The world in which your customers live is more than complex – it's perplexed with a variety of different channels and devices through which they can connect and interact with your business. And with your competitors. Therefore, it's no longer enough to simply connect with your customers. You must build upon that connection and transform it into a strong and healthy relationship.
As a CMO, you need to provide your customers with a 5-star customer experience during their customer journey.
Yes, you may spend your time sifting through CTRs, website clicks, and other traditional metrics, but today's CMOs need to focus on the one (and only) thing it counts: customer satisfaction.
Customer satisfaction is the metric to rule them all
Why has customer satisfaction become such an important factor in determining a business’ success nowadays? Well, because in this completely digitalised world, your business is defined by what your customers say about you. This is why building a strong relationship with customers is becoming a number one priority for CMOs.
They must justify the ROI of their marketing efforts and to do that, they need a metric that will allow them to show how they're attracting new, retaining current customers, and increasing their brand value.
Customer satisfaction can be defined as an objective and formalised tool for assessing how happy are your customers when dealing with your company. Their happiness will increase their lifetime value and their willingness to recommend you to their friends. As a metric, customer satisfaction is more difficult to calculate than LTV (Life-Time Value) or CAC (Customer Acquisition Cost) but is becoming the one that most CMOs focus on first.
According to Salesforce 2015 State of Marketing Report, CMOs are moving away from the traditional metrics and focusing their attention on customer satisfaction.It’s not up for argument here at MyFeelBack. But if you still disagree with the idea, read on, and we hope to convince you otherwise.
5 reasons why every business should analyze their customer satisfaction
We limited ourselves to the 5 most important reasons according to us. They may also differ for each sector.
1 - Customer satisfaction increases loyalty
It might be a statement of the obvious, but customer satisfaction is the main reason as to why a customer remains loyal to your business.
According to Gartner, in the next few years, companies will gain 80% of their revenue from just 20% of their existing customers. The Pareto principle is applied. This means that loyalty is becoming an effective way of retaining customers by keeping them satisfied. On average, it can take as long as 3 years before a customer becomes loyal to your business.
Once loyal, you mustn't slack off but instead continue to keep them satisfied. This way, you have a great chance to turn them into brand ambassadors. Customer loyalty creates a virtuous cycle in which a business can open a new acquisition channel at minimal cost.
2 - Customer satisfaction increases customer lifetime value
In short, LTV is a marketing metric that predicts the total profit accumulated from a future relationship with a customer. The longer a customer is satisfied with your product or service offering, the longer he will do business with you. The longer he does business with you the greater the chance that you will get a return for the cost of acquisition of that customer.
Think about it. If your cost per acquisition is $200 and your LTV is $300, your marketing efforts have a 50% ROI. Now, imagine if you could increase your LTV to $400. You would have a 100% ROI. It's that simple: if you increase your LTV, you increase the return on every marketing dollar you spend.
3 - Customer satisfaction reduces churn
Above all, if your customers are satisfied, then they have little reason to stop doing business with you in the first place. But never think that you are immune to a competitor swooping in and making them a better offer.
Another factor explains to what extent customer satisfaction helps you to better keep your customers. If they are satisfied, it is likely that they will go on to purchase more and more products and services from you. At the same time, they are less likely to be opportunistic and seek out better offers from the competition.
Furthermore, customer complaints can be a valuable source of information. They can let you know when your customers are unsatisfied and give you another chance to retain their business. Complaints can also be used as an early warning system that will allow you to detect minor problems and fix them before they explode.
However, the lack of customer complaints doesn't mean that everything is great. John Goodman, a renowned customer service expert says that only half of your customers will bother complaining to you about their problem. This means that 50% of your customers has the potential of leaving silently and telling others about your poor offering.
By analyzing customer satisfaction, you can detect potential problems and put new processes in place that will increase the quality of all touchpoints with your customers.
Read more on the Hidden value of customer criticism.
4 - It´s cheaper to retain customers than acquire new ones
In one of our previous blog posts, we already talked how businesses devote large portions of their budget to attracting new customers. Each year, you and your marketing team spend most of your budget trying to get the attention of your prospects. You travel great lengths to make their interaction with your brand as immersive and tailor-made as possible.
We all know that acquiring a new customer can cost six or seven times more than it does to retain your current customer. Why is it then that most companies do a poor job in keeping their current customers satisfied?
5 - Customer satisfaction is a great point of differentiation
In today's competitive world where several businesses compete over each customer; customer satisfaction can quickly become a key differentiator. Many businesses offer products and services that can be very similar in terms of features, quality, and price. So, what will make you choose one instead of the other? If your friend recommended one of them would that help?
It's true. Businesses who provide their customers with excellent customer experience create their ecosystems where customer satisfaction is high and brand ambassadors are created daily. Harvard Business Report states that 23% of customers who are happy will share their experience with their friends.
We already mentioned that the customer satisfaction is becoming the most important marketing metric but, in reality, it is much more than that. It's your key differentiator that allows you to attract new customers and achieve long-term success.
Now when you have seen the difference that customer satisfaction can bring to your bottom line, it's time to start putting your customers first.
We don’t advise that you should completely overhaul your business model just to boost customer satisfaction. Implement a plan to measure customer satisfaction that will enable you to:
- Take an audit of your customers’ general satisfaction
- Identify potential sticking points in your customer journey
- Continually monitor customer satisfaction: this will allow you to see what impact your actions have on it