Satisfying customers is necessary for a business to survive, then grow and thrive. It can be the single greatest determinant when it comes to predicting whether a business will scale successfully. Here are five reasons that illustrate the importance of customer satisfaction:

1. Indicator of consumer loyalty

If a customer is happy with the product, service or experience the likelihood of them coming back in the near future is more likely. This is a group that the company can count on when assessing their growth prospects and forecasting revenue. Such customers, can also be advocates through positive word-of-mouth and could be even roped in as ‘evangelists’ - these are people who support and publicise an enterprise beyond what an informal advocate would do.

2. Creates differentiation

Often, two companies offer the same or very similar products. Take noodles for example. Noodles are ubiquitous with numerous places offering essentially the same product. Customer satisfaction that translates to a recommendation may be the sole reason that a person would order from one place or another. The advocacy of a friend, or any acquaintance for example, could also differentiate a particular offerings from the crowd.

3. Reduces customer churn 

Customer churn is the loss of customers. This may be because of dissatisfaction with the  product or service offering. An emphasis on customer satisfaction can ensure that even if a customer has a grievance, they are inclined to think of a firm positively because of how negative feedback is addressed. It gives the customer an incentive to give second chances or stick with a particular choice in a market where there are many similar products.

4. Combats negative word-of-mouth

In the age of social media, negative word-of-mouth poses a challenge to all SMEs. Emphasis on customer satisfaction can mitigate potentially thorny scenarios in the bud and ensure that a firm’s reputation does not take a hit. It’s worth remembering, it is one thing to lose one customer but it is quite something to lose 20 potential customers to bad word-of-mouth.

5. It’s cheaper to retain customers than acquire new ones

The Harvard Business Review said that depending on the business, it is 5 to 25 times cheaper to hold onto existing customers than investing in acquiring new ones. For holding onto customers, customer satisfaction is key.

Measuring customer expectations

The question arises - How can SMEs ensure customer satisfaction?

Measurement of customer expectation is the first step and helps figure out where the business stands with respect to its customers.

As per qualtrics.com, there are four main ways in which customer satisfaction can be measured. They are:

• Overall Satisfaction Measure (Emotional) - An example of this would be asking ‘How was your experience of the product?’

• Loyalty measurement - (Behavioural) - An example would be ‘Would you recommend this product to your friends and family?’

• A Series of Attribute Satisfaction Measurements - An example would be ‘How did you like ‘x’ feature of the product’?. This measure explores an experience of particular features of a product or service and differs from the Overall Satisfaction Measure which measures the overall emotion.

• Intentions to Repurchase Measurements - ‘Would you use a product again?’ - This measure allows you to gauge customer retention.

The insights from a customer expectations study can also be used in understanding what the company’s strengths and pain points are, thus being the foundation of a strategy for future growth. However, you look at it, the truth remains - customer satisfaction may be the key to grow your firm.

Entrepreneur, author and tech Guru H. James Harrington had this to say about the importance of measurement in business:

“Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”

Put your thinking caps on and come up with a customer satisfaction measurement and implementation strategy. It could be just the push your business needs to unlock its potential.