How happy are your customers with your brand or product; that’s the “to be or not to be” question — and what makes up the answer may surprise you. Here again “the customer is always right” is right….but understanding the psychology that determines this elusive happiness is a prerequisite to being able to navigate and improve Customer Satisfaction.
In order to understand and optimize Customer Satisfaction and NPS® (Net Promoter Score®), and in turn convert every customer to a brand loyalist and advocate, we have to look beyond Customer Success and the number of successful transactions.
If the entirety of the customer experience from pre-purchase, to post-purchase, satisfaction or dissatisfaction should be analyzed, then Customer Expectation must be introduced into the equation — and it is frequently overlooked. Customer Expectation is an important first step in the Customer Experience journey, and in the end, highly impacts Customer Satisfaction.
We devised a simple formula to illustrate this relationship.
Customer Experience (CX) — Customer Expectation (CE) = Customer Satisfaction (CS)
Or in short
CX — CE = CS
To break this down, if the Customer Experience meets or exceeds Customer Expectation, the result is a positive Customer Satisfaction. If the Customer Experience doesn’t meet Customer Expectation, Customer Satisfaction will measure low and consequences will follow.
To put it simply, the balance between experiences and expectations is what determines satisfaction.
Let’s further break down the terms:
Customer expectations occur in the first stage of the customer journey and are solidified during product research and fully decided upon purchase. Based on the available information, the customer develops an expectation of how the product will look, function, and serve their needs. This information includes product listings, visual aids, advertising, available feedback and reviews, pricing, previous experience with similar products, and previous experience with different products from the same brand.
Customer experience is defined as the sum of all experiences and interactions a customer has with a brand and product. CX is comprised of the entire journey a customer takes from pre-purchase, to buying, unboxing, installation and onboarding, then ongoing use. Customer Support and proactive or reactive communication from your team is also a part of Customer Experience.
A positive Customer Experience is necessary for ensuring a positive long-term relationship with the customer and increasing LTV (Lifetime Value).
The ultimate definition of Customer Satisfaction is understanding how happy your customer is with your product and brand. Their sentiment is a consequence of how your product and Customer Experience meet the needs and expectations of your customer, and in turn determines customer satisfaction. In other words, is the customer happy with your product, your company, and the journey they took to get to that place? Customer Satisfaction is your most important metric in measuring where you stand with your customers and it’s only by asking your customer that this measure can be established, NPS and CSAT being some of the proven methods to do it.
Customer Satisfaction is many times regarded as the outcome of the level of Customer Experience you manage to produce, yet this is only half the answer. Customer Expectation is often the overlooked other half.
What does this mean for me?
If you find that your products and Customer Experience routinely meet or exceed Customer Expectation, congratulations! You have cracked the code to Customer Satisfaction and are on your way to creating a community of valuable brand loyalists. Your job is to keep the ratio between expectation and experience as narrow as possible, which may become difficult when expectations rise based on the volume of positive feedback about your product. Nevertheless, this is a good problem to have.
If you find that your product or Customer Experience routinely fails to meet customer expectations, there are several things you can do. You can either lower Customer Expectation or improve Customer Experience. Determine which option is less costly to you at the time and balance it with an effort to improve the ratio in the long term. If the gap between Customer Expectation and Experience keeps widening, the reputation of your brand will suffer irreparable damage. This is why it’s important to remedy the gap immediately to protect the future of your product and brand.
Choosing the right remedy depends on what’s considered the lesser of two evils for your business — reduced revenue or increased cost. Lowering Customer Expectation can be done by optimizing product listings and only promising results your product can truly deliver, or by lowering prices — both will impact gross revenue and will have an immediate impact. Improving Customer Experience can be optimized in any stage of your product cycle, from development, through the whole journey your customer takes with your product — any of these will increase your R&D cost and will usually take some time to improve.
In either case, it’s essential to understand where the gap between Customer Expectation and Customer Experience resides. In order to understand this gap, you might want to measure your NPS effectively, be sure to include Segmented NPS in your tools set and stay in touch with the customers throughout their whole journey. Are customers being misled about your product online? Are they having trouble with installation or on-boarding? Are they finding your product difficult to operate? Are they finding it difficult to reach customer support? Wherever the gap lies, identify it, and build your strategy on tackling it from there. Even small steps in improving the Expectation to Experience ratio will show significant results, as long as they are informed by smart data, coming directly from customers.
Understanding your customers and how their expectations are in relation to the Customer Experience you provide, is key in future proofing your business. Giving your customers what they need and delivering on the promises you make is the simple secret to a successful product. To lift the veil that is covering this secret in your segment, or for your particular product, Copilot will help you measure and segment Customer Satisfaction and optimize your CX efforts.
As you apply your resources towards this goal, remember to look at expectations as well. Sometimes a change in messaging, targeting or price structure can be the short and cheaper way to better customer satisfaction — and in most cases, it is the combination of changes to CX as well as CE that will yield the best results.