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Satisfaction, Loyalty

What is Customer Satisfaction (CSAT) & Customer Loyalty (CL)?

Customer satisfaction and customer loyalty are two crucial concepts that any company needs to understand and take into account in order to stay competitive and thrive in any industry. These are concepts that may appear simple at first, but taking a deeper dive into understanding the nuances behind customer satisfaction and customer loyalty and how these two things are built will allow you to gain a huge advantage over the competition.

Customer satisfaction is the degree to which a customer feels that their expectations have been met (or even exceeded) by a company’s product and/or service. This can be influenced by various factors, including the quality of the product, the price they paid for it, customer service, and brand image. Customers who are satisfied with a company’s product and/or service are more likely to become loyal customers, repeat their purchases, and recommend the company to others.

Customer satisfaction and customer loyalty are two crucial concepts that any company needs to understand and take into account in order to stay competitive and thrive in any industry. These are concepts that may appear simple at first, but taking a deeper dive into understanding the nuances behind customer satisfaction and customer loyalty and how these two things are built will allow you to gain a huge advantage over the competition.

Customer satisfaction is the degree to which a customer feels that their expectations have been met (or even exceeded) by a company’s product and/or service. This can be influenced by various factors, including the quality of the product, the price they paid for it, customer service, and brand image. Customers who are satisfied with a company’s product and/or service are more likely to become loyal customers, repeat their purchases, and recommend the company to others.

Furthermore, there are different levels of customer satisfaction. The most basic level would be simply meeting the minimum standards of your customer’s expectations, but by outperforming their expectations, you can even delight and amaze your customers – which will make them much more likely to become loyal customers of your business.

Customer Loyalty on the other hand is the degree to which a customer continues to do business with a company, chooses it over competitors, and recommends it to others. This comes from having a positive customer experience, which is based on factors such as the quality of the product/service, the perceived trustworthiness of a company, and it’s overall value of the customer’s money. Loyal customers are essential to a company’s long-term success since they tend to spend more, refer others, and provide valuable feedback.

There are also different types of customer loyalty which can stem from different situations which businesses need to understand in order to tailor their strategies to meet their customers’ specific needs and win their loyalty. Here are some examples:

  • Transactional Loyalty

This type of loyalty is developed by providing offers and discounts which encourage customers to make repeated purchases. It is often seen in industries such as retail or e-commerce, where customers make frequent purchases based on the price and convenience that the company offers. This is where we find and create customers who are loyal to prices and customers who are loyal due to your loyalty program or the convenience of using your business compared to others. 

  • Social Loyalty

Engagement of customers through social media channels. One way this can be done is by offering rewards for customers who share posts from your brand on their social media platforms, or by tagging their friends in posts from your brand. This provides a way for your brand to keep customers engaged and to involve them in the marketing of your business.

  • Emotional Loyalty

This type of loyalty can be created by establishing an emotional connection with your customers. This can be done by awarding your customers with gifts or rewards on special occasions such as their birthdays, company anniversaries, or special milestones such as a 1- year customer-business relationship. These initiatives can provide deeper connections with your customer that basic discounts do not.

Finally, you will have your truly loyal customers, those that connect with your brand on an emotional and personal level because it not only meets their needs and addresses their pain points, but also provides excellent service while rewarding those same customers for their advocacy and loyalty.

It is important to note that customer satisfaction and customer loyalty are not static concepts but can change over time. Customer needs and expectations evolve, and businesses need to continually adapt to meet these changing demands and maintain a competitive edge. 

From our point of view as market research specialists, it is essential to regularly measure and monitor customer satisfaction to identify areas for improvement by using a wide range of tools and metrics including customer’s experience feedback, customer observation, social buzz, internal metrics, and relationship surveys.

 

Differences Between CSAT & CL?

The Short and Long Term

Customer satisfaction measures how satisfied customers are with a product or service depending on the actual performance relative to the customer’s expectation. CSAT is a metric expressed as a percentage or a numerical score and is derived from surveys or feedback gathered from customers. It is a short-term metric, focusing on the customers’ immediate experience with a product or service.

On the other hand, customer loyalty measures the degree to which customers are loyal and committed to a particular brand, product, or service. It measures the likelihood that a customer will continue to do business with a company, make repeat purchases, and recommend the company to others. Customer loyalty is a long-term metric, focusing on the overall relationship a customer has with the company or brand.

Satisfaction Creates Loyalty

Customer satisfaction and customer loyalty are closely related but with distinct concepts. Customer satisfaction is a requisite for loyalty. Customers who are satisfied with a product or service are more likely continuing  to do business with the company. Conversely, customers who are not satisfied may opt to switch to a competitor or stop doing business with the company altogether.

