What is customer satisfaction? Definition, importance & examples

Customer satisfaction is a measure of how satisfied a customer is with a product, service, or experience. Use our guide to learn how to keep your customers happy.

By Courtney Gupta, Customer Service Enthusiast

Published March 19, 2021
Last updated July 14, 2022

In our Customer Experience Trends Report, we uncovered a startling statistic: about 61 percent of respondents said they’d switch to a competing brand after just one bad customer experience.

Fifty-percent customer churn is a death sentence for almost any business—which means it’s time to prioritize customer satisfaction.

It doesn’t matter if you’re a Fortune 500 company or a mom-and-pop shop up the road. Consumers will compare your business’ support and customer experience to the biggest and best competitors. To keep your buyers happy and compete with mass retailers, you have to deliver like Amazon with all the charm of Etsy.

Customer satisfaction can be the difference between your business failing or thriving. If you want your business to succeed, especially in these uncertain times, you have to maintain high satisfaction levels throughout the customer journey. This guide gives you everything you need to start putting your customers first.

Your guide to customer satisfaction

  1. What is customer satisfaction?
  2. What does it take to satisfy the customer?
  3. How to measure customer satisfaction
  4. The importance of customer satisfaction
  5. Improve customer satisfaction
  6. Customer satisfaction examples
  7. Customer satisfaction tools and software

What is customer satisfaction?

Customer satisfaction (CSAT) is a measure of how well a company’s products, services, and overall customer experience meet customers’ expectations. It reflects your business’ health by showing how well your products are resonating with buyers.

What does it take to satisfy the customer?

Depends on who you ask—and research shows that what businesses think satisfies the customer might not be matching up with what customers expect. According to our Trends Report, while 60 percent of companies surveyed gave themselves high marks for service, 68 percent of customers say there’s room for improvement. In fact, 54 percent of customers report that customer service feels like an afterthought for most of the businesses they buy from.

For starters, customers are looking for helpful and empathetic agents, always-on support, and streamlined conversational experiences—no matter who they’re talking to, be it a human or bot. Despite companies giving themselves a high grade overall, a deeper dive into the data paints a far less rosy picture. Only 18 percent, for example, say they’re extremely satisfied with the number of channels they’re offering customers. Similarly, less than 20 percent rated their resolution speeds as extremely strong, while only 21 percent could say the same for the ease with which customers can interact with their business.

Now is not the time to settle for mediocre—especially when the quality of your customer service may earn you repeat customers or be the reason you lose out to competitors. By taking the time needed to understand what great customer service means to your unique customer base, you can make the changes necessary to ensure that middle-of-the-road experiences don’t hold you back.

How to measure customer satisfaction

Measuring customer satisfaction is critical to growing your business. It enables you to uncover how well your company’s products and services are meeting your customers’ expectations. Accurately and thoroughly measuring customer satisfaction provides the data necessary to see whether you’re keeping your buyers happy or not. When you take a data-centric approach to customer satisfaction, you can:

  • Save an unhappy customer from leaving your brand for a competitor
  • Discover customer pain points and learn how to improve your product, service, or overall customer experience
  • Drive repeat purchases by ensuring customer happiness
  • Monitor and improve brand reputation by discovering how likely customers are to recommend your company to a friend
  • Build customer trust by showing customers that their feedback matters

4 key customer satisfaction metrics

Customer satisfaction can seem like a vague concept, but there are concrete ways to measure it. However, there isn’t a single metric that can fully capture your customers’ happiness. Instead, customer satisfaction is best quantified using multiple metrics.

1. CSAT surveys

You can source a customer satisfaction score by conducting CSAT surveys, for example. These are typically short, one- to two-question surveys offered at the end of a business transaction. A classic question is “How satisfied are you with the product?” with answers ranging from “very satisfied” to “very unsatisfied.”

2. Net Promoter Score (NPS) surveys

Although CSAT is one part of customer satisfaction, it’s far from the only measure. Businesses also use Net Promoter Score (NPS) surveys to determine whether their customers are promoters, detractors, or passives. To measure this, ask customers to answer this classic NPS question with a 1-10 rating, with 1 being “not at all likely,” and 10 being “extremely likely.” Use these responses to sort your customers into detractors, passives, and promoters.

