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1. CUSTOMER SATISFACTION
The degree of satisfaction provided by the goods or services of a company as
measured by the number of repeat customers.
It is a measure of how products and services supplied by a company meet or surpass
customer expectation.
Customer satisfaction is a marketing term that measures how products or services
supplied by a company meet or surpass a customer’s expectation.
SIGNIFICANCE OF CUSTOMER SATISFACTION
Customer satisfaction is important because it provides marketers and business owners
with a metric that they can use to manage and improve their businesses.
Here are the top six reasons why customer satisfaction is so important:
 It’s a leading indicator of consumer repurchase intentions and loyalty
 It’s a point of differentiation
 It reduces customer churn
 It increases customer lifetime value
 It reduces negative word of mouth
 It’s cheaper to retain customers than acquire new ones
1. It’s a leading indicator of consumer repurchase intentions and
loyalty
Customer satisfaction is the best indicator of how likely a customer will make a
purchase in the future. Asking customers to rate their satisfaction on a scale of 1-10 is a
good way to see if they will become repeat customers or even advocates.
Any customers that give you a rating of 7 and above, can be considered satisfied, and
you can safely expect them to come back and make repeat purchases. Customers who

2. give you a rating of 9 or 10 are your potential customer advocates who you can
leverage to become evangelists for your company.
Scores of 6 and below are warning signs that a customer is unhappy and at risk
of leaving. These customers need to be put on a customer watch list and followed up
so you can determine why their satisfaction is low.
2. It’s a point of differentiation
In a competitive marketplace where businesses compete for customers; customer
satisfaction is seen as a key differentiator. Businesses who succeed in these cut-throat
environments are the ones that make customer satisfaction a key element of their
business strategy.
3. It reduces customer churn
An Accenture global customer satisfaction report (2008) found that price is not the main
reason for customer churn; it is actually due to the overall poor quality of customer
service.
Customer satisfaction is the metric you can use to reduce customer churn. By
measuring and tracking customer satisfaction you can put new processes in place to
increase the overall quality of your customer service.
4. It increases customer lifetime value
A study by InfoQuest found that a ‘totally satisfied customer’ contributes 2.6 times
more revenue than a ‘somewhat satisfied customer’. Furthermore, a ‘totally satisfied
customer’ contributes 14 times more revenue than a ‘somewhat dissatisfied customer’.
Satisfaction plays a significant role in how much revenue a customer generates for your
business.
Successful businesses understand the importance of customer lifetime value (CLV). If
you increase CLV, you increase the returns on your marketing dollar.

3. Customer lifetime value is a beneficiary of high customer satisfaction and good
customer retention. What are you doing to keep customers coming back and
spending more?
5. It reduces negative word of mouth
McKinsey found that an unhappy customer tells between 9-15 people about their
experience. In fact, 13% of unhappy customers tell over 20 people about their
experience.
How much will that affect your business and its reputation in your industry?Customer
satisfaction is tightly linked to revenue and repeat purchases. What often gets forgotten
is how customer satisfaction negatively impacts your business. It’s one thing to lose a
customer because they were unhappy. It’s another thing completely to lose 20
customers because of some bad word of mouth.
To eliminate bad word of mouth you need to measure customer satisfaction on an
ongoing basis. Tracking changes in satisfaction will help you identify if customers
are actually happy with your product or service.
6. It’s cheaper to retain customers than acquire new ones
This is probably the most publicized customer satisfaction statistic out there. It costs six
to seven times more to acquire new customers than it does to retain existing customers.
STARATEGIES TO INCREASE THE CUSTOMER SATISFACTION
In a business world where customer acquisition costs are sky-rocketing, small and
medium businesses must focus on building a customer experience to increase customer
satisfaction.
1. Treat your customers like they are your boss
Here are some of the approaches I recommend businesses use:
 Thank all your customers for their business

4.  Go out your way to help customers
 Try to impress your customers as if you want a pay raise
 Think about your paycheck every time you talk to a customer
 Keep your promises and integrity
2. Focus on measuring customer satisfaction
Measuring customer satisfaction can help you reduce the number of unhappy
customers.
So how do you measure customer satisfaction?
 Use one of these four Online Survey Tools
 Focus on these Customer Satisfaction Metrics
3. Build customer loyalty to increase customer satisfaction
Customer satisfaction is worthless. Customer loyalty is priceless.
- Jeffrey Gitomer
Jeffery talks strongly about customer loyalty and it’s relationship with customer
satisfaction in his book, Customer Satisfaction is Worthless, Customer Loyalty
is Priceless. He believes that businesses should be focuses their efforts on creating
loyal customers, that sticky and not easily influenced by competitors.
I agree with Jeffery and have included my five favorite ways to build customer loyalty to
increase customer satisfaction:
 Remember special occasions like birthdays
 Strive to empower and educate customers
 Invest in a self-service support channel
 Top level managers must lead from the front with customer service
 Talk to your customers, tap into what they want and deliver

5. 4. Avoid making these customer retention mistakes
No business is immune to unhappy customers. In fact, even companies with the best
customer service in the world will still lose up to 9% of their customers to competitors.
The good news is you can do something to stop customers defecting. Here are three
common customer retention mistakes that are killing your customer satisfaction:
 You are ignoring customer feedback
 You are taking customer feedback to personally
 You are using long, boring customer feedback surveys
5. Set customer expectations early
Setting expectations too high is a common mistake a lot of businesses (and
salespeople) make when bringing on new business. How many times has your sales
guy made ridiculous promises to push a deal over the line?
There’s no better feeling than as a customer to have your expectations exceeded.
6. Learn how to survey your customers the right way
A customer feedback survey is the best way to find out how satisfied your customers
are, find ways to improve your product or service, and identify customer advocates who
really love your product.
Use a customer feedback survey that asks participants to rank (1-10) how likely they
are to recommend you. A quick and relevant survey will help increase survey response
rates.
7. Email is the best channel to increase customer satisfaction
59% of B2B marketers believe email marketing is still the most effective channel in
generating revenue.
If it’s so good for marketers, why don’t we use it more to increase customer satisfaction?

6. 8. Tap into social media to track and monitor customer satisfaction
so you can keep your customers happy
It costs a company lot every time they lose a customer. Can you afford to not be
monitoring and tracking customer satisfaction?
With your customers now using their mobile phones up to 150 times per day, it’s
important to recognize that they will turn to social media to leave their customer
complaints.
Your job is to make sure you use social media monitoring tools to keep track of positive
and negative feedback, and resolve them accordingly.
In fact, social media provides a great opportunity to actually increase customer
satisfaction.
Here’s how you can do just that:
 Use social media to monitor brand mentions and sentiment
 Use social media as a customer support channel
 Use social media to hold Q&A sessions with customers
9. Stats don’t lie, understand the importance of customer
satisfaction
If my first eight ideas weren’t already enough, it’s worth reading about why I think
customer service is the new marketing.
Here are three mind-blowing facts that should motivate you to start focusing on
increasing customer satisfaction.
 According to Bain and Co., a 5% increase in customer retention can increase
a company’s profitability by 75%.
 Gartner Group statistics tell us that 80% of your company’s future revenue will
come from just 20% of your existing customers.
 Lee Resource Inc. found that attracting new customers will cost your company
five times more than keeping an existing customer.

7. COMPONENTS OF CUSTOMER SATISFACTION
Customers are satisfied whenever they consistently receive:
1. A perfect product
2. Delivered by a caring, friendly person
3. In a timely fashion
4. The support of an effective problem resolution process.