On top of that, customer satisfaction can have an impact on customer loyalty over time. If a customer has a positive experience with a company and is satisfied with their product or service, the likelihood of them becoming loyal customers and to continue to do business with the company in the future increases. By providing excellent customer service, responding quickly to customer complaints, and continuously improving products and services, companies can build a loyal customer base that is more likely to continue to do business with them over time

The Behaviour of Loyal Customers

Meanwhile, customer loyalty can be measured through a variety of metrics, such as repeat purchases, customer retention rates, and customer lifetime value (CLV). Repeat purchases refer to the frequency a customer makes a purchase from a company over a certain period of time, while customer retention rates refer to the percentage of customers who continue to do business with a company over a certain period of time. CLV is the total amount of money a customer is expected to spend over the course of their relationship with the organization. High customer loyalty can lead to increased revenue, as loyal customers are more likely to make repeat purchases and recommend the company to others. Moreover, it can also reduce the cost of customer acquisition, as loyal customers are less likely to switch to a competitor.

Customer loyalty also refers to the behavior of customers who are loyal to a particular brand, product, or service. Examples of customer loyalty behavior include repeat purchases, advocacy, brand attachment, and forgiveness of the occasional mistake or lapse in quality. It encompasses the mindset and beliefs of customers who are loyal to a particular brand, product, or service. It is the attachment and emotional connection that customers have towards a brand, which leads to continued loyalty and repeat business.

 

The Benefits of CSAT and CL?

The Benefits of CSAT and CL

Having high customer satisfaction and loyalty can lead to many benefits for your company, such as: 

Increased customer retention: High levels of customer satisfaction and loyalty can help to retain existing customers and reduce customer churn.

Indicators of team performance: Customer satisfaction can also be used to determine how well your team is doing, which will help you to strategise when it comes to assigning manpower and managing your human resources.

Boosting customer acquisition: Satisfied and loyal customers are more likely to recommend a company to others. This positive word-of-mouth can help to attract new customers and expand the customer base. A positive CSAT & CL score also helps to enhance a company’s reputation which will attract new customers.

Increases customer lifetime value: The higher the satisfaction, the more likely the customer is to remain loyal, and the more likely they will be willing to spend a higher amount of money on your product over time.

The Effect of CSAT and CL on Commercial Benefit

Customer satisfaction and customer loyalty are critical factors that can significantly affect the commercial benefit of a business. Satisfied and loyal customers are more likely to come back and to spend more money on the company, which leads to repeat sales and a higher customer lifetime value. This results in increased revenue and profitability over the long term. Loyal and satisfied customers are also more inclined to recommend a company to their friends, family, and colleagues, which can lead to increased sales and revenue through new customer acquisition. High levels of customer satisfaction and loyalty can aid in building a positive brand reputation, which leads to increased trust, loyalty, and sales, as customers have a tendency to choose a brand that they trust and believe in.

Additionally, it is more cost-saving for companies to retain existing customers than to acquire new ones. Satisfied and loyal customers tend to require less marketing and advertising spend to keep them engaged. Research shows that companies with high levels of customer satisfaction and loyalty often have a competitive advantage over their rivals. Their customer base are often more willing to purchase from them instead of their competitors, enabling the company to charge premium prices for their products and services. 

The Relationship between CSAT & CL Towards Customer Lifetime Value

On top of that, the measure of customer satisfaction and customer loyalty can affect customer lifetime value for businesses. The impact can be seen through customer retention, customer acquisition, customer spending, and customer lifetime. 

Generally, higher customer retention rates often leads to increased customer lifetime value. 

New customer acquisition occurs when satisfied and loyal customers recommend a company to others. This can increase customer lifetime value by bringing in new customers who may become loyal, repeat customers themselves. 

Customer spending considers how satisfied and loyal customers are more likely to spend more money with a company over time and to purchase additional products or services from the company. This leads to a higher average order value. Lastly, customer lifetime looks into how long a customer continues to do business with a company. Satisfied and loyal customers tend to have a longer lifetime with a company than dissatisfied or disloyal customers, allowing the company to continue to earn revenue from the customer for a longer period.

Loyalty Programs: A Boost for Customer Lifetime Value (CLTV)

Loyalty programs are one of the most effective tools for increasing customer lifetime value for businesses. Loyalty programs can help to retain existing customers by rewarding them for their loyalty, thus increasing customer retention rates. The rewards and incentives offered by loyalty programs encourage customers to spend more money with a company, leading to a higher average order value. They can also help to attract new customers by offering incentives for signing up. Well- made programs help to build brand loyalty by rewarding customers for choosing a particular brand over others. This can lead to increased trust and loyalty among customers

More impartantly, loyalty programs provide businesses with valuable customer data and insights, such as purchasing behavior and preferences. This information can be used to create more personalized marketing campaigns, which can increase customer engagement and loyalty.

