Introduction to SaaS Businesses and the Importance of Customer Satisfaction
SaaS companies need to be right on top of customer satisfaction. If they want customers to renew their subscription, they should be offering a great customer experience that leads to satisfaction and loyalty. You need customers to keep coming back again and again because they love your SaaS product and the service you provide.
For SaaS businesses above all others, it’s critically important to focus on customer retention rather than acquisition alone. If you want to experience truly sustainable growth, you’ll want to expand and retain your existing customer base.
And how do we measure how likely customers are to renew? One way is by tracking customer satisfaction using key metrics to give insight into a customer’s state of mind. Simply asking a customer how satisfied they are with an experience or your business is the best way to predict how likely a customer is to renew.
What are Customer Satisfaction Metrics (CSAT)?
Customer satisfaction metrics are metrics that measure customer satisfaction on a particular scale. You can use it to obtain insight into a particular customer or observe trends in your overall customer base. If you have a high customer satisfaction score, it usually means your business is doing a good job and customers are likely to renew.
Measuring customer satisfaction doesn’t have to be complicated. There are several customer satisfaction metrics you can track.
Customer Satisfaction Score
Customer Satisfaction score is the metric that directly measures customer satisfaction by asking in a straightforward way how satisfied a customer is with your business, product, features or service. Customers rate their answers on a scale of 1 to 5. A CSAT survey asks a question: “How satisfied are you with your customer service experience today?”
Net Promoter Score
Net Promoter Score measures loyalty, which is a direct result of satisfaction. The NPS survey asks customers how likely they are to promote your business, and rates their answer on a scale of 1 to 10, which is the NPS score.
An NPS survey asks a question: “How likely are you to recommend [business] to family or friends?”
Customer Effort Score
Finally, Customer Effort Score asks customers how effortful their experience with your product or service was, grading their answer on a scale of 1 to 5. Easier experiences lead to more satisfaction, as customers meet less friction when doing business with you.
A CES survey asks a question: “How difficult was your customer service experience today?”
Understanding Customer Satisfaction Metrics and Why They Matter
If you don’t ask customers about how satisfied they are, you end up with a customer base that is at a high risk of churn. Customer satisfaction metrics matter because:
They allow you to intervene before it’s too late
Taking action to measure your customers’ satisfaction means you can keep your finger on the pulse of whether customers are likely to churn. Instead of waiting until it’s too late, low satisfaction scores prompt your business to intervene with unhappy customers.
They offer a standardized way of understanding customer satisfaction
Many businesses use metrics like CSAT to measure customer satisfaction so you know you are in good company. Customers are used to receiving surveys of the type you intend to send so you know you are in familiar territory. You can see how your business compares to others in the industry.
They help gather actionable insights your business can use to improve
Since you’d typically ask a follow-up question after getting customers to rate their satisfaction, loyalty or effort, businesses are able to gather actionable insights that they can use to improve. Criticism hurts, but it’s the only way you’ll be able to better the product or experience so customers are happier and more satisfied.
How to Collect and Analyze Customer Satisfaction Data
1. Decide on your survey goals
You may want to collect data on a customer’s overall sentiment towards your business, which is one goal. In this case you would ask: “How satisfied are you with our software?”
If you want to be more precise, you could also gather feedback on how customers feel about the new feature you have just released. Then ask: “How satisfied are you with our new feature?”
Whatever question you ask must be in line with your goals, because it determines the responses you will get from your customers.
2. Choose the best survey for your business
Of the three different satisfaction survey types, there will be the best one to pick at a particular time. Whether you decide to go for CSAT, NPS or CES, decide on which type of data you want to collect before sending out your survey.
- CSAT directly measures customer satisfaction
- NPS measures loyalty which is the result of satisfaction
- CES measures effortful experience which can lead to more satisfaction
Each of these surveys will be useful at different times.
3. Be intentional about sending your surveys
Consider carefully which customers to ask for feedback and exactly when to ask them about satisfaction. For example, gathering feedback during a stressful customer service experience is not likely to improve their temper or their impression of your business. Timing is key when conducting your surveys.
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4. Analyze survey results
Analyze the results of your survey to find out what customers would change about your business. If you’ve asked the right survey questions, they’ll have told you what will make them more satisfied with your business. Critically, low satisfaction scores mean that there is a strong pressure for your business to take action immediately before you lose your customers to churn.
5. Make changes based on feedback
Actioning the results of your surveys is the most important step of measuring customer satisfaction. If customers tell you that you are providing a poor support experience, it’s vitally important to equip your agents to deliver a better standard of service so these customers don’t churn.
Conclusion and Tips for Implementing Customer Satisfaction Metrics in your SaaS Business
Measuring customer satisfaction means your SaaS business can stay ahead of the game and find out what your customers are really thinking. Satisfaction frequently leads to loyalty, which is a state of mind you need to cultivate if you are to improve retention and drive revenue.
SaaS companies that care for their existing customers will experience more, longer, and more sustainable growth than those that focus on acquisition alone. Satisfied customers renew their subscriptions and recommend your SaaS product to family and friends.
- Send in-app surveys to customers during the time when they are engaging with your product
- Issue email surveys that reach your customers at particular times of day
- Use website pop-up surveys to capture customers while they are on your website
- Use customer success software like Churn360 to measure satisfaction