The main objective of a start-up is to grow and growth comes from customers buying products. Customer satisfaction is one of the factors that drives growth. According to a McKinsey & Company study, companies with high levels of customer satisfaction outperformed their competitors in terms of revenue growth by more than 2.5 times. When customers are satisfied with a purchase they are more likely to buy again or tell their friends and family about your product.

High levels of customer satisfaction lead to customer retention, loyalty and advocacy. In most cases, satisfied customers may not promote your product directly. However, whenever a friend or family shares a problem that your product can solve, they will recommend your product for the person’s consideration.

Check out this article on How customers make purchase decisions. 

Unhappy Customers Are Bad For Business

According to a survey by HubSpot, 93% of customers are likely to make repeat purchases with companies that offer excellent customer service. As I mentioned, satisfied customers are more likely to suggest your product to others, and give favourable reviews and comments. However, unhappy customers will bad mouth your product every opportunity they get.

How to Measure Customer Satisfaction

There are several metrics for measuring how satisfied customers are. Most organizations will use a rating scale (5-star rating scale) to quantitatively assess the feedback from their customers. Some others will ask for qualitative feedback (in the form of reviews). Notwithstanding there are other tools and techniques:

  1. Net Promoter Score Survey
  2. Customer Satisfaction Score Survey
  3. Customer Effort Score Survey
  4. Customer retention rate
  5. Customer lifetime value
  6. Complaint resolution time
  7. Churn rate
  8. Web analytics


Net Promoter Score (NPS)

You might have noticed net promoter surveys pop up whenever you use some mobile applications. This metric measures the likelihood of customers recommending a product to others; using a scale of 0 to 10. Customers with a score of 9 or 10 are termed promoters, whereas those with a score of 0 to 6 are considered detractors.

Customers with a score of 7-8 are called passives because although they are satisfied with your service, they are unenthusiastic, making them susceptible to competing products. The NPS score is calculated by subtracting the percentage of detractors from the percentage of promoters. You can set up an onsite survey by embedding a form at the bottom of your webpage using Mailchimp.

You can use NPS data to compare customer satisfaction across multiple sales channels.

Customer Satisfaction Score (CSAT)

Similar to NPS surveys, you may sometimes come across on-site surveys asking how satisfied you are with a product or service.  Companies collect data on customer satisfaction over time. Customers are polled to gauge their level of satisfaction with the product or service they received.

Customer Effort Score (CES)

This metric assesses how simple it is to do business with a company. Customers are asked to rate the ease with which they used a product or service or resolved a problem they had while interacting with the company. Tools like Medallia and Qualtrics allow you to automate the feedback collection process

Customer Retention Rate (CRR)

This metric calculates the percentage of customers who return to the company after a certain length of time.  It is the percentage of customers who continue to use your product or service within a specified period. To calculate the CRR, select a period that is appropriate for your evaluation; this can be anything from 30 days to a year, and then use the following formula:

Customer Retention Rate = (Customers at the End of the Period) – (New Customers Acquired) / Customers at the Start of the Period

Customer Lifetime Value (CLTV)

This KPI calculates the total value that a client delivers to the company over the length of their relationship. It assists firms in comprehending the long-term consequences of their client acquisition and retention initiatives. The formula for customer lifetime value is:

Customer Lifetime Value = (Customer Value* x Average Customer Lifespan).

where, the customer Value = (Average Purchase Value x Average Number of Purchases)

Customer Complaint Resolution Time

This metric tracks how long it takes the company to resolve customer complaints. It is an important indicator that reflects the organization’s responsiveness and customer-centricity. This is usually tracked by opening and closing tickets against each complaint received.

Customer Churn Rate

This indicator calculates the percentage of customers who stop doing business with a company over a set time. A high turnover rate may suggest problems with the company’s products, services, or customer service. use the following formula to calculate your annual churn rate.

Annual Churn Rate = (Number of Customers at Start of Year – Number of Customers at End of Year) / Number of Customers at Start of the Year

Website Traffic

This measures the number of people who visit a company’s website. A rise in website traffic might indicate the effectiveness of a company’s marketing and customer engagement initiatives. Analytics tools such as Google Analytics can provide useful insights into website traffic, user behaviour, and engagement levels for businesses. Businesses can find portions of their website that are popular with clients and places that need work by analysing this data.

You can also track your online reputation using customer reviews and ratings on sites like Google, Yelp, and social media. These reviews and ratings can also provide useful information about client satisfaction levels and indicate areas for improvement.

How to Start Tracking Customer Satisfaction as a Small Business Owner

Start-ups that wish to track customer satisfaction and retention can use the following approach:

  1. Decide which metrics are important
  2. Set goals for improving the metric
  3. Monitor Goals Regularly
  4. Train Everyone


Decide Which Metrics are Important

You should clearly define the customer satisfaction metrics you want to track and link them to your broader business goals. These KPIs should be specific, quantitative, and business-relevant. For example, you may wish to track your customer’s lifetime value because it is also an indicator of how effective your sales and marketing strategy is, and how valuable your products are.

Set Goals for Improving the Metric

Goals should be attainable and reasonable. For example, your goal could be to raise the lifetime value score of your customers by a certain percentage at the end of a certain period.

Monitor Metrics Regularly

Depending on the KPI, metrics should be monitored daily, weekly, monthly, or quarterly. For example, if you are tracking NPS scores month-by-month, you might discover a drastic fall in your score due to certain events such as an unexpected website downtime that customers experienced that month.

Your NPS, CSAT and CES can be tracked month-by-month whereas it might be more insightful to calculate customer lifetime value at the end of each financial year.

Train Employees

Train your employees on how to provide exceptional customer service and respond to client complaints and feedback. Employees should be given the authority to handle problems and deliver personalized solutions to consumers. Customer service representatives must be knowledgeable about the goods, services, and procedures offered by your business. Additionally, they must be amiable towards clients (even challenging ones) and be prepared to go above and beyond to help them.

Lastly, Customer satisfaction is a key factor in revenue growth. Customers are more inclined to return to businesses with good customer service and recommend your product to others. Tracking consumer feedback and using the information gathered to improve your product will help your business succeed.

You might be interested in reading:  Asana Play Book For Small Businesses