Drive Value: Cross-Selling and Up-Selling

Businesses can also drive value by increasing revenue from existing customers through tactics such as cross-selling and upselling. 

Cross-selling is the technique of offering customers additional products or services that complement the products or services they have already purchased. For example, a customer who buys a laptop may be offered a printer, a case, or other accessories. 

Upselling on the other hand, is the technique of offering customers a more expensive or premium version of the product or service they are interested in. To illustrate, a customer who is interested in a basic TV package may be offered a more comprehensive package with additional channels and features. 

Cross-selling and upselling can lead to increased revenue from existing customers by increasing the value of each transaction. This isn’t solely to the benefit of the business as it can also provide customers with additional value and enhance their overall experience. This can lead to increased loyalty, repeat business, and positive word-of-mouth referrals, significantly increasing the revenue generated from each customer over their lifetime.

Businesses should regularly measure CSAT and CL to identify areas where they need to improve their customer service and take steps to address any issues or concerns. A strong CSAT and CL program can help companies to build and maintain strong relationships with their customers, which can lead to increased revenue, profitability, and long-term success.

 

How to measure CSAT & CL?

Now we know the importance of CSAT & CL, which means it’s just a matter of figuring out how to measure them. 

Why measure CSAT & CL?

Measuring CSAT & CL is essential as it allows a company to know where they stand and how to improve. 

From the perspective of the day-to-day operations of a business, having to measure  your customers’ satisfaction and loyalty and keeping a close eye on it will allow you to take action in order to save an unhappy customer from leaving your brand for a competitor. This will spare you from the pain of finding that droves of what were once loyal customers have suddenly left in search of a business that better suits their needs, as you will always be able to see the warning signs of any dips in customer satisfaction and take the initiative to address their problems and complaints.

Measuring CSAT & CL will also help you to discover customer pain points and learn how to improve your product, service, or overall customer experience. Ensuring customer happiness in this way is what will drive repeat purchases, resulting in more loyal customers.

From a marketing and branding perspective, measuring CSAT & CL will allow you to monitor and improve your brand reputation by discovering how likely customers are to recommend your company to a friend, a likelihood which would be based on their levels of satisfaction and loyalty to your business.

Finally, simply dedicating your business to carrying out the process of measuring customer satisfaction and loyalty will already serve to build customer trust as it will show customers that you value them and their feedback matters to you, which will then inspire more confidence and loyalty in them toward your business.

How is CSAT & CL Measured?

Measuring customer satisfaction typically involves using surveys to gather feedback on various aspects of the customer experience, such as product quality, customer service, and ease of use. 

One popular tool for measuring customer loyalty is the Net Promoter Score (NPS), which is a rating given by customers based on how likely they are to recommend a business to a friend or colleague. Customers are asked to rate this likelihood on a scale of 0-10, with those who rate their likelihood as 9 or 10 considered “promoters” and those who rate it as 6 or below considered “detractors.” The NPS is then calculated by subtracting the percentage of detractors from the percentage of promoters, with a score ranging from -100 to 100.

CSAT (Customer Satisfaction) surveys, on the other hand, are focused on evaluating how well a business has met a customer’s expectations during a specific interaction or experience. These surveys typically ask customers to rate their satisfaction with the product, service or experience they received, using some sort of scale or rating system to gauge overall satisfaction, with higher scores indicating higher levels of satisfaction e.g. a scale of 1-5 stars, a thumbs up, or a reaction ranging from very unhappy to very satisfied. 

CSAT surveys may also include open-ended questions that allow customers to provide more detailed feedback on their experience, which businesses can use to identify specific areas where they are performing well and where they need to improve, as well as gain a better understanding of the pain points customers are facing and how these customers would like to have their needs addressed. Engaging with your customers in this manner will 

What can Oppotus do to help you measure CSAT & CL?

Our comprehensive proprietary research toolkit contains tools, techniques and methods which are not only able to measure CSAT & CL, but also go a step further and provide insight and detailed analytics that will tell you exactly what areas your business is excelling and underperforming in. 

By working with us and allowing us to engage your business with our research tools, we will also be able to calculate a Customer Satisfaction Index for specific products and services that your business offers,  which will show how satisfied or unsatisfied customers are with that particular product.

 

What Does it Take to Satisfy The Customer?

