Why Monitor Customer Satisfaction
Customer satisfaction is a term used to measure how business product and service offerings meet or surpass the expectation of its customers. It is a requirement of the ISO 9001 standard that the organisation will monitor customer satisfaction. Why is it important for a business to monitor customer satisfaction? Customer satisfaction is important because it provides business owners with a measure to manage and improve their businesses.
Here are the top 5 reasons why customer satisfaction is so important
- It is a point of differentiation
- It reduces the churn
- It increases customer lifetime value
- It limits negative word of mouth
- It is much cheaper to retain existing customers than to acquire new ones
A point of differentiation
Businesses who succeed in a competitive marketplace are the ones that make customer satisfaction a key element of their business strategy. In today’s competitive environment, a recommendation to use one business over the other can influence prospective clients decision. Companies who offer outstanding customer experiences create environments where satisfaction is high and so customer advocates are plenty.
collecting customer feedback also helps you identify differentiation opportunities to further stimulate customer satisfaction.
Knowing what your business customer satisfaction levels are, will help you better implement processes and tactics to enhance and improve the overall quality of your customer service.
Try putting an emphasis on exceeding customer expectations and ‘wowing’ customers at every opportunity.
These should be implemented for a period of about six months; thereafter customer satisfaction levels should be measured again to see whether the newly implemented initiatives had positive or negative implications on customer satisfaction.
Increasing customer lifetime value
Customer satisfaction plays a significant role in how much revenue a customer generates for your business over the period of your relationship, which is also known as lifetime value.
Any successful business is aware of the importance of customer retention as well as creating customer lifetime value. Increasing customer lifetime value subsequently increases your business returns.
Customer lifetime value is a result of high customer satisfaction and excellent customer retention. Think about what you are doing to keep customers coming back and spending more.
Limiting negative word of mouth
Generally speaking, an unhappy or unsatisfied customer tells between 9-15 people about their experience. That’s a lot of negative word of mouth.
How much will that affect your business and its reputation in your industry?
Customer satisfaction is closely linked to revenue and repeat purchases. What often gets forgotten is how it negatively impacts your business. It’s one thing to lose a customer because they were unhappy, but it’s another thing completely to lose 20 customers because of negative word of mouth.
To reduce or completely eliminate this, you need to measure customer satisfaction on an ongoing basis. Tracking changes in satisfaction will help you identify if customers are actually happy with your product or service.
More cost effective to retain existing customers
This is probably the most publicized customer satisfaction statistic out there. It costs up to ten times more to acquire new customers than it does to retain existing customers.
If that statistic does not resonate with you, then there’s not much else anyone can do to demonstrate why customer satisfaction is important.
Customers cost a lot of money to acquire. You and your marketing team spend hundreds or even thousands of dollars getting the attention of prospects, nurturing them into leads and closing them into sales, therefore it should then come as no surprise that it would require more money to keep these acquired customers.
Imagine if you allocated one sixth of your marketing budget towards customer retention. How do you think that will help you with improving customer satisfaction and retaining customers?
Customer satisfaction plays an important role within your business. It is one of the key indicators of customer loyalty, tracking customer complaints and dissatisfaction, and it is also the key to unlocking business product and services differentiation strategies. Over and above all of these great benefits, it allows the business to compete with competitors on the sole basis that the business knows what their customers want.
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