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Best Practices in Customer Satisfaction Research

How satisfied are your customers? Are they more or less pleased with your company than they were last year? How does your customer satisfaction level compare with that of your competitors? What impact does it have on your company’s profits?

How do you know?

Guesswork and hunches won’t cut it. You need hard data. You need to measure and monitor customer satisfaction—consistently and regularly. You need a customer satisfaction research strategy and program.

You can do it yourself, but there are a few things you need to consider. This paper gives you the benefit of the experience and lessons learned by industry experts to help you design, distribute, and analyze your customer satisfaction research. We want you to act on insight, not instinct.

Why Measure Customer Satisfaction?

Customer satisfaction is tied directly to profitability. If your customers are happy, they tend to be loyal. And if they’re loyal they not only buy more, they refer other customers. Well-established research by Bain & Company found that, for many companies, an increase of 5% in customer retention can increase profits by 25% to 95%. The same study found that it costs six to seven times more to gain a new customer than to keep an existing one.

* "It's six to seven times more expensive to gain a new customer than it is to retain an existing customer."

* "A 5% increase in customer retention can increase profits by 25% to 95%."

(Source: Bain & Company study in Harvard Business Review, 2001)

Moreover, one bad experience can outweigh a whole lot of good experiences. Because of e-mail and instant messaging, that bad experience can quickly be broadcast to dozens, hundreds, or thousands of other customers, magnifying its impact. So if your business is doing something that frustrates customers, you need to know right away.

It is critical to give customers the opportunity to provide feedback about their overall satisfaction level...