At this point, we have a good understanding of what customer satisfaction is and the benefits it can bring, but we’re still missing out on an important aspect: what does it actually take for a customer to be satisfied?

In our previous section, we talked about how CSAT Surveys can be used to get a direct response from customers who have engaged with your business and find out their level of satisfaction from those interactions, but there’s another process that goes hand in hand with CSAT Surveys that can be used to give your business an even better understanding of what it takes for a customer to be satisfied – the Mystery Shopper Study.

A mystery shopper study is conducted using “agents” who are given the task of visiting a business and acting as an ordinary customer in order to collect information about the services/experience provided by the business and objectively assess the quality of the overall experience. Conducting the study involves the following steps:

  1. Training: The agents selected to be mystery shoppers are trained on data collection and paying attention to specific details before conducting visits. The data is collected using an online platform that can be accessed through a smartphone so the mystery shoppers can upload the data in real time.
  2. Visit: Shoppers visit the designated business
  3. Interact: As trained, shoppers will interact with the personnel accordingly while making relevant observations – do the staff greet customers in a manner befitting the service expected from the business? Are staff able to identify the pain points of customers within a certain amount of time elapsed from the first interaction?
  4. Observe: Shoppers observe the internal conditions of the outlet, making note of things such as cleanliness and whether the facilities are working or maintained as they should be.
  5. Capture: Evidence of any form of non-compliance can be taken immediately using a smartphone camera or by making notes/ticking criteria on a digital platform.
  6. Input: Shoppers can input data into a smartphone whenever necessary to ensure no missed or forgotten data.
  7. Output: Data obtained in “real-time” is used to generate a report of the mystery shopper study.

The benefit that a mystery shopper study offers is that it can help validate or refute the feedback received through the CSAT surveys. If customers report poor service in surveys, mystery shoppers’ observations can confirm whether these concerns are valid and provide additional context.

While the CSAT survey can provide information on whether or not customers’ needs are being met while visiting a business, mystery shopper studies can pinpoint specific issues and how certain behaviors are affecting customer satisfaction.

For example, a customer who visits a mobile phone store might answer a CSAT survey by stating that they had an unsatisfactory experience with the staff member who attempted to assist them, but they wouldn’t necessarily be able to explain the staff member’s shortcomings in detail. Even if they did so, the customer’s account of the interaction wouldn’t necessarily be accurate as it would be subject to bias. By dispatching a mystery shopper to the store and having that mystery shopper interact with that staff member, the mystery shopper would be able to provide an objective evaluation of the staff member’s performance and pinpoint where the customer’s dissatisfaction arose from – perhaps it was because the staff member didn’t display a welcoming attitude to the customer at first, or perhaps the staff member simply wasn’t able to assist the customer in finding the type of mobile phone that was suited to them due to the customer not specifying their own needs clearly.

Thus, CSAT surveys and mystery shopper studies go hand-in-hand when it comes to getting a detailed understanding of what it takes to achieve customer satisfaction and implementing those changes in your business. They are complementary to each other, where the information from both can provide a benchmark to compare how your business compares to others in the same industry and provide you with actionable items that you can implement over time in order to continuously improve customer satisfaction for your business.

Getting Down to the Business of Improving CSAT

Ultimately, your CSAT surveys and mystery shopper studies might inform you that you need to implement certain practices to effectively improve customer satisfaction:

1. Offer high-quality products

Every business has to constantly ensure that their product and/or services are at the forefront of their respective industry in order to keep their customers satisfied, lest they seek out your more innovative competitors. This might sound obvious, but it’s also worth keeping a constant eye on whether your business is offering the highest-quality products possible – and whether or not the customers are aware of the quality that your business is offering.

2. Boost customer satisfaction by emphasizing convenience

Speaking of awareness, customers will always lean towards a business that provides a more convenient experience for them compared to its competitors. Convenience can take many forms, such as easy accessibility to your business across different platforms i.e. a company website, e-commerce sites, social media, and more. Speeding up transaction times and providing different ways for your customers to complete payments and transactions will also lead to your customers being more satisfied with their experience and leaning toward your business.

3. Manage expectations carefully

With that in mind, be sure to let your customers know upfront what they can expect from your business. Aside from promoting your own services to prospective customers, you can also inspire customers to trust you and improve their overall satisfaction when you live up to their expectations.

These are just a few examples of practices you can implement with your business in order to boost customer satisfaction. By keeping a close eye on CSAT levels using surveys and mystery shopper studies, you’ll be able to figure out which practices are best to address any shortcomings in your business as time goes on and maximize customer satisfaction.

