scale, or by using an emoticon voting system

For example, CES survey questions and answers could look like this:

To what extent do you agree or disagree with this statement? “It was easy for me to find the information I needed.”

  • 1 – Strongly disagree
  • 2 – Disagree
  • 3 – Somewhat disagree
  • 4 – Neither disagree nor agree
  • 5 – Somewhat agree
  • 6 – Agree
  • 7 – Strongly agree

To calculate your CES, use the following formula:

CES = (Total sum of responses) / (Number of responses) 

With CES, you’re looking for the average of all responses. If you’re using a 7-point scale, a CES score of 5 is a reasonable target—anything lower than 5 warrants further investigation.

3. Net Promoter Score (NPS) 

Your Net Promoter Score (NPS) is a number ranging from -100 to 100 that determines your customer’s willingness to recommend your company to others. 

This metric is thought to be more of a long-term measure of customer loyalty instead of a rating based on one specific interaction (like with a CSAT or CES survey which can be based on a specific scenario [e.g. their experience with a live chat agent]).

NPS is measured on a 10-point rating scale and would look something like this:

On a scale from 0 to 10, how likely are you to recommend XYZ Company to your friends, family, or colleagues?

0 – Not likely at all 10 – Extremely likely 

Survey participants are then broken down into three different categories based on their selection:

  1. Detractors: Those who give a rating of 0 to 6. Classified as unhappy customers who can threaten the growth of your company through negative reviews and word of mouth. 
  2. Passives: Those who give a rating of 7 to 8. Classified as satisfied but unenthusiastic customers who are vulnerable to competitive offerings. (Passives aren’t included in the formula to determine your NPS score.)
  3. Promoters: Those who give a rating of 9 to 10. Classified as loyal customers who will help your company grow through referrals, positive reviews, and affirmative word of mouth.

To calculate NPS, use the following formula:

NPS = % promoters – % detractors

NPS is a great way to determine long-term satisfaction and customer loyalty within your customer base. 

4. Customer Happiness Index (CHI)

The Customer Happiness Index (CHI) is a metric that reflects the degree of satisfaction a customer feels towards your product, service, or experience with your company. The CHI survey question is simple. It asked customers to rate their satisfaction level by giving them three choices: a smiling face emoticon, a neutral face emoticon, and a frowning face emoticon. 

For example, a CHI question would look like this:

How did we do today?

🙂 :-l 🙁

When measuring customer satisfaction, take the number of smiling face emoticon votes against the total number of votes to determine your CHI.

5. Customer Retention Rate (CRR)

Customer Retention Rate (CRR) is a metric that quantifies the percentage of customers a company retains during a specified time period. This can be a good indicator as to the level of satisfaction your customers feel towards your company.

To calculate your Customer Retention Rate, you’ll first need to identify the time frame you want to study, then you can use the following formula:

CRR = [(E-N)/S] x 100

E = The total number of customers at the end of the time decided period 

N = The total number of new customers within the time period

S = The total number of existing customers at the start of the time period

To calculate satisfaction rate through indirect measurements, you’ll need to use one of the following methods:

  1. Churn rate
  2. Adapt your own scoring system
1. Churn rate

Churn rate (also referred to as attrition rate) represents the percentage of customers lost over a specific period of time and the rate at which customers stop doing business with you. 

For example, churn can represent the number of subscribers who cancel or don’t renew a subscription from one month to the next. 

To calculate churn rate, use the following formula:

(LC / TCAS) x 100

LC = Lost Customers

TCAS = Total Customers at the Start of Time Period

2. Adapt your own scoring system

When you’re measuring customer satisfaction by monitoring online reviews or social media engagements, you can adopt one of the formulas above to come up with your own score. For example, if you’re monitoring online reviews tally up the number of positive reviews (4 or 5-star reviews) and divide by the total number of reviews (similar to the churn rate formula). From this, you can determine the percentage of satisfied customers who have left reviews.

Analyze the results

Once you have your customer satisfaction scores, it’s important to use that data to your advantage. Analyzing the results to truly understand how your company is performing, how your customers feel, and how you can improve is what makes measuring customer satisfaction worthwhile.

How to analyze customer satisfaction data

When you’re dealing with quantitative data to analyze customer satisfaction data, you should start by referring to any industry benchmarks to see how your score measures up. Use charts, tables, and graphs to visualize the results. 

When it comes to qualitative data, it’s best to use the help of software. Manually analyzing open-ended data can take months and can be very challenging to formulate conclusions or draw meaningful insights from. Programs like Idiomatic use powerful AI to analyze customer feedback and generate actionable insights for your company to use towards growth. 

How to automate customer satisfaction analysis

Idiomatic makes it possible to listen to all of your customers, not just the ones who answer surveys. We categorize and quantify any type of customer feedback from all of your data sources. Gain actionable insights on customer support experiences, surveys, app reviews, social media, forums, product reviews, and more. We automate the entire process so your product teams and marketing teams can focus on planning and implementing strategies to improve customer satisfaction.

Get a no-obligation, custom demo of Idiomatic’s AI-driven customer intelligence platform to see how we can improve your customer satisfaction measurement and analysis process.