Customer satisfaction scores and Net Promoter Scores are discussed frequently in the CX world. Watch the video to understand how they differ.

3. Customer service data

If you’re seeing an increase in support requests around a particular feature or task, that’s a sure sign that something needs fixing before happy customers start getting frustrated. You can also infer customer satisfaction from your call resolution rates and average issue-handling time. A 2020 Statista survey found that 27 percent of people said lack of effectiveness is their most common cause of customer service frustration, while 12 percent said it was lack of speed. On the other hand, a Yelp survey found a correlation between faster service times and higher customer satisfaction ratings.

4. Quantitative customer satisfaction metrics

In order to understand customer satisfaction from every angle, include both qualitative and quantitative research. One qualitative way to understand customers’ motives and behaviors is through a client advisory group, a panel of customers who meet to discuss your business’s products and services.

Why is customer satisfaction important in business?

Customer satisfaction is important because it means your customer base likes what you’re doing. Research shows that high customer satisfaction leads to greater customer retention, higher lifetime value, and a stronger brand reputation.

But low customer satisfaction scores are important, too. They can reveal customer pain points and provide data-backed insights for how to improve your product, service, and overall customer experience.

5 benefits of customer satisfaction

  • Customer loyalty
  • Customer satisfaction measurement
  • Repeat purchases
  • Customer lifetime value
  • New customer acquisition

1. It drives customer loyalty

Satisfied customers tend to share their positive experiences with friends and family. But the opposite is also true: An unhappy customer tells more people about their negative experiences than a happy customer does.

Social media makes social proof more powerful than ever before, with 79 percent of people in the United States using social media to connect and share their experiences. Today, a customer can easily share feedback on a bad experience with millions of people with a single click (so make sure that review is going to be a positive one).

You’re more likely to gain positive referrals if you use customer feedback to prioritize top-of-the-line service. For example, our Trends Report found that 89 percent of people think quick responses are important when deciding which company to buy from. If you want to improve your company’s response time to support that data, you might incorporate AI technology, like an AI-powered chatbot, to send prompt responses.

2. Customer satisfaction metrics reflect your support team’s performance

Customer satisfaction benchmarks and metrics don’t just help you gauge how happy your audience is—they also tell you how your support team is doing. Use a variety of team metrics to understand customer satisfaction levels:

  • Your support team’s initial response time: In our customer experience report, the #1 most frustrating part of bad service was long wait times. Faster support team response times not only lower customer frustration, but also give you a measure of your team’s speed and efficiency.
  • The length of time it takes your team to resolve a customer issue: If it’s taking your team hours to resolve issues that could be dealt with quickly, it might be time to tweak your internal processes. Don’t just strive to respond quickly—resolve quickly, too.
  • How many times a ticket or call required a transfer to find a resolution: Few things are more frustrating than having to wait to be transferred to a new agent and repeat your issue to get your request completed. If transfer occurrence drops, customer satisfaction should rise.

Considering our study found that the #1 aspect for good customer service was quick issue resolution, your team’s efficiency in these areas says a lot about customer satisfaction. Our built-in analytics function is a great way to observe how well your support team serves customers historically and in real time. With the help of AI, teams can even predict customer satisfaction during a conversation—before a customer takes a survey.

3. It encourages repeat purchases

A satisfied customer is a loyal customer, who will stick with your company year after year. So, how do you get those repeat customers? By hitting your customer support efforts out of the park. Our trends report agrees: 57 percent of consumers say excellent customer service is a factor in their brand loyalty.

how to improve customer satisfaction

How do you know if your customer service is driving customer loyalty? There are two different ways to answer this question. The first is to directly poll customers using a net promoter score survey, or to ask questions like:

  • “Would you speak to your friend about our brand?”
  • “How often do you speak to your friends about our brand?”

These questions can shed some light on customers’ likelihood of being brand ambassadors.