 

How To Turn Satisfied Customer to Loyal Customer?

It’s a fiercely competitive business landscape out there, and maintaining customer satisfaction can be tricky given how many rival businesses are out there innovating and evolving in order to gain the competitive edge.

Identifying the underlying issues that are affecting customer satisfaction can often be a complex and challenging task but Oppotus can be an invaluable partner that provides insight while lighting the way forward. Oppotus specialises in pinpointing the precise root causes of issues within your business that may be adversely affecting customer satisfaction, which is done through a combination of cutting-edge research/data collection methods and a deep understanding of consumer behavior and brand development from our decades of experience working in the field of market research.

If you want your business to stay prosperous and continue to thrive after all of your effort and resources invested into gauging customer satisfaction and implementing ways to improve it, your best course of action is to focus on turning your satisfied customers into loyal customers.

In one of our earlier chapters, we discussed the types of loyalty that customers may have to your business, such as “Transactional Loyalty” developed by providing offers and discounts that encourage customers to make repeated purchases, and “Social Loyalty”,  which comes from the engagement of customers through social media channels. However, the best types of loyalty you can have for your business come from the “truly loyal” customers – the ones that have a deep connection with your brand on an emotional and personal level which makes them the most likely to stay loyal over a long period of time and make frequent transactions with your business.

Taking a closer look at the dynamics of customer loyalty, recent trends show that loyalty to brands is directly tied to the emotions of customers. With the current digital media landscape where all brands have their own social media presence and a multitude of platforms to create their own content and interact with the public, customers desire recognition from the brands that they love and are more likely to be loyal customers when they have an ongoing relationship with brands beyond just the time when they decide to purchase something.

Keep in mind that customer acquisition and customer retention are two different goals that require significantly different strategies. Getting a customer to make a first-time purchase is all about making your product as appealing as possible, but getting a customer to make a repeat purchase is a much more nuanced endeavor – you need to build a relationship with the customer and provide a “post-purchase” experience that they can’t turn away from.

Keep Your Customers Engaged

Once a customer has made their first purchase with your business, as far as you are concerned, their journey with your brand has only just begun. The time period immediately after the first purchase has been made is when the iron is hottest and you need to seize the opportunity to build the customer relationship.

One way that this can be done is to have the customer immediately sign up for a loyalty program – something that most customers would be willing to do if they are told that they can immediately earn loyalty points starting with their first purchase. Once this link is established, you can continue to engage the customer with information about your brand and other things that may catch their interest such as discounts and related products/services that they may enjoy. In fact, a recent study of customer loyalty in 2023 showed that 57.5% of customers would like a brand to engage with them by informing them about sales and discounts. This can be done alongside other engagement methods such as giving the customer reward status updates, news about exclusive product launches and product recommendations, all of which can help keep your brand fresh and relevant in the minds of your customers.

Reward Brand Loyalty & Build Trust

Simple psychology tells us that customers will be more likely to stay loyal to a brand if that loyalty is rewarded – a fact reinforced by the results of the aforementioned study of customer loyalty. 53.2% of customers stated that a loyalty program would make them continue to purchase from a brand, so it’s definitely worth putting a focus on building a loyalty program that continuously provides great benefits to your customers.

Be cautious however, as one of the fastest ways to turn customers off from your brand is by sending them too many messages that are irrelevant to them, making it seem like you are badgering them to make a repeat purchase. Instead, your engagement with customers should be focused on rewarding their loyalty while also building trust. This can be done by providing timely updates about their purchases/ongoing services, giving specific recommendations related to the customers needs based on what they have purchased so far, and even providing them with special deals catered to their preferences which they would be more likely to be interested in. All of these things make the customer feel recognised, which makes them more likely to put their trust in your brand and become loyal customers.

Build a Loyal Community

Beyond just having loyal customers, building a loyal community of customers for your brand can bring you exponential benefits by virtue of them becoming advocates for your brand.

This can be done by creating community platforms such as online forums and social media groups where customers can interact with each other and with your brand, where you can encourage customers to share their experiences through reviews, testimonials, or user-generated content. This not only showcases the loyalty of your customers but will also create a positive feedback loop where satisfied customers share their experiences with other customers which will make them more likely to become repeat customers as well.

These community platforms are also a great place to implement feedback channels, where you can actively seek and listen to customer feedback to improve your products and services continually, building an even stronger bond of trust with your customers.

With all this in place, customers will be even more likely to recommend your brand to others at any given opportunity, ensuring that you will have a steady stream of new loyal customers joining your ranks.

