MAKING CUSTOMER SATISFACTION MEASURABLE

Price and comparison calculators, ever greater challenges to position oneself on the market through a diversified USP, and "influenced" consumers due to a multitude of different information sources often present companies with the challenge of building a loyal customer base.

Customer Centricity represents the beginning of the value chain, and it is no longer so much the product itself, but rather whether the product fits into the customer's life that counts.

Thus: Full focus on customer satisfaction as well - not only in view of the fact that it is usually significantly cheaper for companies to keep a regular customer than to acquire a new one, this area should be given increased attention, as further product development may also indirectly depend on this area.  

CUSTOMER SATISFACTION: DEFINITION AND HOW CAN IT BE MEASURED?  

Before making a purchase decision, customers generally go through their own information and needs process, which manifests defined expectations and wishes with regard to the product, the services and all the services around the product. After the purchase decision has been made, these expectations - based on individual perceptions - are compared with the actual performance.

In order to quickly have an initial indication of customer satisfaction, key figures are developed as a measure of satisfaction and customer loyalty:

One key figure frequently used in practice for customer satisfaction is the Net Promoter Score, which indicates the probability with which consumers would recommend your company, product or service to others.  Here, buyers are asked how likely it is that the company/product will be recommended to others on a 10-fold graded rating scale of 1(unlikely)- 10(extremely likely).

The Net Promoter Score results from the subtraction of promoters and critics. Passive-satisfied customers are not included in the calculation. The formula is promoters (% of all respondents) - detractors (in % of all respondents).

Another way for companies to measure customer retention is by measuring the retention rate. The retention rate records current customers (AK) minus new customers (NK) within a fixed period, divided by the customers at the beginning of the recording period (AK) and multiplied by 100.

The calculation is made using this simple formula:

The possibility of looking at different time periods means that the calculation can be related to different marketing or loyalty programs.

In addition, the churn rate can also be used, which indicates how many of a company's customers have churned compared to the existing customer base in a given period. The churn rate is usually calculated on a monthly or quarterly basis and also depends on the industry, service/product or the respective business model.

The calculation is made using this simple formula:

OPPORTUNITIES TO IMPROVE CUSTOMER SATISFACTION AND CHURN.   

Optimally, the calculations result in high and increasing customer satisfaction, and an optimal churn rate would be zero percent. However, since no company will have every customer satisfied all the time, and customer needs can also change quickly, a certain level of dissatisfaction and churn is completely normal.

As mentioned earlier, however, it is often more cost-effective for companies to retain customers than to acquire new ones. For this reason, companies should focus on maintaining and expanding existing customer relationships and keeping a close eye on the churn rate.

Investments in retention marketing measures such as a rapid ticketing system, comprehensive complaint management or the establishment of bonus programs help companies to prevent customer churn. In parallel, the responsible employees in a company should also research and explore the reasons for churn, uncover common problem areas, and develop a long-term strategy for winning back churned customers - if this is profitable according to the business model.