How to Improve Customer Satisfaction in SaaS
Customer satisfaction is an integral part of any SaaS business. There’s a popular misconception that customer satisfaction is pretty much the same thing as customer service. However, there’s a lot more to it than that when it comes to product-led SaaS businesses. You need to know how to improve customer satisfaction if you want to scale.
Customer satisfaction is versatile and complex, which is why you need to make sure that your users don’t run into any issues at any stage and have a great experience throughout.
With that said, your main focus should be onboarding, adoption, and engagement. Those are the key elements you can use to improve customer satisfaction today.
In this article, I’m going to cover:
- Why customer satisfaction is so important
- The key benefits that customer satisfaction brings
- How to measure customer satisfaction
- And finally how you can improve your customer satisfaction
By the end of this article, you’ll have everything you need to start improving customer satisfaction, and start scaling your SaaS business.
So let’s get started…
Why is customer satisfaction important?
A lot of SaaS businesses used to overlook the importance of customer satisfaction. They simply didn’t see it as something that deserved a thorough approach or deliberate strategy.
As far as people were concerned, if you had a great product and knew how to market it, success was guaranteed.
But then something changed. SaaS founders realized that retaining customers, and increasing customer lifetime value (CLV) was the key to scaling.
The sheer number of competitors out there, all offering similar products to yours in terms of functionality, have made it more important than ever to provide a great customer experience. It’s at least 5x cheaper to retain an existing customer than find a new one. That means improving customer satisfaction is simply good business.
According to an Econsultancy survey, most companies have now shifted their focus to customer experience:
The definition of customer satisfaction suggests that it is your customer base that ultimately determines whether your product or services meet their expectations. So, customer satisfaction essentially equals success.
And, a lot of times, if a customer feels a gap between what they want and what they get, they start looking for alternatives. That can only lead to one thing: Churn.
Customer satisfaction is by no means a walk in the park. But, at the same time, it can be game-changing for your SaaS business.
Benefits of customer satisfaction
What’s in it for you if your customers are happy? Well, as it turns out, quite a lot actually. Here are the key benefits of customer satisfaction I’m going to focus on…
- Loyal customers
- Word of mouth
- Reduced costs
Customer satisfaction means loyal customers
If your customers are happy with your product, and gaining value from it, it stands to reason that they’ll stick around for longer.
This improves your CLV. In other words, you’re going to get more money from each customer on average. That’s the beauty of a SaaS product — it’s recurring revenue.
A high CLV is really useful. Not only does it maximize your profits, but it’s also an indicator of how successful your business is. The higher your CLV, the higher you can value your business, and the more chance you have of raising money in future.
According to research from Invescpro, 76% of companies see CLV as an important metric. That means if you aren’t, you’re in the minority, and you’re falling behind.
Customer satisfaction encourages word of mouth
Did you know that word of mouth generates twice as many sales as paid ads? Or that people are 4x more likely to purchase a product when it’s been recommended by someone they know?
The fact is, word of mouth is the most effective form of marketing at your disposal. The tricky part, however, is that it’s out of your hands. Well, sort of. While you can’t force your customers to spread the word about your product, you can encourage it. How do you do that? By providing them with the best possible customer experience.
Improving customer satisfaction is what turns normal users into brand advocates. Your product can leave such a strong impression that your customers tell all their friends and colleagues about it. No marketing campaign can possibly compete with that.
Customer satisfaction reduces costs
I’ve already explained why improving customer satisfaction increases your profits. But there’s more. It also reduces your costs. Clearly, any scaling SaaS business needs to be doing two things: finding new customers, and keeping current customers. Now, here’s the interesting part… it actually costs 5x as much to find new customers as it does to keep existing ones.
Let that sink in for a moment. All that money you spend trying to find new business might well be being poured down the drain. For a fifth of your marketing budget, you could be working on retaining your current customer base.
Retention is the true key to growth as a SaaS company, and improving customer satisfaction is a surefire way of retaining your customers.
More profit, less costs
As you can see, if you improve customer satisfaction, you end up with more profit and less costs. What’s not to love?
Now that you understand how important customer satisfaction is, and the amazing benefits it provides, let’s move on to how you actually measure it…
How to measure customer satisfaction
There’s no shortage of helpful strategies when it comes to measuring customer satisfaction. The graph below shows how companies currently measure it.
I’m going to cover the two different types of customer satisfaction measurement. These are qualitative and quantitative.
Qualitative measures of customer satisfaction
Qualitative measures of customer satisfaction focus on detail, and identifying the reasons behind the figures. As a result, you can extract vital information about how to improve customer satisfaction, and where your product is currently falling short. The downside is that it’s harder to objectively measure a customer satisfaction score using qualitative methods.
