What is customer satisfaction? Everything you need to know

Every business needs satisfied customers to survive and thrive.

Seriously. You can have incredible products and the largest marketing budget in the world, but if you don't know how to satisfy customers, your business is likely doomed.

This is why Jeff Bezos, the founder of Amazon, said, "We've had three big ideas at Amazon that we've stuck with for 18 years, and they're the reason we're successful: Put the customer first. Invent. And be patient."

Note how Bezos started with "put customers first."

It's also why 45.9 percent of businesses surveyed by SuperOffice named 'customer experience' (CX) as their top priority over the next five years.

Okay, but what exactly does the term 'customer satisfaction' mean? And what are the actual benefits of customer satisfaction?

Let's find out.

In this article, you'll learn everything you need to know to build a customer-centric business that thrives.

What is customer satisfaction?

Customer satisfaction — also referred to as 'CSAT' — is a measure of customers' overall feelings about their experience with a business and its products and/or services. It's also the term used to describe the process of a business monitoring customer satisfaction levels and extracting actionable insights to guide improvements.

What is a customer satisfaction survey?

Companies use CSAT surveys to measure and quantify customer satisfaction. The idea is to learn as much as possible about what customers like and dislike and what they do and don't care about.

There are tons of different types of customer satisfaction surveys to choose from, although most feature a handful of questions on the:

Customers' experience
Products and/or services
Customers' overall level of satisfaction
Customers' demographics (quantitative data on their age, location, gender, etc.) and psychographics (qualitative information on their feelings, attitudes, values, etc.)

These questions are usually presented in a digital form using a tool like Google Forms.

To learn more about customer satisfaction surveys, check out our full-length guide, INSERT TITLE AND HYPERLINK OF SURVEY POST HERE.

What is the difference between customer satisfaction and customer loyalty?

Customer satisfaction is a measurement of how happy customers are with their purchase and brand experience. On the other hand, customer loyalty refers to the attitudes and behaviors that customers exhibit over time that demonstrate loyalty to the product or the brand — such as recommending the brand and making repeat purchases.

These two concepts are intimately linked — after all, satisfied customers often become loyal customers. That being said, it's important to understand that it's possible to have delighted customers that aren't loyal.

Really? Yep.

Let's say you visit a store and purchase a new PC. The PC is exactly what you need, and you got it for a good price. So, you leave the store a very satisfied customer. But while you were there, the salesperson tried to sell you a more expensive computer that you didn't need. Plus, the store is far away from where you live.

In this instance, would you go back to the store if you had a closer option? Would you consider yourself a loyal customer?

Why is customer satisfaction important? 5 benefits of customer satisfaction

Now that you understand what customer satisfaction is, how it's measured, and how it differs from customer loyalty, it’s important to explore why customer satisfaction is important.

In general, highly satisfied customers will make repeat purchases and recommend a business to their network. On the other hand, unsatisfied customers are unlikely to buy again and may warn their network against buying from a company.

In other words, if you get customer satisfaction right, your business will likely spiral upwards. But if you get it wrong, it'll likely spiral downwards — fast.

No pressure!

Now, let's take a closer look at the 5 benefits of customer satisfaction in more detail. Here's what we'll cover:

CSAT initiatives help you learn about your customers
CSAT feedback can guide product and services updates
Increased customer satisfaction improves customer retention
Improved customer satisfaction leads to positive social proof
Strong customer satisfaction produces customer advocacy

Let's dive in.

1. Customer satisfaction surveys help you learn about your customers and improve your customer experience

Take some advice from the author and marketing consultant, Roy H. Williams, who said, "The first step in exceeding your customers' expectations is to know those expectations."

This is where customer satisfaction surveys come in. CSAT surveys provide insight into customers' hearts and minds to learn what they love and hate about their experience with your business.

Let's run through a couple of examples to illustrate the power of this point.

First, you review the survey results from your most satisfied customers. These results reveal that many of your customers love your post-purchase shipping notifications. You take this feedback and decide to improve the customer experience even more by creating a branded tracking page for customers to check their orders. And as a bonus, you use the branded tracking page to drive additional sales by cross-selling recommended products.

The takeaway: You're able to double-down on your wins.

Next, you review the results from unsatisfied customers and discover that many customers are unhappy with your website's checkout experience. Apparently, it has too many steps, the copy isn't clear, and the cybersecurity is questionable. With this information, you can get to work quickly to remedy these issues and provide a more straightforward checkout experience with increased security measures.

All in all, learning about your customers empowers you to identify golden opportunities to improve your customer experience.

2. CSAT feedback can guide product and/or service updates

Similarly, customer satisfaction feedback should directly guide your product and service updates.

It doesn't matter what you sell, either. Whether you're a restaurant or a software-as-a-service (SaaS) business, it always pays to listen to your customers.

