How Do I Measure Customer Satisfaction In My Business?
One question we get asked often is how do I measure customer satisfaction? There are a million ways to do that. There are a million of possible questions to ask. How do I really go about that? And what data is really important as a business owner?
At Denver Business coach, we've seen probably three main reasons why people would want to measure customer satisfaction.
1. To know How Well Your Business Is Doing
This one is obvious. As a business owner, you want to have a metric to know how well your business is performing - getting real market feedback from your customers. Are you meeting expectations? Are you falling short on expectations or are you exceeding expectations?
2. It Can Serve As An Internal KPI
In many cases Customer Satisfaction might be used as an internal KPI for specific team members, or for certain departments. For example, if you want to know how well your service team, or your account managers are doing – as it relates to customer service, having a specific metric is important.
3. Improve The Value Of Your Company
The third reason to measure customer satisfaction relates to your business exit strategy. At some point you will exit your business - hopefully sell it successfully and get a fair price for it.
The more empirical data you have that can show how satisfied your customers currently are, as well as being able to predict the probability to continue to do business with your company in the future, the higher your business valuation will be.
Having measurable data will help you defend your numbers and your price against a potential buyer, who will always try to negotiate you down.
These are only three of the reasons why we think it is critical to measure customer satisfaction.
The Net Promoter Score
Over the last decade the Net Promoter Score, has established itself as one of the universally accepted score toe measure customer satisfaction. It was established in 2003 by Fred Reichfeld, and we recommend to read the story of how he went about identifying the “ultimate question.” It's really interesting to see how it all boiled down to one question that is a very reliable predictor of your customer’s future behavior and whether or not they're going to refer your business.
The question is a question that you've probably answered a million times yourself.
And it goes along this line of, “On a scale from 1 to 10, how likely are you to refer our product or service to friends or colleagues?”
People who score a 10 or 9 are promoters. If they're answering 7 or 8, they're neutral. And if they answer with a 6 or below, they're what's called the detractor.
Out of all the customers that you're asking, you're essentially adding up all the promoters and you're subtracting all the detractors. This will give you your net promoter score.
Businesses that score above 50 are considered excellent businesses. Businesses with a net promoter score of above 70 are considered world-class business.
Please contact us if you are interested in implementing a customer satisfaction survey, or a Net Promoter Score survey in your business and you have questions about that.
Or, if you are looking to position your business for a future sale down the road, and what to know how to maximize the value of your company, we are happy to start that conversation with you. To your continued success.