Customer satisfaction is one of the most powerful indicators of success for your business.
That statement likely doesn’t come as a huge surprise. Ask just about any business owner, and they’ll tell you they “know satisfaction is important.”
Experts have profusely reported on single-question customer metrics as great indicators of success. You can read scores of studies and articles emphasizing everything from the standard Customer Satisfaction rating, to Net Promoter Score (NPS), to the emerging Customer Effort score, to pieces emphasizing all three.
These experts extrapolate their importance, tying it to your bottom line. In some studies, customer satisfaction has even been linked to how well stock prices perform.
And for us, the power of satisfaction to predict success bears equal importance with subscription businesses.
How Satisfaction Rating Drives Subscription Commerce
Satisfaction, product feedback, and customer-driven data provide huge indicators for success, in terms of subscriber loyalty (retention) and in terms of the lifetime value (LTV) of those subscribers.
In the below examples, we’ll take one of the simplest forms of feedback – Product Feedback on a scale of 1 to 5, where 5 is best – and see how it relates to churn & revenue.
Satisfaction and Loyalty
Loyalty can be measured by a number of different metrics. For subscription businesses, one of strongest indicators of loyalty is retention, which is a measure of how likely a subscriber is to stay with your subscription.
A simple illustration could be described as the following: if your subscription business has 100 subscribers and 10 cancel in the month, leaving you with 90 subscribers, your subscription would seen 90% retention for that month. (Conversely, this would represent 10% churn)
How do we get from satisfaction, to loyalty, to retention? The line of reasoning is straightforward: the higher the satisfaction, the less likely the cause for cancellation. The fewer the cancellations, the higher the retention.
And when we look at the data, this assumption comes to light.
Using the data from real subscription businesses, we’ve shown how average product rating (a scale of 1 to 5, where 5 is best) correlates to higher or lower churn percentages.
As Average Feedback Response moves to the right, closer to 4.5 and 5 out of 5 scores, churn % trends downwards.
In this graph, the green data points represent the best churn (the lower the better). The orange, yellow, and red colors show worsening churn amount, respectively.
What this tells us is simple, but profound: the greater the Average Feedback Score, the lower the churn rate. The lower the churn rate, the higher subscriber loyalty.
Satisfaction, Loyalty & Revenue
This directly affects revenue.
When churn is low, subscribers continue paying for longer periods of time, which means higher value per customer. Over the lifetime of the subscriber (from signup date to cancellation date), we can calculate their “Lifetime Value” or LTV.
Using the same method above, we can compare LTV and Average Product Feedback:
Above, as with churn, the higher the product feedback, the better the result. In this case, higher product feedback correlates with higher LTV.
For instance, when a subscriber rates a product as a ‘1 out of 5’, their LTV is, on average, $67.70/subscription. Compare that with the subscriber who rates the product as ‘5 out of 5’, with a whopping $350.40 in total LTV – that’s over 5x the amount of revenue on a single subscription.
Product Feedback Drives Retention & Revenue
With just the one satisfaction metric we’ve detailed above, we’ve drawn strong relationships between two of the most important metrics for subscription business: churn & LTV.
It might make you wonder, “How would my subscribers rate my product?”
The Problem(s): How We Gather That Data
If you ask most business owners, gathering actionable data around customer satisfaction probably isn’t something they proactively do.
That might feel like a jarring sentence after seeing why it’s so important. And it ought to be — everyone should be gathering feedback, right?
But we tend to notice that there are two key problems at play here:
Problem 1. It’s kind of confusing, boring, and feels like a nuisance.
The problem is this: ‘customer satisfaction’ may sound opaque. The numbers used to quantify a rating may not be all that interesting. The opt-ins we use to gather feedback might seem like a nuisance.
Because of this, gathering data on satisfaction tends to fall into secondary set of concerns — that “I’ll do it when I have time” category of tasks.
Problem 2. There’s not a super simple way to do this currently.
Getting great data sounds inherently complicated and, potentially, totally Greek to most business owners. To do this, you might think you need to sort through endless apps or plugins, do product walkthroughs of expensive tools, and talk to data scientists and sales people to implement your product feedback loop effectively.
We’ve got some good news. It’s actually very simple to start gathering feedback.
How to Gather Data in 1 Simple Step: Cratejoy Product Feedback
The easiest way to gather product feedback and satisfaction data on your subscription business is by using Cratejoy. Recently, Cratejoy has released a simple, easy to implement solution for product feedback. You can read more about it here.
For the subscriber, it’s a simple rating and option for a short answer:
The process behind implementing it is simple (read the full guide):
- Enable feedback in your settings
- Choose your request timing, ie. 7 days after shipment
- Look at your Satisfaction Reports in the Analytics section of Cratejoy
The goal here should be two fold: 1) track overall subscriber satisfaction by aggregating responses & 2) identify and address problem areas or significant subscriber issues. The simple form above accomplishes both goals, provided a quantitate rating scale and option of a a short answer, subscribers will be able to provide highly detailed, qualitative feedback on their experience
By tracking subscriber satisfaction, you can compare results to the trends we’ve shown above.
By identifying problem areas, you can proactively improve your business and make adjustments to how you curate, fulfill, and market boxes. As you improve, satisfaction ought to improve as well.
Start Gathering More Product Feedback
The best thing about product feedback is no matter the stage of your business, you can start gathering this data. Whether you have 10 or 10,000 subscribers, the data provided by subscriber is useful.
And if you’re looking to go above and beyond the standard Product Feedback ratings shown above, there are even more tools at your disposal.
Several 3rd party services can help you gather more granular data around your product (such as individual product feedback, as well as other details about subscriber experience (shipping, customer support, etc)). If you’re looking to gather more feedback, check out some of these low-cost tools:
Questions? Post them below to start a conversation.