As you can see from the graph above, the most popular approach is to simply ask customers directly. Reaching out to newer customers and asking them for feedback, or to fill out a survey, can provide you with a lot of useful information. It also shows your customers that you care. That might even go some way to improving customer satisfaction in the first place.
Surveys appear to be the most common method of gathering feedback. That’s because they’re relatively easy to set up, and also fairly simple for your customers to fill out. Having standardized questions means the answers are more easily compared. If you want to collect as much feedback as possible, as quickly as you can, then surveys are the way forward.
When it comes to writing survey questions, you need to think about what you want to find out. It’s best to focus on one or two key areas, so that surveys don’t take too long to fill out. The best advice I can give is to settle on one topic. Perhaps you want to understand why customers choose you over competitors, or maybe you want to focus on areas you can improve your product. No matter what your chosen topic is, stick to it, and make sure all your survey questions are designed with that in mind.
A final qualitative approach you can take doesn’t involve reaching out to customers at all. Customer reviews and testimonials have become a normal part of SaaS life. Sites like Capterra and G2 Crowd are great at aggregating reviews for your product. These reviews can be a goldmine of information concerning how satisfied your customers are. You may need to do a bit of digging, but it’s well worth the effort.
Quantitative measures of customer satisfaction
Quantitative measures of customer satisfaction focus purely on numbers and data. This makes it easy to track your progress over time, and provides a consistent, objective measure of customer satisfaction. The problem with quantitative measures is that you can’t understand the reasons behind the numbers.
There are three main scores you need to consider when measuring customer satisfaction. The first of these is Net Promoter Score (NPS).
An NPS survey consists of one key question: “How likely are you to recommend our product to a friend or colleague?”
The respondent answers on a scale from 0 to 10. As you can see from the image above, a score of 0-6 is a detractor, and a score of 9 or 10 is a promoter. You subtract the percentage of detractors from the percentage of promoters, and you’ll have your NPS.
It’s a simple way of finding out how satisfied your customers are with your product. The happiest customers are more likely to recommend your product.
The next score is a Customer Satisfaction Score, or CSAT.
To find out your CSAT, you need to ask one question: “How would you rate your overall satisfaction with our product?”
Your customers use a 1-5 scale, with 1 being “very unsatisfied” and 5 being “very satisfied”. The percentage of respondents who answer 4 or 5 is your CSAT.
The main difference between CSAT and NPS is that CSAT directly asks your customers about their satisfaction, whereas NPS asks about recommendations.
The final score to consider is the Customer Effort Score (CES).
This score is based on the answers you receive to the following question: “How easy was it for you to complete this task or action?”
Answers usually fall on a scale between 1 and 7, ranging from “very difficult” to “very easy”.
The effort it takes for your customers to use your product is really important when it comes to customer satisfaction. The easier your product is to use, the more satisfied your customers will be. For that reason, CES is a good indirect measure of customer satisfaction.
Measure customer satisfaction with these tools
Now that you know how to measure customer satisfaction, I thought I’d show you some of the most popular tools you can use to help you along the way.
The first is Userpilot. While Userpilot is primarily used to improve user onboarding (which I’ll discuss later), it also has great NPS functionality. You can add an NPS survey to your app which means it will display as your customers are using your product.
You can also trigger the NPS survey based on user behavior. Perhaps you only want to survey customers who use a specific feature? Then simply show the survey to people who reach the relevant page.
If you need to know more about the reasons behind NPS scores, then you can add a follow-up question to probe further. We also recommend reaching out to users and asking about their score.
Here’s a great example from Profitwell:
Wootric is another great solution, used in more than 75 countries to improve customer satisfaction. Wootric gathers feedback about your business from various sources and surveys. It then analyzes that data and helps you understand whether your customers love you or not.
Wootric offers a full suite of customer experience metrics: NPS, CSAT, and CES. It basically gives a numerical answer to the question: How satisfied are my customers?
Another powerful tool you might want to consider is Feedier. It allows you to create a custom bot with your logo, text, etc. that will gather feedback from your users. Feedier offers multiple survey types for you to choose from and these can be applied to each user differently depending on how satisfied they are.
Last but not least, Churnzero is a brilliant option. You can easily monitor how your customers are using your product in real-time. ChurnZero also logs every in-app action, analyzes behavior, and gives you a customer health score. With a scale from 0 to 100, where 0 is completely satisfied, you can quickly see how likely it is that a certain user will churn.
Once you’ve measured your current levels of customer satisfaction, there’s only one thing left to… improve it.
How to improve customer satisfaction
I’ll be honest, improving customer satisfaction isn’t easy. It requires a lot of time and effort to get it right. But hopefully you realize now how important it is to any SaaS business.
With that in mind, I thought I’d focus on the three key principles that will help you improve customer satisfaction.
