What is Customer Satisfaction?

Surely all businesses set out with the goal of satisfying their customers. But this can often be a vague goal with little understanding or intent behind it. It helps to really understand what customer satisfaction means before you can strategise about how to achieve it. So, let’s start by wrapping our heads around customer satisfaction and why it is important for any business.


What is customer satisfaction?

Customer satisfaction refers to how well you, as a product or service provider, fulfil the needs and expectations of your customers. This applies to any interactions before and after the sale as well as during it. The following customer satisfaction definition comes from Cambridge Dictionary:

“A measure of how happy customers feel when they do business with a company.”

Seems simple enough, right? But the problem comes down to measuring customer satisfaction. It’s not enough to assume that a customer is satisfied because they leave with a smile on their face and don’t complain about you online. Some people might just be polite.

Start Creating More Meaningful Relationships With Act!

Start your 14 day free trial today. No download or credit card required.

How can you measure customer satisfaction?

The fact that the above definition uses the word “measure” highlights the importance of measuring customer satisfaction empirically. This is typically done using customer satisfaction surveys to gather your customers’ opinions on the different aspects of your service. You can also factor in other metrics like customer retention and loyalty to make assumptions about customer satisfaction.

By measuring customer satisfaction in this way, you can identify your weaknesses and figure out how to improve your service in order to increase customer satisfaction levels.

Why is customer satisfaction so important?

It’s much easier to forget about a customer as soon as they leave your store or click away from your website. So why should we take the time to follow up with our customers and focus on their satisfaction levels? Here are some of the key reasons why measuring customer satisfaction and striving to improve it are so important. 

Maximise customer lifetime value

Many businesses underestimate the cost of acquiring a new customer. It is much more cost-effective to invest in retaining existing customers rather than constantly chasing new ones. If you focus on customer satisfaction, then those that buy from you are much more likely to buy from you again.

This increases the lifetime value of that customer, i.e. the amount they spend with you over their entire lifetime. When customers keep coming back to buy from you, your return on investment from their customer acquisition cost increases. The bottom line is: satisfied customers are more loyal and loyal customers are more profitable for your business.


Minimise customer churn

Customer churn refers to those customers that stop buying from you, whether that’s after their first purchase or after several years of being a loyal customer. Customer churn can be very costly for your business because it means you need to go back to focusing on getting new customers. As mentioned above, a satisfied customer is more likely to remain loyal, therefore decreasing customer churn. 

Positive brand exposure

Word of mouth is important to any business. Disgruntled customers will go online and complain about your business or its products, they’ll write negative reviews, and they’ll recommend your competitors over you. By improving your customer satisfaction, you not only avoid this, but you also benefit from positive word of mouth. Satisfied customers will recommend you to friends and family, talk positively about you online, and, hopefully, write positive reviews on places like Google, Facebook, and Yelp.

Increase revenue

All businesses want to increase their revenue and grow their business, but they might not always have the resources to invest in actively growing it. Once you’ve got your customer satisfaction strategy right, it becomes an effective way to grow your business and its revenue passively.


While you focus on improving other areas of your business, satisfied customers keep coming back to buy from you and they keep recommending you to their peers or writing positive reviews online. This keeps a steady and, hopefully, increasing revenue stream coming in without you having to constantly work on it. Of course, customer satisfaction is something you should review on a regular basis to ensure you’re still hitting the nail on the head.

Big results. Small investment.

Ready to take the first step?