Why should every business aim for customer satisfaction?
Customer satisfaction is a term used in marketing world that measures how products or services supplied by a company meet or surpass a customer’s expectation. It serves as a metric to manage and improve businesses by marketers and business owners. It’s been found out that a staggering 75% of marketing managers vouch for customer satisfaction as one of the most useful metrics for monitoring and evaluating business growth.
Although there are many reasons why customer satisfaction attainment is imperative for every business, I shall only mention the top 5 ones:
1. It is the main criterion for customer loyalty
Customer satisfaction is the best indicator of the likelihood and probability of future purchases that can be made by the customer. Using a scale of 1 to 10 as your customers to rate their satisfaction which will eventually lead to segmenting them as repeat customers and brand advocates. Customers who give a score of 7 and above, can be considered satisfied, and you can bank on them to come back and make repeat purchases. Customers who rate you a 9 or 10 are your potential brand ambassadors. Be cautious of ratings 6 and below, which indicates that customers are not happy and have a risk of leaving as well. These customers must be your immediate focus, follow up with them and try to find out what can make them happy. Thus, we see how customer satisfaction proves to be beneficial in providing with insights on customer buying behaviour.
2. It acts as a point of differentiation
In a highly competitive marketplace where businesses constantly trying to compete with each other for customers; customer satisfaction is considered as a key differentiator. Businesses who manage to succeed in such cut-throat environments are the ones that use customer satisfaction as a key element in their business strategy. Picture this- two businesses offer the same product, but what parameter will decide the fate of one gaining more popularity than the other? Businesses who create an optimum environment where customer satisfaction is high, also tend to have prospective customer advocates.
3. It minimises customer churn
According to various surveys conducted by prominent organisations, it has been found that surprisingly, price is not the main reason for customer churn, but poor customer satisfaction definitely is. Using optimum customer satisfaction, you can drastically minimise customer churn. Focus on exceeding customer expectations and amaze them whenever you can. Measure customer satisfaction after six months and evaluate whether your initiatives made a positive or negative impact on satisfaction.
4. It elevates customer lifetime value
Satisfaction plays an important role in measuring the amount of revenue a customer generates for your business. It has been found out that a completely satisfied customer, contributes 2.8 times more revenue than a satisfied customer does, and approximately 15 times more revenue than a dissatisfied customer. Successful businesses understand the significance of customer lifetime value (CLV) which is directly proportional to the returns on marketing capital. CLV is achieved upon high customer satisfaction and optimum customer engagement.
5. Cost of retaining existing customers is cheaper than acquiring new ones:
Retaining existing customers is probably cheaper than acquiring new ones which is touted to be one of the most publicized customer satisfaction statistic. New customer acquisition cost is almost six to seven times more than cost of retaining old ones. Customer acquisition strategies involve a lot of investment, in terms of cost and time. Marketers invest a huge capital in getting the attention of prospects, nurturing them into leads and finally closing them into sales.
Customer satisfaction thus plays an important role within any business.