Turning satisfied customers into loyal customers may seem like a daunting task at first, and while it does indeed take time, having a loyalty system and community in place will eventually provide continuous, immense long-term benefits for your brand.

 

How Dissatisfied Customer Affect The Company

The last thing a company wants is to have dissatisfied customers, but sometimes you’ll find your business in an unforeseen situation with a bunch of dissatisfied customers and you’ll need to find some way to fix the damage before it gets worse. So, what causes customers to be dissatisfied and how can we solve the problem once it is created?

The Causes

Poor Quality: When the quality of your goods or services fail to meet the customer’s expectations or perform as advertised, then they have every right to be dissatisfied. A truly satisfied customer is one who has received value beyond what they expected for the amount of money they paid, and subpar quality causes frustration and disappointment which undermines their trust in your brand

Pricing: Pricing-related issues can generate dissatisfaction because customers have a certain budget in mind for making their purchase. This ties in with the previous issue of quality, as customers may feel that they are not getting a fair deal when they perceive a product as overpriced. Besides the retail price paid up-front, unexpected additional costs, hidden fees, or unclear pricing structures are also big deal-breakers for customers.

Product Specifications: Accurate and comprehensive product specifications are essential for customers to make informed decisions. When these specifications are inaccurate or fail to align with the product’s actual features, the discrepancy between what was promised and what was delivered can cause disappointment and dissatisfaction.

Usability: Complex interfaces, confusing instructions, and poor design – all of these hinder the usability of a product/service and can lead to frustration as customers struggle to achieve their desired outcomes, making customers feel that their purchase was a waste of time and money.

Poor Customer Service: Unresponsive, unhelpful, or rude customer service representatives can leave customers feeling undervalued and frustrated – a dire problem when your brand is trying to build a rapport with your customers. Sometimes a single negative customer service experience is enough to turn a customer off from ever becoming a repeat customer again.

Hidden Product Info: Hidden product information, such as undisclosed terms and conditions or important details buried in fine print, can cause customer dissatisfaction and damage their trust in your business. Customers expect transparency and honesty from businesses, and hidden information can make them feel deceived or manipulated.

Customers are also likely to take these negative experiences and share them with other people as warnings, which will drive prospective customers away from your business.

The Effects

This brings us to the effects of having dissatisfied customers. It’s safe to assume that this would result in your business losing customers and having reduced sales. However, the impact of having dissatisfied customers can go far deeper than just temporarily lowering your sales numbers, as the actions of these dissatisfied customers can often lead to snowballing negative effects for your business which include the following:

Bad Reviews: Dissatisfied customers are more likely to leave negative reviews on platforms like Yelp, Google, or social media which can tarnish your brand’s reputation. In the modern era where customers rely predominantly on information from the internet to inform their purchasing decisions, this can severely hinder your brand’s ability to attract new customers.

Poor Lead Generation & Conversion: When potential customers hear about others having a bad experience, they are far less likely to bother inquiring directly to your business. This can lead to a decrease in the number of new leads generated and a lower conversion rate.

Loss of Employees: Poor customer satisfaction can even have a negative impact on your employees. Constantly dealing with unhappy customers, complaints, and negative feedback can lead to burnout and demotivation among employees in customer-facing roles.

Furthermore, if your business is struggling due to declining sales and a negative reputation, you may have to make cost-cutting measures, which can include layoffs or reduced employee benefits, both of which will lead to a spiral of negative outcomes for your business as rebuilding customer trust will become increasingly business without having adequate and capable staff on your side.

The Solution

Potentially having dissatisfied customers must seem pretty daunting at this point – and for good reason. However, there are ways to prevent it that any business can implement.

Ultimately it all comes down to transparency and a willingness to not only seek feedback from customers but to act on it. Here are some steps that you can take with your business to nip any potential problems in the bud:

Set up Effective Feedback Channels: Establishing accessible and user-friendly feedback channels, such as online surveys, feedback forms, or direct contact points, enables customers to voice their opinions and concerns easily. By actively seeking feedback, you can gain valuable insights into customer experiences and identify areas that may lead to dissatisfaction, allowing for timely improvements.

Implement Customer Feedback: Use this information gained from the aforementioned feedback to make meaningful changes in your products/services as well as the processes that your staff go through with customers. Addressing issues raised by customers as quickly as possible demonstrates your brand’s commitment to their satisfaction which can even reverse negative situations with customers in your favor – an initially dissatisfied customer could end up being an advocate for your brand if they see that you are willing to go the extra mile to ensure their eventual satisfaction.

