If you continually please your customers, you have a good chance of positive growth in the future. This is why a number of customer satisfaction metrics can be used to predict revenue growth. Some of these are more exact than others, and which you use will depend on the type of business you have and how you choose to collect responses.
5 Customer Satisfaction Metrics to Predict Revenue Growth
If your customer satisfaction metrics indicate that your customers are happy, does it mean they’re likely to make a return visit or repeat purchase? How likely? Does it mean they’ll recommend your business to their friends or family? Did they like your product/service, staff, or overall experience? Different customer satisfaction metrics will help you measure different things.
1. Net Promoter Score (NPS)
This is one of the most popular customer satisfaction metrics to measure. It uses a simple numeric system, a single question, and gives you a score that is easy to compare year over year. Since it’s only one question, it’s easy to get lots of responses, so your overall score is more likely to be accurate.
To gather Net Promoter Score, ask your customers the question, “How likely are you to recommend us to friends or family?” and provide responses between zero and ten. The total NPS is derived by subtracting the percent of “detractors”—those who responded with a number between zero and six—from the percent of “promoters”—those who responded with a nine or a ten. The final result is a percent, anywhere between 100 and -100.
NPS has been shown to correlate with revenue growth. This makes sense; customers willing to recommend a company to others are not only helping to bring in new customers, but they’re also less likely to move to a competitor. Since this customer satisfaction metric is also easy to gather and calculate, it’s an attractive option for business leaders who want to assess their customer satisfaction fast. However, a recommendation doesn’t necessarily equate to loyalty. This metric also doesn’t provide details about what a customer enjoys, or what they might not.
2. Customer Satisfaction Score (CSAT)
Customer Satisfaction Score (CSAT) is a customer satisfaction metric that might assess a particular aspect of your business, or assess a customer’s overall satisfaction. A CSAT survey asks customers to rate their experience on a scale of 1 to 5, and then derives a percent. CSAT might ask about the checkout experience, staff, customer service, or the customer experience in general.
Like NPS, CSAT is easy for customers to answer, so it’s easy to gather a lot of responses and get an accurate picture of customer satisfaction. CSAT scores have also been shown to predict future business performance. If customers are generally satisfied with your product or service, they’re likely to make repeat purchases. However, CSAT doesn’t explain why customers gave a particular score. To see how you can improve your CSAT score or the particular strengths that keep customers returning, it’s important to ask the right follow-up questions.
3. Customer Effort Score (CES)
While CSAT score asks about a customer’s overall satisfaction, Customer Effort Score (CES) addresses problems they might’ve had. A CES survey asks customers to rate the difficulty they experienced when making a purchase or asking for assistance.
CES and CSAT appear very similar, however they focus on fundamentally different things. While CSAT seeks to maximize customer satisfaction, CES seeks to reduce problems. Both of these metrics correlate with repurchase behavior, though some studies suggest that reducing problems or difficulties can be a better indicator of overall satisfaction and business performance.
4. Customer Trust Index (CTI)
Satisfaction isn’t the only factor when it comes to the question of repeat purchases and customer loyalty. Even if a customer is satisfied with their experience overall, they’re unlikely to make a repeat purchase if they feel that the business is somehow unsafe or untrustworthy. The Customer Trust Index (CTI) is a type of customer satisfaction metric that takes a slightly different approach; instead of asking about a customer’s happiness, CTI asks about their trust.
CTI is also gathered differently than other customer satisfaction surveys. Marketing research businesses measure CTI by analyzing online conversations, web searches, stock market activity, and more. They might analyze customers’ feelings towards a particular brand, or about the economy in general. This can help businesses know what to predict, especially during times of crisis or volatility.
Since it doesn’t require direct responses from customers, CTI is a tempting customer satisfaction metric. However, it should be applied carefully. Overall positive feelings towards a brand doesn’t necessarily indicate customers are loyal; mentioning a brand and purchasing from them are different things. Generally negative feelings also don’t necessarily mean your brand is to blame; customers may have negative attitudes towards the industry or economy at large.
5. Customer Churn
Customer churn and customer satisfaction are closely related. Customers that aren’t satisfied with their experience are less likely to visit or purchase again. If new customers are frequently turning into lost customers, it’s a good indication that they’re not very satisfied.
When your customer churn rate is high or rising, it’s a symptom that something is wrong, and requires further investigation. A general customer experience or satisfaction survey might reveal only what you already know—that customers aren’t happy. You might be better off skipping these cursory surveys and digging deeper. Or, a Customer Effort Survey might be a logical next step to figure out where customers are having problems.
Consider customer satisfaction metrics carefully when conducting a survey, and be wary of making unsteady connections. Remember that satisfaction, loyalty, trust and actual buying are all different things. To get the most accurate view of customer satisfaction and to accurately predict business growth, it’s a good idea to use more than one metric, and analyze your findings collectively.
Posted in: Customer Feedback