Plus, this process can be as simple as reading customer reviews about your product or service posted online. What are your customers saying about your business?

Perhaps plenty of customers mention how much they love your SaaS product's dashboard interface. Before reading these reviews, you may have been tempted to overhaul the dashboard to try to improve it. But with this CSAT feedback, you'll tread far more carefully and redirect your resources to another project that will have more impact.

Or maybe you have a product that customers complain about a lot. It seems there's a small piece of inexpensive plastic that regularly breaks and renders the product useless. In this case, you can improve the product dramatically, quickly, and inexpensively.

Don't be discouraged by negative reviews — they're goldmines of information that you can use to improve your business and products/services.

It's also worth noting that whatever customers dislike, try not to take it too personally — instead, treat every piece of negative feedback as an opportunity.

3. Focusing on customer satisfaction will improve customer retention

Brian Balfour, the founder & CEO of Reforge, said, "If your retention is poor, then nothing else matters."

He's right. It takes a lot of time, effort, and money to consistently generate new customers.

Zendesk's 2021 Customer Experience Trends Report discovered that around half of respondents said that just one bad customer experience would compel them to switch to a competing brand.

In other words, half of your customers won't give you a second chance to get things right — so you need to do things right the first time.

On the flip side, happy customers won’t turn to your competitors — as long as you keep them satisfied, of course. So, when you increase customer satisfaction, increased customer retention usually follows.

Bottom line, you can find powerful ways to reduce customer churn, retain more customers, and grow your business faster by monitoring CSAT.

Here's the thing: A whopping 81% of consumers say that brand trust is a deciding factor in their purchase decisions.

And what screams brand trust? Social proof.

The term 'social proof' describes the simple fact that, when evaluating a brand, people are influenced by others' opinions of it. This is why reviews, endorsements, testimonials, and associations carry so much social clout.

In the words of Andy Crestodina, the co-founder of Orbit Media Studios, "When you say it, it's marketing. When your customers say it, it's social proof."

For example, here at AfterShip, we display social proof on our website's homepage in the form of raving customer reviews:

In short, customers are more likely to trust other consumers' or companies’ opinions over a company's messaging. In fact, one study suggests that consumers consider other consumers as 14% more credible than brand employees.

Social proof also plays a crucial part in the buyer's journey. That's because 9 out of 10 people read reviews when deciding whether or not to make a purchase.

Alright, so why is all of this relevant? Because satisfied customers generate the social proof you want — glowing recommendations that champion your products and service. These types of positive reviews are proven to increase sales by 12.5%

Unsatisfied customers, however, tend to create social proof that you don't want, and definitely don’t need — think 1-star reviews detailing how angry and upset they are with your brand or products.

So basically, when you increase customer satisfaction, you can produce a growing body of positive social proof that will help propel your business to success.

5. Strong customer satisfaction produces customer advocacy

What's better than social proof? Customer advocacy.

Imagine if customers didn't just leave positive reviews. What if your customers also actively promote your business to other people in their networks who trust them — people who are likely also part of your target market?

These wonderful brand advocates wouldn't just help you land sales, they'd also drum up new business for you — for free!

Sounds good, right?

And we're in the age of social media — 82% of people in the United States use social media to connect with others and share their opinions and experiences. So, customer advocacy is more powerful than ever.

So, it's no wonder many brands create loyalty programs to engage customers and encourage them to refer people from their network. These programs typically offer customers incentives in exchange for their referrals, such as gifts, discounts, or exclusive access to content or products.

This is the holy grail of all customer satisfaction initiatives — to produce loyal, repeat customers who are fanatic brand and product ambassadors.

Gregory Ciotti, the senior lead of content marketing at Shopify, said it best: "A satisfied customer is one who will continue to buy from you, seldom shop around, refer other customers and in general be a superstar advocate for your business."

Summary: Start Improving Your Customer Satisfaction and Reap the Rewards Today

CSAT is a measure of how customers feel about your brand, their experience with your business, and your products.

Remember, if you want to improve customer satisfaction, you must first understand how your customers feel. To do this, you can conduct a customer satisfaction survey. A CSAT survey can help you learn more about your target markets. It can also reveal what your customers love, like, dislike, and hate about your business and products.

Remember, although customer satisfaction and customer loyalty are closely related concepts, they're not the same. CSAT refers to how customers feel about your brand, products, and their experience. On the other hand, customer loyalty refers to how invested they are in supporting your business.

Here are the top 5 reasons why customer satisfaction is important:

By learning about your customers, you can improve the the customer experience
CSAT feedback is packed full of opportunities to enhance your products and/or services
Improved customer satisfaction increases retention and repeat sales
Satisfied customers generate positive social proof, which helps to increase sales
Strong customer satisfaction gives rise to brand advocates who promote your business freely

In short, don't underestimate the importance and power of customer satisfaction.