Resolve Complaints Quickly: When customers encounter problems or complaints, addressing them promptly is essential. Having established protocols for handling complaints, will ensure that customers feel heard and their issues are resolved in a timely and satisfactory manner. As we established in our previous point, timely resolution can turn a potentially dissatisfied customer into a loyal one.

Respond to Negative Feedback: Rather than ignoring or avoiding negative feedback, embrace it as an opportunity for improvement. Responding to negative feedback in a transparent and empathetic manner demonstrates that your brand values customer opinions and is willing to take steps to rectify any issues, which can help rebuild trust and prevent further dissatisfaction.

Follow Up: After addressing feedback as seen above, it is crucial to follow up with the customer to ensure their satisfaction. This demonstrates your brand’s commitment to satisfaction and excellence – something that will capture the trust of customers and build an emotional bond with them.

This is the post-purchase experience that will turn even initial dissatisfied customers into loyal, returning customers who are also advocates for your brand.

 

Challenges of Fixing Customer Satisfaction

In cognizant , we saw just how dire the consequences can get for a business with dissatisfied customers. Companies would want to completely avoid having dissatisfied customers if at all possible, but even with protocols and solutions for addressing customer feedback in place, there are still challenges that your business must face when it comes to fixing customer satisfaction.

Varying Preferences Across Generations

As time progresses and new generations of customers emerge, it becomes more and more of a challenge for a business to keep up with the differing preferences across different generations of customers.

Each generation has its own set of values and preferences when it comes to products or services. For example, younger generations such as millennials and Gen Z might prioritize sustainability and the usage of cutting-edge technologies, while older generations such as baby boomers may prioritise reliability and traditional values.

The differences of technological savviness between generations may also pose a problem to the way your goods/services are designed and provided to customers. Imagine for example if your company offers a product that  is a household appliance with an elaborate digital user interface that connects seamlessly to a smartphone – something that younger, more technologically savvy generations would find appealing as they could already be using their smartphone as a main control for their home ecosystem. However, if connecting through a smartphone is a requirement for that product’s functionality, then older generations who do not enjoy using smartphones on a regular basis might look for an alternative product that can be used without a smartphone instead of yours.

The differences in attitude towards technology are also reflected in how different generations prefer different communication channels. For example, younger generations may prefer digital communication, such as social media or online chat, while older generations may prefer phone calls or in-person interactions. As we established in our previous section, having proper feedback channels in place is crucial for managing customer satisfaction, and catering to multiple generations of customers means that you will need to invest in developing multiple channels of customer support to reach customers through their preferred methods, be they digital or traditional.

The Quandary of Online Reputations

In the present day, a great deal of your company’s public reputation is tied to its online presence. Nowadays this applies even to older generations of customers, as the diminishing presence of older information channels such as classifieds and traditional marketing means that even less technologically savvy customers have to resort to using the internet in order to find out information about a business.

In fact, this makes the initial online perception of your business even more crucial, as less technologically savvy customers would be more likely to base their opinion off easily accessible headlines and Google reviews rather than conducting thorough online research on platforms such as specialized review sites, social media content creators and online forums. This means that even just a couple of negative recent reviews/headlines about your business can easily turn a lot of prospective customers away from your business if you do not carefully manage your online reputation.

Furthermore, the majority of customers across both the younger and older generations say they trust online reviews as much as personal accounts these days. This may be justified due to online platforms often having a substantial volume of reviews, making it easier for customers to assess the overall sentiment about a product or service. Online reviews also provide a consistent format and structure for evaluating products or services, allowing customers to make easy comparisons. Personal accounts on the other hand can vary widely in the information provided and the criteria used for evaluation, and not every potential customer will have access to a person who has had experience with your business in the first place.

Competition-driven markets

Markets are becoming more competitive with each passing day. With rapid advancements in technology and companies adopting increasing degrees of globalisation, they are able to adapt and utilize different processes and approaches for increasing customer satisfaction, which makes it increasingly difficult for any one business to keep up with the global scale.

With globalisation, consumers have access to a wider range of products and services from around the world. Even local industries and marketplaces have become far more competitive due to e-commerce platforms such as Shopee, Lazada, and Carousell which have low barriers to entry and give basically any business the ability to make themselves visible to potential customers. Technological advancements have also reduced the barriers to entry for many industries in general, so startups and small businesses can now enter markets more easily, creating increased competition as time goes on. Technological advantages that were once reserved for larger companies such as customer hotlines and customer databases are now widely available for companies at even the smallest scale.

This makes maintaining customer satisfaction even more crucial as customers can now easily pivot to an alternative brand when they find that their needs are not being met by their initial choice.