The second method is to observe customer behavior. For example, you can track repeat purchases with loyalty programs and referral posts for your business on social media. Reading conversations in your community forum can also give you insight into how customers feel about their experience with your product or service.

4. It increases customer lifetime value

75 percent of customers are willing to spend more to buy from companies that give them a good customer experience, according to our Trends Report. Satisfied customers are not only more likely to remain loyal and less likely to churn, they’re also more likely to spend more money with your business.

measure customer satisfaction

In fact, during the first 6 months of the COVID-19 pandemic, those companies that had the highest CSAT scores were 8.7x more likely to have significantly grown customer spend.

5. It boosts new customer acquisition

At the onset of the pandemic, companies with the most satisfied customers were also 3.3x more likely to have grown their customer bases. Customer service isn’t just important for supporting existing customers, it’s also key to bringing in potential customers and supporting them when they reach out. If a prospect doesn’t have a positive experience when they interact with your support team, they’ll be less likely to purchase.

The main difference between service today and service 10 years ago is that customers expect premium service to be built-in from the first sales or marketing interaction and carry through to the moment they ask for help, post-purchase, and back again. To position themselves for success, businesses must integrate service into the journey at every interaction point.

Free customer experience guide

Find out how to create great customer experiences that will lead to loyal customers, improved word-of-mouth promotion, and increased revenue.

How to improve customer satisfaction

The benefits of focusing on customer satisfaction are clear. But actually making customers happy can take some trial and error. The key is persistence. Always aim to go above and beyond for customers, and lean on other departments to help boost your customer experience. Here a few ways start improving your customer satisfaction scores.

  1. Customer feedback
  2. Convenience
  3. Speed
  4. Customer-focused culture
  5. Agent training
  6. Self-service
  7. Empathy
  8. Personalize
  9. Proactive support
  10. Conversational customer service
  11. Community

1. Become obsessed with customer feedback

Become a student of your customer feedback. Don’t just collect it: Analyze it and apply it to what your customers are saying. Commit to learning about buyers’ pain points, and then make a plan to alleviate them in ways that set you apart from competitors.

A great way to do this is to use Zendesk’s feedback feature. The tool includes analytics for agent performance and customer surveys, so you can study complaints and compliments regarding your services.

Even without a CRM like Zendesk, you can still keep close tabs on customer feedback. Social media and online review boards are especially good places to monitor buyer attitudes. Search for mentions of your brand name or your dedicated hashtags on social sites to see what people are saying.

2. Meet customers where they are

The most successful physical stores are all about buyer convenience. Customers enjoy places with flexible hours that fit their schedules. Think of the success Walmart, 24-hour drug stores, and gas stations have with that model. We’re also more likely to shop at places close to us.

To build the same sense of convenience as a brick-and-mortar store online, you need to have a digital presence on the platforms and services your customers already use. Make a point to be easily accessible for support questions on your customers’ channels of choice.

Offering support via messaging apps (like WhatsApp, Twitter, and Facebook) helps businesses create that same sense of 24-hour availability. These are the same channels customers use to interact with friends and family, so it gives you a chance to meet them where they already are.

3. Deliver fast responses

In our Trends Report, we asked customers what matters most to them when resolving an issue with a company. 73 percent said “they resolve my issue quickly” and 59 percent said “they respond quickly.” In a constantly connected world, customers don’t want to have to wait a day, or even more than a few hours, for a response. Here are some tips for delivering faster responses:

  • Pre-written responses ensure agents don’t have to write common answers repeatedly
  • Messaging channels enable agents to help more customers at once because they are asynchronous. In fact, support teams that have the fastest resolution times are 42 percent more likely to be messaging with their customers.
  • AI-powered bots can intercept would-be tickets when agents are off the clock
  • Bots can also gather details upfront, such as city or account type, before an agent takes over

4. Make customer satisfaction a company-wide focus

To improve overall customer satisfaction, you have to put time and effort into a business strategy that puts customers first.

Using a tool like the balanced scorecard is a great first step. The balanced scorecard guides companies in thinking about their operations from four different perspectives:

  • Financial
  • Internal business
  • Customer
  • Innovation and learning

It also helps companies consider how all their activities are working toward the goal of high customer satisfaction.