Improve customer satisfaction with onboarding
40 to 60% of free trial users will log in once and then never come back. Why? Well, there’s probably a few different reasons, but the most common one is simply that they haven’t been onboarded properly.
A lack of effective onboarding can kill your product before it even has a chance to provide value. If it isn’t providing value right away, then customers won’t be satisfied. And, as we’ve already covered, that means they’ll look to your competitors.
So how can you improve customer satisfaction with onboarding? The key lies with your product’s Aha! Moment.
This is the moment that your product “clicks” and your customers see the value that your product provides. It’s also generally the moment that free triallers decide to become paying customers, or that paying customers become bigger advocates for your product.
Your product’s first-run onboarding flow should direct users to the Aha! Moment as soon as possible.
One of Userpilot’s customers, Stripo, actually lets users experience the Aha! Moment before they’ve even signed up. They provide a 1-click demo that walks users through the key features that Stripo offers.
The more you can reduce the friction between sign-up and the Aha! Moment, the greater the customer satisfaction.
One of the most effective ways of driving new users to the Aha! Moment is to use a checklist. This checklist should contain the key tasks that users must perform in order to reach the Aha! Moment and start seeing value from your product. Checklists are useful because they essentially funnel users in the right direction.
Each task on the checklist can then be further illustrated with tooltips or driven actions. These highlight specific parts of your product and show users what they need to do.
When you put all of this together, you get an onboarding flow that drives users to the Aha! Moment.
Rocketbots used Userpilot to do exactly that:
Improve customer satisfaction with adoption
Of course, once your users start seeing value from your product, your work has only just begun. You now need to keep on providing value if you want to improve customer satisfaction. The best way you can do that is to increase feature adoption.
Most products have a range of different features, each of which can provide value to your customers in different ways. For your customers to be truly satisfied, they need to be making the most of the various features that your product offers.
That initial Aha! Moment isn’t the end of your users’ journey. It’s only the beginning. You then need to introduce more and more Aha! Moments in order to drive product adoption.
The trouble with driving adoption is that you need to time it perfectly. Leave it too late to introduce a feature and your customer may have already churned. Introduce it too early, however, and they may be overwhelmed.
Fortunately, there’s a simple solution. It’s called contextual onboarding.
Essentially, this is where you show the right message to the right user at the right time. It personalizes onboarding to each and every user. You do this by having different onboarding flows trigger depending on what the user does with your product.
A great example we always use to show what we mean comes from Hubspot.
This modal only pops up when a user attempts to copy and paste an email. Hubspot recognizes what the user is trying to do (re-use an email layout) and introduces them to the templates feature that will solve their problem.
It’s perfectly timed to help the user right as they need it, and is a really powerful way of driving adoption of this particular feature.
Contextual onboarding can help you drive adoption of different features. With every feature your customers adopt, the more satisfied they’ll be, and the longer they’ll stick around with your product.
Improving customer satisfaction with engagement
The more customers engage with your product, the more satisfied they’ll be. Engagement refers to how much your users interact with your product.
The first step is to measure product engagement. There are plenty of product analytics tools out there to help you do that. The most popular of these are Mixpanel and Heap.
Once you’ve chosen your tool and started collecting your product usage data, you’re ready to start improving engagement.
You need to look at where engagement is low. Your product usage data is key to finding this out. Look for areas or features of your product that aren’t getting much traction with your users. Keep an eye out for high drop-off rates. Anywhere that has an anomaly. This is where you should be focusing your efforts.
Then you need to create a hypothesis. This will generally sound something like this:
“Doing X will improve engagement of Feature Y.”
X is an improvement you can make. It might be an improvement to your onboarding flows, like an extra tooltip. It might be improving the microcopy, or the empty state, or the call to action you use. Anything that you think will have an impact.
Y is the feature that is seeing low levels of engagement.
Creating a hypothesis means you have something concrete to measure. You can see engagement before you make the change, and then engagement afterwards. This way you can measure the exact impact that your changes had on product engagement.
Chances are more and more competitors are popping up, all hoping to steal your customers away. That’s just part and parcel of the SaaS world, unfortunately. And that means that a key differentiator is customer satisfaction.
Here are some key takeaways from this article:
- Improving customer satisfaction is really important, because it means your customers stick around, and so your CLV increases.
- The key benefits that you get by increasing customer satisfaction are improved loyalty, word of mouth, and reduced costs.
- Qualitative methods of measuring customer satisfaction include surveys, directly emailing customers, and mining insights from reviews.
- Quantitative methods of measuring customer satisfaction include NPS, CSAT, and CES.
- The three principles you need to consider when improving customer satisfaction are onboarding, adoption, and engagement.
About the author:
Daniil Kopilevych Growth Marketing Manager at HelpCrunch – A Customer Communication Platform. Daniil hopes that he is making the world a bit better by building and growing new products and helping others do the same.