Finding the Right Customer Satisfaction Metrics for Your Small Business

In this age of unlimited power of expression available to anyone with a smart phone or web connection, customer satisfaction is more important than ever. Negative feedback can spread in hours or even minutes and can affect your revenues just as quickly.

Of course, smart business owners want to get a handle on anything that impacts their business.

But how do we manage customer satisfaction? Is it some amorphous entity that has to be plucked from the mind of our customers? Or is it just a matter of dealing with random comments that surface on the web, usually at an inopportune moment?

In this article I’ve outlined a simple step-by-step plan to measure, track, and use customer satisfaction in a simple way, accessible to any small business or solopreneur.

How to Measure Customer Satisfaction in a Meaningful Way

We all know you can’t manage what you can’t measure. You can certainly make educated guesses about where improvement is needed.

For instance, if you’re getting a lot of tech support calls on a product, there is probably a customer satisfaction issue with that product. And you can take steps to fix it. That’s all well and good.

But when you look at the numerous methods available for customers to interact with you in this digital age, a single element such as tech support could be one of fifteen areas in which you’re getting feedback. Your focus on tech support will certainly help, but the other fourteen ways might be sinking your ship.

What is Customer Satisfaction?

Customer satisfaction (CSAT) is a measure of whether your product or service met (or exceeded) the purchaser’s expectation.

If we’re a solopreneur or very small business, it’s kind of easy to get a feel for whether we’re meeting customer expectations. We’re actively engaged with clients and get one-to-one contact. Our intuition and experience, if we’ve been around a while, is also useful, and shouldn’t be overlooked.

If we see that some customers are continuing to buy our products and are referring people to us, it can give us a sense that customer satisfaction is good.

Reasons Why It’s Important to Measure Customer Satisfaction

However, if we want to scale our business to any degree, it’s important to find ways to measure key performance indicators such as customer satisfaction. Measurements turn those gut feelings into actionable data.

Another danger of relying on our gut alone is that the data might be leading us in the wrong direction. Intuition is our sub-conscious brain processing information from the past. It does a great job of it, but if we don’t feed it new information, it can lead us astray as the business world evolves around us.

We can’t know everything, but if we measure and manage as much current data about our business as possible, we can make informed decisions. And in turn, more data will actually improve our “intuition”.

How Do I Measure Customer Satisfaction?

Many customer service surveys I’ve seen tend to be kind of “touchy-feely” e.g. “How would you rate your overall satisfaction/happiness/experience with our company?”

A more concrete and useful example is “Would you recommend us to a friend?” It’s called the Net Promoter Score and is a reliable indicator of future growth. The problem is it’s typically a long term measure of your customer’s experience with you over time. (More on how to figure your score below.)

We need to look at things to act upon today. This means finding out how satisfied customers are with their most recent experience.

Here’s a blueprint to create a customer satisfaction index that works specifically for your business.

Start with “Who”

Who should be interviewed? It’s important to examine a cross section of your customers, not just ones who engage or who purchase regularly.

For instance, you might find that in your infrequent purchasers there is a high level of dissatisfaction with something not indicated by regular buyers. Customers who returned products might express other dissatisfactions. If you ignore them, you miss a significant revenue opportunity to turn them into more frequent buyers.

Also, consider other factors in who you talk to. The actual buyer of your product or service might not be the end user. Each has a different agenda in their organization, and you’ll get much different results in a survey of each.

For example, the end-user of your widget will be concerned with how it makes their job easier. Or they might be worried that newfound productivity resulting from your widget reduces their overtime, so they come to dislike your product, no matter how well it functions. (I’ve had that happen to me.)

Their manager will be concerned with how it helps them meet their production goals.

The owner will be concerned with return on investment.

As you can see, the satisfaction of all stakeholders is important and has an influence on purchase decisions.

List all ways customers can interact

The list of where it’s possible to collect data can be quite lengthy and varies.  For example:

  • Surveys
  • Interviews
  • Email
  • Telephone
  • Chatbots
  • Mobile apps
  • Instant messenges
  • Social media (need to be active and engaged for this to work)
  • Review sites
  • Company pages on Facebook, LinkedIn, Pinterest, Instagram, Twitter
  • Tech support
  • Your employees
  • Forums, online communities and groups
  • In-person events
  • At your place of business
  • Your website
List all possible sources of customer data

If you’ve been in business a while, your various sales, marketing, and bookkeeping databases are a goldmine of information. From them you can glean such things as:

  • Which products are selling and which are not
  • Seasonal fluctuations
  • Product returns (This statistic is not just a gauge of customer satisfaction—if you’re selling effectively, you’ll always have some returns.)
  • Demographics including age, location, gender, income, purchasing behavior, education, marital status
  • Media—where do they prefer to interact with you? Is it magazines, TV, movies, social media, direct mail, newsletters, newspapers?
List things you can measure about your customers or product

Once you have your “who” defined and your sources of data listed, list the things you can measure and track. For example, all of these items can be assigned a measure that’s relevant:

  • Speed of delivery or service (on time/late, number of days to deliver, days early/late, etc.)
  • Prices relative to all your competitors
  • Complaints (number of total complaints, number of complaints in various channels, complaints resolved/unresolved, product specific complaints)
  • Complaint resolution (time to resolve, ability to resolve, was it resolved?)
  • Customer requests about products
  • Customer FAQs
  • Refunds (get feedback and turn into a positive experience)
  • Product sales (which ones sell best, worst, which customer segment buys which products)
  • Purchasing behavior (what buyer time frames are important, when do they buy, what is their strategy, do they use products similar to yours, how do they use them, what needs aren’t being met, what makes them buy)
  • Tech support calls (which products, how many calls, nature of calls)
  • Routine service calls. (Use this point of engagement to gather data and feedback about customer and product)
  • Life expectancy of product
  • Customer service interactions. You can ask customers to rate any interaction or conversation with your company on a scale of one to ten. For instance, do this after any phone call, tech support email or service call.

It’s important to keep it simple and measurable, such as yes/no, quantity/number or rating scale.

Action Steps after Gathering CSAT Data

Now that you’re collecting all this customer satisfaction data, what do you do with it?

Start with a single objective. For example, if product returns are causing a decline in revenues, your goal might be to simply reduce return rates.

Use the 80-20 rule (Pareto principle) to pare down the lists and focus your efforts. Select the top 20% of measurable interactions that have the most activity that are relevant to the problem product. Start by assigning a measurement to those items and begin to track them. You can use a simple spreadsheet to do this.

If you don’t have a specific goal, start with the same 80-20 reduction and select the areas of engagement that have the most activity.

Once you have the process in place and a little experience, it will take less time. You can then add in the other elements to measure and track.

Using Trends to Understand Your CSAT Information

Another simple way to use data without getting overloaded is to watch trends in the data you are measuring.

Your initial data is a starting point. Depending on the statistic, an upward trend might provide confirmation you’re on the right track, and vice versa. As a management tool, trends typically carry more weight than daily or one-time numbers.

Using Comparisons to Understand Customer Satisfaction Information

Comparisons may not always be available but there are some industry stats published regularly, such as the American Customer Satisfaction Index (ACSI) which covers 47 industries.

Trade associations frequently offer this type of information, too.

Here’s an example of customer satisfaction metrics at full-service restaurants by year. If you’re measuring similar items as they are in this ACSI annual survey, you can gauge where you stand in relation to the average restaurant.

Which CSAT Metrics are the Best Predictor of Future Performance?

Ah, that’s a question, according to customer satisfaction scholars, that has no definitive answer.

That’s ok, because in the realm of small and micro-businesses, it’s been my experience that it’s best to evaluate our unique situations rather than blindly adopt some other company’s best practices.

There is nothing wrong with looking at best practices. They’re a great place to start as long as we put them into the context of our business.

For example, the techniques that Amazon uses to measure customer satisfaction probably won’t directly transfer to a retail store or professional practice in which all transactions are done face to face.

However, we could take elements of Amazon’s process, such as automated requests for reviews, and adapt them appropriately to our own operation.

The Net Promoter Score we mentioned earlier is a fairly reliable predictor of future performance.
It starts with the question, “On a Scale of 1-10, how likely are you to recommend X/company/product to a friend or colleague?”

Generally it’s figured by dividing answers into 3 categories:

  1. Promoter (9-10)
  2. Passive (7-8 can be swayed)
  3. Detractor (0-6).

NPS = percentage of detractors – percentage of promoters. A “Good” NPS is considered to be 45-60.

There are plenty of scoring systems out there.

Yet for small businesses, the very fact that you’ve taken time to begin measuring your customers’ satisfaction is, in itself, a great indicator that your future growth is going to be good. It shows you care, and this will come through to your clients.

Conclusion

Does measuring customer satisfaction sound like work? Yes, it is.

But it’s well worth the effort. After all, today’s satisfied customer might be quite upset tomorrow. You’d want to know that.

Customer satisfaction metrics start with an understanding of everything you can measure about your customers and products. A consistent, strategic effort to measure and track these numbers leads to a deeper understanding that can only help your future business growth.

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Andre Palko

Andre Palko is founder of the Small Business Rainmaker™ and its free weekly e-newsletter that focus on helping small business owners go from "I'm just getting by" to "I love my business and the life it's given me!", by working smart, de-stressing, and getting more free time. He’s devoted to sharing the growth tactics that helped his previous business make it to the Inc. 5000.
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2 thoughts on “Finding the Right Customer Satisfaction Metrics for Your Small Business

  1. Interesting read! I’ve had some experience with measuring and analyzing CSAT’s for a ride-hailing company I used to work for. If you pay close attention, you can do wonders with the results you find! Customer engagement is amongst the most important factors to drive business growth in today’s time!

  2. Thank you Maazia, glad you enjoyed the article. And yes, I believe there is much to be gained by taking time to measure customer satisfaction. It’s a bit of work for most small business owners but the payoff is big. I appreciate your feedback!

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