The balanced scorecard is just one way to incorporate customer satisfaction into company goals. You can (and should) incorporate customer satisfaction into your company mission and value proposition, too. That keeps it top-of-mind with every employee, regardless of their position.

When employees can see the impact of their work and all stakeholders feel committed to a goal, they can achieve high customer satisfaction levels.

5. Invest in agent training

Happy agents lead to happy customers. They’re the beating heart of any customer service team, but it’s a tough job and burnout is real. Agent experience, good or bad, can quickly impact customers. Poor agent experience can lead to poor job performance, or worse yet, high turnover rate. And high turnover rate can erode a support team’s knowledge base and ultimately it’s ability to better serve customers. It’s no surprise then, that supporting customers really starts with supporting your own people.

According to our Trends Report, companies with high customer satisfaction are 6.4 times more likely to have plans to greatly extend education and training opportunities for their support team. As a result, their agents are over 8 times more likely to be extremely satisfied with the frequency of training.

6. Enable customers to help themselves

Customers today have adopted a Google-it mantra. For simple queries, they prefer to find answers themselves online.

You should offer opportunities for customers to help themselves throughout the customer journey. Many customers prefer the hands-off convenience of a knowledge base, where they can search for information without having to interact with customer support reps. In fact, 70 percent of customers say they expect a company to have a self-service portal or content available to them, according to our Trends Report.

You can also use an AI-powered chatbot to serve customers help center articles outside of your knowledge base. Customers are increasingly willing to turn to chatbots for simple problems. And more tickets solved by bots means more time for agents to focus on complex problems.

7. Lead with empathy

If there’s one thing the pandemic taught us, it’s that empathy is an essential skill for support professionals— it’s even more valuable than customer service experience. In fact, nearly half of customers want to interact with an empathetic customer service representative.

Support leaders can provide empathy training, but it’s also a good idea to hire support reps who can already put themselves in an angry customer’s shoes and communicate that understanding to the customer. Businesses might also consider allowing agents to make exceptions to certain policies in situations that require empathy.

8. Personalize the customer experience

Our Trends Report found that 90 percent of customers will spend more with companies that personalize the customer service they offer them and 68 percent say they expect all experiences to be personalized.

Give agents access to valuable customer information—beyond just the customer’s name—that they can use to improve experiences. With customer context such as the previous issue the customer reached out about, how long they’ve been a customer, and what products they’ve purchased, agents can anticipate customer needs and deliver more tailored support.

9. Provide proactive support

Reactive support used to be the standard: you wait for a customer to contact your business with an inquiry or issue. Proactive service, however, is now a crucial type of customer service—it means anticipating your customers’ issues and addressing them before your customers do. For example, an internet provider might send customers a text about upcoming service disruptions. Or, a software company might add new resources to its help center before a product update.

10. Implement conversational customer service capabilities

Customers hate repeating themselves, and they certainly don’t want to wait on hold while an agent hunts around for information that should be readily available. Enter conversational customer service—the ability to offer fast, personalized, uninterrupted service across web, mobile, and social apps. Instead of siloed chats that start and stop each time a customer reaches out (or switches channels), each interaction becomes part of a larger conversation that carries over a lifetime of interactions with the company. The result is a seamless experience for customers and agents alike.

In fact, companies with high customer satisfaction are 6.8 times more likely to have already implemented conversational customer service capabilities, including adding messaging channels or making it possible to switch between channels for a single ticket.

11. Build customer community

A customer community is an online or physical space for customers to connect on a regular basis to have conversations, answer questions, and share ideas and information. Customer community can improve the customer journey and increase trust.

Customers that find value in connecting to each other and being a part of the community will associate that value with your brand. By doing the work to bring your customers together and help them help each other, you’ll give them more opportunities to be successful using your product, and you’ll generate the kind of goodwill that builds brand loyalty.

Customer satisfaction examples

Looking for examples of companies that achieve high customer satisfaction? Read on for examples of businesses that excel at satisfying their customers.

