Customer Satisfaction & Why It's Important

Customer Satisfaction & Why It's Important

In the mayhem of tracking net profit margins, lead conversions, CAC payback, revenue growth, etc., some business owners and professionals lose sight of the big picture. It’s easy to gamify KPIs, believing that if you tweak the relevant numbers, your business will strike an upward trajectory.

Ultimately though, your business’ success boils down to one vital condition: Are your customers happy enough to keep coming back? Arguably more than any technical KPI, customer satisfaction is the measure of a company or professional looking for long-term success.

What is customer satisfaction, and why is it so important? Let’s take a closer look.

What Is Customer Satisfaction?

Simply put, customer satisfaction is the measure of how happy a customer is with a specific product, service or consumer-related experience.

It’s a metric most often applied to companies, but it can also apply to professionals who offer a service: tutors, medical professionals, real estate agents, etc.

There are several ways to measure customer satisfaction, but conventional methods include:

  • Consumer surveys (the most popular method)
  • Benchmarking against competitors
  • AI-powered sentiment analysis
  • And analyzing related KPIs like churn rate and retention rate

The process requires collating and analyzing enough qualitative and quantitative data to get a “clear” picture of how happy your customers are.

Why Is It Important?

Most business owners and professionals understand intuitively why satisfaction is a vital metric. Phrases like “customer first” and “the customer is always right” are practically baked into the business lexicon at this point.

But let’s put intuition aside for a moment and explore a few concrete advantages of boosting customer satisfaction.

  • Acquisition is costlier than retention: Acquiring a customer can cost five to 25 times more than retaining an existing one. Therefore, keeping current customers satisfied is a shrewd investment in your bottom line.
  • Customer centricity is a competitive edge: Refer to the case study below for an example of how customer satisfaction can help your business stand out. Especially in an industry ambivalent to customer success.
  • Loyalty and CLV: Customer satisfaction fosters loyalty, ensuring better customer lifetime value.

There’s one last reason why customer satisfaction is important. The consumer deserves to be happy. You do not have to frame customer satisfaction in business terms. Consumers respect transparency, accommodation, and guidance.

A Case Study: Customer Satisfaction in Real Estate

To drive home the importance of customer satisfaction, let’s rip a case study from the headlines; the sudden success of Nobul, a real estate digital marketplace. Before Nobul, the real estate industry often took a customer-ambivalent stance. When looking for an agent, you had to rely on relatives’ recommendations, the Yellow Pages, or aggressive cold calls. There was no guarantee you were getting a fair price or quality representation.

Founded by Regan McGee, Nobul created a space for itself by prioritizing customer satisfaction. The platform lays out your best options for real estate agents in your area. It does this using an AI algorithm, which allows agents to compete for your business.

McGee shared with KRLD that, “If you’re a homebuyer or seller, you can pay lower fees, get better service, and it’s all done with the accountability of a tech company that’s designed to be consumer-centric right from the beginning.”

While those technical KPIs and "serious" business metrics will help you run an efficient and profitable enterprise, customer satisfaction will help ensure your business stays successful in the long haul.

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