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.
Why now? Well, because in this completely digitalized 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.
One metric to rule them all
Customer satisfaction can be defined as an objective and formalized 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. Here are 5 most important reasons why every business should analyze their customer satisfaction:
1) It 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.
2) It increases loyalty
According to Gartner, in the next few years, companies will gain 80% of their revenue from just 20% of their existing customers. 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.
3) It reduces churn
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(s). 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.
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) It's 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. Here are some ideas to help you started:
- Use high-quality content to educate your customers
- Use newsletters to send special promotions
- Use customer satisfaction surveys to measure and increase satisfaction