1. Instacart

Instacart is a same-day grocery delivery service. One way it achieves high customer satisfaction is by having data visibility and agility. In other words, it can access customer data, draw insights from it, and act on it. Being data-centric allows Instacart to:

Personalize the service experience: Instacart brings data about each user into its customer support software. When helping customers, it’s important for agents to know contact information, recent order information, and coupon and credit balance. On the other hand, when helping shoppers, it’s important to know what type of shopper they are, and if their status is active or dormant.

Capture the voice of the customer: No matter the usage, the transparency and flexibility of Instacart’s support metrics allows it to capture the voice of the customer and dig deep into changes in satisfaction to discover the root cause and make changes at the product or policy level, or to ramp up agent training in specific areas. It also allows them to collect positive feedback so they know what’s working well, and can build on their successes.

CSAT: 90 percent+

Read the full story.

2. Dollar Shave Club

Dollar Shave Club is one of the first direct-to-consumer subscription services, delivering affordable razors straight to Members’ doorsteps every month. The company knew from day one that the only way to nurture legions of loyal subscribers was to provide a world-class support experience. Here are a few ways they deliver this.

Meeting customers where they are: Dollar Shave Club offers support over a range channels to give customers options when they need help, including email, live chat, phone calls, and messages from Facebook Messenger. All its channels feed into Dollar Shave Club’s customer support system so agents can offer fast and personalized support no matter how a customer reaches out.

AI-powered self-service: Research shows that customers prefer to help themselves for simple problems. With this in mind, Dollar Shave Club deployed a chatbot to scale its self-service and enable customers to find answers on their own instead of having to reach out to the support team.

CSAT: 96 percent

Read the full story.

3. Squarespace

Squarespace provides people with the tools and templates to build, host, and promote their online brand. Naturally, Squarespace wants its customers to feel at ease in their digital home and works hard behind the scenes to create a customer experience that is easy and intuitive, turning even the least Internet-savvy among us into designers of beautiful spaces. It does so through:

Fast, always-on support:Quick, around-the-clock support are two of the top components of good customer service, according to customers. Squarespace offers 24/7 support and strives to reply to customers in a few minutes via chat and within a few hours on email.

Coaching and mentorship: Beyond a help center, Squarespace offers coaching and mentorship to help its customers succeed online.

CSAT: 95 percent

Read the full story.

Customer satisfaction tools and software

While agents interact with customers directly, the company has to provide them with tools to do their jobs well. Customer satisfaction requires a mix of both customer service skills and the right software.

Here is a list of customer satisfaction tools and software:

  • Customer service software that makes it easy for customers to reach you on the channels of their choice
  • A ticketing system that makes it easy to manage customer requests and respond to customers quickly and effectively
  • CSAT surveys: With customer service software these can be sent automatically after every customer service interaction
  • Survey tools that integrate with your customer service software, such as SurveyMonkey
  • Robust customer analytics tools that track customer engagement and support performance across channels

Top customer satisfaction questions

What does customer satisfaction mean?

Customer satisfaction is a measure of how well your products, services, and overall customer experience meet customer expectations.

Why is customer satisfaction important?

High customer satisfaction can help attract new business, boost retention, and increase sales among your existing customer base. In fact, 73 percent of business leaders report a direct link between their customer service and business performance, according to Zendesk’s 2022 CX Trends Report.

What happens if customers are not satisfied?

Whether a company exceeds or falls short of customer expectations is often directly tied to business success. It’s a high-stakes game—76 percent of customers would now defect to a competitor after just two bad experiences.

How does customer satisfaction help branding

Customer service is the new brand. Companies with high customer satisfaction drive greater loyalty and lifetime value. Zendesk’s CX Trends Report revealed that 60 percent of business leaders believe customer service improves customer retention and 64 percent say it boosts growth.

Free customer experience guide

Find out how to create great customer experiences that will lead to loyal customers, improved word-of-mouth promotion, and increased revenue.

Free customer experience guide

Find out how to create great customer experiences that will lead to loyal customers, improved word-of-mouth promotion, and increased revenue.

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