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Measuring Customer Satisfaction

Monday, February 07, 2011   By Mike Reddy


As a business mentor, I know companies can spend thousands of dollars on advice from business coaches, consultants and other experts, but often the best advice is freely given by the people that matter most - your customers.

When you ask a customer to write several sentences about their experiences it is also a great way to test confidence in your business. Which customers would you ask? Are your customers prepared to vouch for your business with their name? Are you prepared to accept negative feedback?

The rule of thumb is that every disappointed customer will share their experience with 10 others. As a business advisor, I assure you that if you aren’t collecting negative feedback you are missing out on a great way to improve your business and increase customer retention.

Conversely, if your customers tell you what they love about your business you can use their praise in marketing and promotional material. Popular products can be placed more prominently or spearhead an advertising campaign.

Working on increasing customer satisfaction is a great way to build future sales. Word of mouth recommendations are so effective because they are built on relationships of trust. People are likely to trust their neighbour’s recommendation of a local service such as a drycleaner if only because they will see them the following week and tell them whether it was a good tip.


How a business collects customer feedback depends on the number of customers it deals with every week. A high-turnover business such as retail or food might give customers an email address with a small incentive - say a discount on their next purchase - in return for a couple of sentences on the quality of service they received. A business with a small number of high-value clients might take a more direct, personal approach.

The first step is to have a channel in place for collecting feedback. Passive forms of feedback collection require little effort or cost to establish. Methods include a dedicated email address or a form on the company website which automatically creates a spreadsheet of responses. More traditional forms include the self-addressed, pre-paid postage survey or fax feedback forms. Once in place, you can point to this channel in your invoices or receipts or pamphlets. For example, hotel rooms almost always have a paper feedback form lying on a desk.

There are times when more specific feedback might be required for product development or strategic planning. An active approach such as a phone survey gives you greater control over the quality of data. However, some customers are more forthcoming when anonymous; others are reluctant to put their opinions in writing.

And one final business coaching tip: if you receive the glowing recommendation you deserve, make sure you get the customer’s written approval before using their name in your promotions.

Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.