What is customer satisfaction?

Customer satisfaction has been defined in many different ways, let's explore the most popular.

In this article


Customer satisfaction has been defined in many different ways, below we explore the two most popular:

1. Customer satisfaction is a measurement of how well the products or services you offer meet customer expectations.

2. “The number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services exceeds specified satisfaction goals”. Paul Farris—Marketing Metrics.

The key difference between these definitions? Who sets the threshold for satisfaction—the customer or the business? The first definition implies that customers approach a firm’s products or services with expectations. These expectations then become the threshold or goal, which must be reached in order for that given customer to be satisfied. Your overall customer satisfaction then becomes a measure of how many of your customers would say your products or services met their expectations.

In Farris’s definition, this satisfaction threshold is set by the business via ‘specified satisfaction goals’. As such, customer satisfaction doesn’t mean you reached customers’ expectations, but rather an acceptable level of satisfaction which the business has defined. A benefit of this approach is that it gives businesses the ability to change the goal. For example, if a business operates in a highly competitive sector, it might be beneficial to raise the customer satisfaction threshold to ensure they stay ahead of the game.

Now you know what customer satisfaction is, check out our page on how you can measure it.

1. Is customer satisfaction the same as CSAT score?

In short, no. A CSAT score is just one of many metrics you can use to quantify customer satisfaction. Such metrics include Net Promoter Score and Customer Effort Score. You can read more about these on our CSAT metrics page, but it’s important to know the formula.

If you don’t have a clearly defined goal (e.g “I want to find out where the bottlenecks on our primary user journeys are”) you’re unlikely to actually use the data you collect, meaning the whole process will eat up your budget for zero benefit. So set a goal, measure towards it and then make it part of a bigger mindset shift…

The CSAT score formula

The calculation is as follows: Take the total number of satisfied customers (e.g. those who gave you a score of 4 or above on 1-5 scale), divide by the total number of participants, then multiply the result by 100 to get the percentage.

To get the full story on CSAT scores—including what makes a good score and how best to use them, check out our CSAT scores 101 page.

2. Customer satisfaction vs. customer experience

You’ll often hear the terms customer satisfaction and customer experience used interchangeably—but while related, they’re different things.

As we outlined above, customer satisfaction could be viewed as a “happiness index” of your customers. Customer experience, on the other hand, deals with the way your customers interact with your business across all touch points. Their experience of your business begins from the moment they encounter your marketing materials until the moment they cease being a customer of yours. As such, it covers their interactions with your website, your support services, and all points in between.

So to improve your customer experience, you might invest in a chatbot to answer lower-lever queries on your website, making it easier for them to find a solution to a problem. Many times this translates directly into a boost for customer satisfaction scores.

3. Customer success vs. customer support

Customer success is defined as the efforts a business makes to try and anticipate the needs of a customer and address them proactively. So a customer success department may look at the customer experience their business offers and assess where improvements could be made, before a customer has highlighted the need for them in a customer satisfaction survey.

Customer support/service is defined as the way a business responds to a customer event, issue, or complaint. The key differentiator is that customer support is reactive, but customer success is proactive.

4. The impact of customer service on customer satisfaction

How many times have you called a customer service center and found that the experience didn’t meet your expectations? Or worse, left you with a bad impression of the business overall? Quite a few, right? Unsurprisingly, your company’s ability to respond to a customer event, issue, or complaint has a big impact on the extent to which they feel you have met their expectations—and therefore, a big impact on your customer satisfaction levels.

The good news is there are many ways to use customer service to boost customer satisfaction.

Below we have outlined some of key ones:

Prioritize the right channels

Providing multi-channel support is vital (via social media, chatbot, email, telephone), but it’s important to get to know how your customers like to reach out to you for support. And which types of customers like which platforms.

For example, if customers tend to use social media to seek support, increasing your capacity here will help improve resolution times, which will improve your customer satisfaction. But it’s important to be specific about your customer base.

You may discover that while 60% of your customers use social media channels to contact you, this percentage is predominantly of one-time purchasers of your entry level products. And the remaining 40% are high-value repeat customers who tend to call your contact center and use your support ticketing system. The difference in value of these to your business will inform how you prioritize your support channels.

Improve agent training

We all know that there’s nothing more frustrating than calling a company for support only to find that the person at the other end isn’t trained to deal with the request. The more premium the product, the more we expect from these interactions. The same escalation of expectation happens as the size of purchase increases, and when dealing with sensitive services such as healthcare or financial services.

The answer? Improve agent training. In the business process outsourcing sector where services have typically been chosen based on price, this is an area where training can make a huge difference. By improving agent training, you can massively increase your first call resolution rates, which in turn boost customer satisfaction.

Improve agent empowerment

There are also times when it’s not the training of the agent that causes the problem, it’s the extent to which they’ve been empowered. This includes giving them access to the data they need to do their jobs via the right technology platform. But it also includes the extent to which they’re empowered to make decisions. For example, a support center built on rigid calling scripts will likely deliver less customer satisfaction than one where the agents are able to mold their approach to the customer’s needs.

5. Measuring customer satisfaction and setting KPIs

As we mentioned above, there are many different ways to measure customer satisfaction and set KPIs. Many of them revolve around surveying customers and asking them to input their opinions on either their overall satisfaction of an event (such as a support call), or how hard/easy it was to resolve an issue etc.

We delve into these in detail on our measuring customer satisfaction page and on our metrics page. Be sure to check them out for the full lowdown on the importance of a strong measurement strategy, and the best metrics to use.

Some key KPIs to know about:

1. Average resolution time

This is used to measure the average time it takes for your customer support channels to resolve a customer issue. Traditionally, there was a blanket application of this metric in which the shorter the resolution time, the more efficient the support channels were deemed to be. But this has been challenged due to the increase of customer service channels. Companies with highly efficient customer support departments had begun deploying chatbots or self-learning mechanisms to handle easily resolvable customer issues, routing more complex issues to highly trained calling agents. As the agents were dealing with more complex issues, the average resolution time of their call center actually increased whilst improving customer satisfaction. When deploying average resolution time, it’s also important to take into account the channel the support is being offered through.

Because of this debate, many businesses now prefer to use “first call resolution rate” as a metric. This measures how many customer issues are resolved at the first time of asking in a direct person-to-person interaction.

2. Response times

While the importance of your average resolution times might be debated, the time it takes you to actually respond in the first place is crucially important.

Of course, your chatbot and email replies will have a different minimum threshold, as will the amount of time your customers sit on hold when trying to call you.

Key ways to improve your customer service response times:

Because of this debate, many businesses now prefer to use “first call resolution rate” as a metric. This measures how many customer issues are resolved at the first time of asking in a direct person-to-person interaction.

Use dedicated customer service software to manage email inboxes

Use email autoresponders so customers know they’ve actually reached you

Use email templates to decrease composition time and error count

Use smart routers on inbound calls to ensure customers reach the right people

Improve your self-service options so customers can self-help their way out of easier problems leaving other channels clear.

3. Churn Rate

This measures how many customers stop using your product or service in a given period. No matter how satisfied your customers are, some will leave. But keeping a watchful eye on how many and what customers are leaving gives you the intel you need to try to reduce it.

Want to see the calculation? Head over to our metrics page.

4. Customer Lifetime Value (LTV)

This measures the predicted (or historic) value of a customer to your business across their entire “lifetime” as a customer. This is a great measure of how—or if—your customer satisfaction strategy is setting you up for long-term wins.

When calculating LTV, you need to know about two other values which we outline on our metrics page.

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