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What is Customer Satisfaction?

The Father of Modern Marketing, Philip Kotler, defines Customer Satisfaction as a 'person’s feeling of pleasure or disappointment, which results from comparing a product’s perceived performance (or outcome) against their expectations.'

Customer Satisfaction essentially measures whether products and services offered by a company meet or surpass a customer’s expectations.

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What happens when you buy a product or use a service, you always have an expectation of how it would be. Remind yourself what happens when the product or service doesn't live upto the hype. You obviously feel dissatisfied and disappointment. And the complete opposite happens when it meets or surpasses your expectations. When you are satisfied with a product, you also tend to leave reviews for the company, recommend it to others and stay loyal to the brand and business. 

So it's easy to say that Customer Satisfaction also affects Customer Loyalty


There are multiple factors that influence our expectations of products and services we purchase and use. Let's review some of the Factors that Influence Buyer's Expectations

  • Performance of the product in the past
  • Reviews, Recommendations, Word-of-Mouth, and Testimonials
  • Competitor Views about the Products and Services
  • Expectations built by the Seller or Service Provider

Importance of Customer Satisfaction

In this competitive age, Customer Satisfaction is a key component of a good business. Every business needs customers to make them flourish. To keep the customers happy and retain them, customer satisfaction plays an important role. Customer Satisfaction and Loyalty eventually generates big returns — a 5% increase in customer retention results in a 25% to 95% increase in profits.

If you don't measure Customer Satisfaction, there will simply be no other way for you to identify unhappy and dissatisfied customers. And if you don't identify them, you cannot prevent them from churning or from leaving bad reviews online which in turn will affect your business gravely. Similarly, measuring Customer Satisfaction also helps you identify happy customers who can be evangelists and loyal marketers of your brand and business. 

Let's review in detail why measuring Customer Satisfaction is important. 

  1. Helps identify Unhappy Customer
    You can't create a good product for your customers till you know how they feel. Also, you can't make improvements in what you offer without knowing your unhappy customers and knowing why they are dissatisfied and unhappy.

    With customer satisfaction surveys, you can measure how many customers are unhappy and if used effectively, you can also find out why they're unhappy.

    Once you know and identify this, you can easily build strategies to prevent them from churning, to make improvements and keep business.

  2. Helps reduce Customer Churn Rate & Improve Retention
    Like we discussed in the first point, measuring Customer Satisfaction and knowing what is working and what is not working, helps you prevent Customers from leaving your business and improves Retention. This is nearly impossible to achieve without any data of how happy or unhappy your customers are.

  3. Helps identify Happy Customers & Loyalists
    Besides identifying the customers that are dissatisfied, it is also important to identify the happy ones. Happy Customers means repeated business and beyond the monetary value, happy customers also act as promoters and marketers for your brand by recommending your business to others.

    It is cheaper to retain existing customers and continue getting their business than winning new ones.

  4. Helps you forecast Business Growth
    Without measuring Customer Satisfaction, it is hard for marketing and sales teams to determine health of business and predict business growth. It is also hard for teams to work on the business without incorporating feedback and understanding what customers truly expect from the business.

  5. Helps you attract more Customers and Business
    If you're measuring Customer Satisfaction and working on making improvements for miffed Customers, chances are that your customers, especially the ones who you win back will promote you and appreciate you. This will help you get reviews and testimonials to win Customers and get more Business. 

  6. Helps you with Customer Advocacy
    Referral programs and Customer Advocacy programs are great for all businesses. You can make your Happy Customers the best marketers for your business and let them promote you to other potential customers. 

    You must have come across simple referral strategies, like voting for a business online for awards, leaving reviews and recommendations online to get discounts, get a discount on referring to friends. 

  7. Helps create a long-term relationship with your customers
    With increased Customer Satisfaction, customers don't get a reason to leave your business. Loyalty to business increases and this helps build long-term relationships. Happier Customers will never turn to competition and that helps you with sustained business growth.

In a nutshell, Customer Satisfaction is a way of understanding and measuring how satisfied and happy you're keeping your customers with the brand and products you offer. It is important to measure and track Customer Satisfaction to ensure that Customers don't churn, that they stay loyal and bring in continued business and business growth for you. 

Learn more about the Customer Satisfaction (CSAT)

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Written by Megha

Dec 26, 2019

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