Growing Customer Expectations

When evaluating why your business is having difficulty maintaining customer satisfaction, it might be easy to point toward customers becoming less appreciative and more difficult to please in recent times. However, if you look at the bigger picture, it might be more accurate to say that the growing markets with stronger competition from innovating businesses have resulted in customer expectations growing and becoming more diverse, constantly changing and advancing in accordance with improvements in technology and customer service skills offered by different businesses.

Customers themselves are also becoming more accustomed to looking at the bigger picture. Rather than sticking with a single brand, customers are increasingly aware of the multitude of different brands that exist as options both internationally and locally, and the convenience of the internet means that they have a constant option to seek out alternatives should they be dissatisfied.

 

Customer Experiences for Long-Term Relationship

A good customer experience is what forms the essential foundation for any potential long-term relationship between the customer and your brand.

When customers have positive interactions with your company through seamless transactions, responsive customer support, or personalised services, they are more likely to feel valued and appreciated. This fosters a sense of loyalty and trust that can lead to them becoming loyal customers and advocates for your brand. As we saw when discussing the challenges of customer satisfaction, a single negative experience can quickly become widely shared through social media and online reviews, potentially tarnishing a company’s reputation.

On the other hand, being able to provide positive customer experiences not only keeps existing customers coming back but also attracts new ones, bringing growth and long-term success to your brand. In essence, customer satisfaction hinges on the quality of the experience a company provides, making it a fundamental aspect of modern business strategy.

However, providing a positive customer experience is not a one-off thing. In order for your brand to maintain customer satisfaction, you need to be able to constantly provide a positive experience for both new and returning customers alike. The results of the experience that you provide for customers need to be constantly monitored and evaluated to ensure that your brand is at the forefront of your industry, and improvements take time to implement. Fortunately, as a brand, you will always have tools in your arsenal to monitor and analyze the customer experience such as the CSAT surveys and mystery shopper studies we discussed earlier.

With everything that we’ve learned so far regarding customer satisfaction, the most significant constant across all of our sections has been the fact that customer demands are always changing. Thus, it’s important to constantly monitor how customer’s expectations are growing and changing in response to developments around the world and in your particular market. This could be due to many different reasons that fall under a multitude of different categories such as economic, technological, and even political, but the bottom line is that you need to have your finger on the pulse of both the global and local markets to ensure that your brand is ready to adjust to the changing expectations of customers. It’s a journey that requires constant effort from your business as every interaction with customers in your day-to-day operations has an impact on the success of your brand.

Customer Lifetime Value (CLV) – The Guiding Light

Building a successful brand is a long journey, but CLV is a crucial metric that helps to create and maintain the long-term relationship between businesses and customers, basically shedding light on whether a brand is following the right path towards success and longevity.

Here’s how CLV is typically calculated:

CLV = Average Purchase Value × Average Purchase Frequency × Customer Lifespan

  1. Average Purchase Value: The average amount of money a customer spends with your business during each transaction. It is calculated by dividing the total revenue generated from a customer by the number of purchases they make.
  2. Average Purchase Frequency: How often the average customer makes a purchase from your business within a specific time frame (e.g., a month or a year). It is calculated by dividing the total number of purchases by the number of unique customers.
  3. Customer Lifespan: This is the estimated period that a customer is expected to remain engaged with your business and continue making purchases. Their lifespan can vary significantly depending on the nature of your products or services, industry, and the efforts you make to retain them as customers.

By multiplying these three components, you get an estimate of the total revenue that a customer is likely to generate for your business over their entire relationship with you. It can then serve as a metric that  can help you make strategic decisions about customer acquisition and retention for your brand, guiding your efforts toward the most effective ways of maintaining customer satisfaction.

But how?

Knowing the CLV of different customer segments has the crucial advantage of essentially allowing you to strategise how to allocate resources in order to improve customer satisfaction in key areas to maximise profit for your business.

By identifying opportunities to implement strategies such as upselling, cross-selling, or loyalty programs, you can turn new customers into high-CLV boons for your brand, and even increase the CLV of your existing customers by providing them with better experiences which will make them even stronger advocates who will make more repeat purchases with your brand.

It’s important to note that CLV is not a fixed or absolute value, but an estimate based on historical data and assumptions. You need to regularly review and adjust your CLV calculations as customer behavior and market conditions change. It’s a constant battle, but businesses that understand and optimize their CLV are better equipped to compete effectively in their market. Mastering customer satisfaction and increasing CLV is the key to outperforming your competitors by delivering superior customer value and bringing in the revenue you desire to continue growing your brand to its fullest potential.

To get started with your journey of excelling at CSAT and maximising the CLV of your business, get in touch with us at theteam@oppotus.com