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What Is Customer Satisfaction?

Austin Chegini
22 May 2024

If you’ve spent any time in a customer-facing role, you’ve likely heard the term, “The customer is always right.” While this may be an oversimplification, the phrase does show the importance of customer satisfaction. 

But what is customer satisfaction? 

Keep reading to see how experts define this term and learn ways to improve customer satisfaction in your business. 

Why is customer satisfaction important?

Businesses must do everything they can to stay competitive. Failing to ensure your customers are satisfied will only weaken your position in the market. 

However, customer satisfaction is much more important than simply remaining competitive. Some key benefits that come with customer satisfaction include:

  • Free marketing: Satisfied customers love telling their friends and family about excellent service. By providing an exceptional experience, you can increase word-of-mouth marketing in your area.
  • Stronger loyalty: The more satisfied customers you have, the higher your chances are of converting these buyers into repeat customers. With this increase in customer loyalty comes an increase in recurring revenue, especially since repeat shoppers spend x amount more than first-time buyers.
  • Reduced expenses: Happy customers put less demand on your business. They don’t call your service lines to complain, ask for refunds, or return inventory as often as unhappy customers. Thus, you spend less on labor costs and other related expenses.

Defining customer satisfaction

Customer satisfaction is a vague term. Without quantifying it and tailoring expectations to your business, it is difficult to assess how happy your customers are. 

In Marketing Metrics: The Definitive Guide to Measuring Marketing Performance, the authors define customer satisfaction as “the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals” [1]. 

Many companies and professional organizations endorse this definition, including the Marketing Accountability Standards Board. With this idea, you can accurately analyze your business. 

How to measure customer satisfaction

Let’s implement the definition above and apply it to a hypothetical business. In this case, we will analyze a fictional ice cream shop.

Using this process, you can create your own measurement of customer satisfaction. 

Determine what customers expect

Since we serve ice cream, it is reasonable to assume that customers want ice cream! However, we want to be more detailed than this. So, what goes into a great scoop of ice cream? 

In this case, we assume our customers want:

  • Great taste
  • Fresh ingredients
  • Fair value
  • Wide variety of flavors
  • Speedy service

As for your business, think about what goes into each purchasing decision. You may also want to consider reviewing your social media and online reviews to see what unhappy customers mention. What key issues caused them to leave a bad review, or what did happy customers rave about in their 5-star reviews? 

Write everything down, and then make a list of the top five to ten most mentioned factors. 

Create a customer satisfaction survey

Next, we will create a survey to track each of these factors listed above. In this survey, we will ask customers to rate each item on a scale of 1-5. 

For example, we will ask the following question to assess “Great taste”: On a scale of 1 to 5 (with 1 being poor and 5 being exceptional), how would you rate the taste of your ice cream?

Our survey would ask the same for each of the items, as well as include one question that measures overall satisfaction for their purchase. 

Analyze your results

Lastly, we will collect all data and evaluate responses. On a broad level, the average results will help us determine how satisfied the typical customer is with our ice cream. If the average score is below our set standard, then we know to make changes to this part of our business. 

On an individual level, the survey gives us the opportunity to address issues that could negatively affect customer retention. If a customer responds with a 1 or 2 for a specific issue, we can follow up with the respondent to see how we can correct the problem. 

Each customer we retain will help sustain recurring revenue, as well as reduce our marketing cost to acquire new customers. 

Win over more customers with Epos Now

Two of the most important elements in customer satisfaction are order accuracy and speed of service. Shoppers want to quickly get in and out without any confusion or service errors. 

Unfortunately, many businesses rely on outdated technology that is slow and/or hard to operate. If you’re still using equipment like this, you could lose customers due to long checkout lines, processing orders incorrectly, or manual errors by confused employees. 

Luckily, you can avoid issues like these with a modern point of sale system. These devices can completely overhaul your business by providing features that make serving customers easier than ever. 

With a new POS system, you can, 

  • Manage inventory in real-time
  • Take online orders
  • Accept all payment types 
  • Generate custom reports
  • Connect with dozens of apps

Contact Epos Now today to learn more about our POS systems.