The Power of Active Listening in Enhancing Customer Satisfaction

According to some studies, an average person spends about 70%-80% of their waking day communicating, with around 55% of the time focused on listening. Other research demonstrates that whilst many people believe they are able to communicate and listen effectively, the average person only listens at about 25% efficiency and tends to forget from one-half to one-third of it within eight hours.

Listening is an important skill in all areas of life, but is particularly important when providing customer service. Customer service refers to all the interactions between an organisation and the people using its products or services. It is an essential part of any organisation, and should meet and support customer and service users’ needs from the first point of contact with the organisation. Effective customer service should ensure that customers and service users have a positive experience at all times in their interactions with the organisation. To achieve this level of customer satisfaction, customers and service users need to feel that they are being listened to, heard and understood. 

Twice a year the Institute of Customer Service carries out an independent, objective benchmark of customer satisfaction on a consistent set of measures on 282 organisations and organisation types in 13 sectors and is based on 60,000 survey responses provided by more than 15,000 UK adult customers. Key findings in the July 2024 report highlighted that 56% of customers say their satisfaction with an organisation has been influenced by whether they felt it understood and cared for their personal situation and needs. 

To address the needs, concerns and/or complaints of customers and service users effectively, when communicating, anyone dealing with customers or service users needs to fully focus, understand, respond and remember what the other person is saying, whilst building rapport and trust; in other words, utilise a communication technique known as active listening.

What is Active Listening?

Effective communication is a key aspect to ensuring that all parties have clear expectations of one another. To communicate effectively, you need to listen carefully and respond accordingly, applying the 2:1 ratio, which means listening twice as much as you speak. Listening plays an integral part in communicating effectively. In communication there are two types of listening:

Passive listening – this is when you are hearing someone or something without putting 100% of your attention towards listening. This is a type of communication that is pretty one-sided. The individual listening passively will often not give any feedback on what they are listening to or to the person speaking. When a person listens passively, they aren’t actively engaged in what is being said. Instead, they might be thinking about something else entirely and only putting a portion of their focus on the conversation. There are several suitable circumstances for listening passively, for example, watching TV or listening to music when engaged in other tasks, or dealing with background conversations in the workplace. However, in general, passive listening in a one-to-one conversation or a small group format isn’t just unproductive, it is also considered to be rude.

Active listening – this occurs when a person fully engages in what is being said, or what they are listening to. It requires the listener to make a conscious decision and a commitment to be fully present. Active listening involves not only hearing words but also receiving, interpreting, responding, and paying complete attention to the person speaking rather than concentrating on yourself, or your surroundings. Listening actively and with empathy will help you to better understand a person’s situation from their perspective, digesting it without pre-judgement rather than making assumptions or shaping it to your interpretation of what they are trying to tell you. 

In every workplace, the ideal would be for all interactions to involve active listening rather than passive listening. Active listening is an essential soft skill that many employers hold in high regard. In customer service, active listening helps to foster a positive relationship between the organisation and its customers and service users, building rapport and trust, and significantly enhancing customer satisfaction and loyalty. However, for many people, active listening does not come naturally, it is something that requires a conscious effort to do, and although active listening is a skill that can be learned through training, studies show that only 2% of people have been trained in active listening.

Benefits of Active Listening in Customer Service

As we have said previously, customer service is a crucial aspect of business operations; it refers to the service and support provided by a business or service provider to its customers and/or service users before, during and after purchasing or using its products or services. It encompasses all interactions between a business and its customers and/or service users. Customer service directly influences customer satisfaction, loyalty, and the overall perception of the business or service provider and its brand.

When customers and/or service users in the private sector experience poor service at any stage of the interaction with the business, if they are dissatisfied, they can find a different provider with a better approach or service proposition. It is more complex for public sector customers and service users, because that luxury of choice often doesn’t always exist. 

The success and reputation of a business or public service organisation will depend on the ability to satisfy and retain customers and service users. Research from the Institute of Customer Service indicates that higher levels of customer satisfaction correlate with an organisation’s reputation, financial stability and growth. Despite the intrinsic link between high levels of customer satisfaction and business performance, recent research indicates a concerning trend that customer satisfaction levels are declining and the relationship between declining standards of customer service and UK PLC’s sluggish economic performance as a whole is becoming more evident. 

Both businesses and public sector organisations should be looking for ways to improve any gaps in customer and service user expectations and satisfaction, and active listening is an effective tool to use. 

When customer interactions are tailored to the individual based on active listening, it strengthens customer satisfaction and loyalty by uncovering, understanding and addressing the customer’s real needs behind the spoken words. Interactions that are based on active listening help to strengthen customer connections, enhancing engagement with customers. 

The impact of active listening is both immediate and lasting. In the initial stages of a customer interaction it is crucial for understanding customer needs, effectively resolving any issues and for building strong relationships. A positive interaction where the customer feels understood can enhance their overall perception of the organisation, and can turn a simple enquiry or issue resolution into a relationship-building opportunity.

Customer retention is significantly strengthened by active listening; customers who feel heard are more likely to feel valued by an organisation, which increases their loyalty, the likelihood of them remaining a customer, and the probability that they will recommend the organisation to friends and family. It has been said that when a customer is satisfied with their interactions, purchases and/or service from an organisation they will tell three other people of their positive experience. However, dissatisfied customers who have had a negative experience with an organisation will tell around 15 other people. These figures are magnified by the prevalence of social media, where a bad review about customer service has the potential to reach hundreds, if not thousands, of prospective new customers and/or service users. 

Active listening also improves efficiency and productivity. When customer needs or concerns are listened to and heard, enquiries and/or issues are resolved correctly the first time. This reduces the need for repeat customer communications on the same issue, which can frustrate the customer, and ties up staff time preventing them from serving other customers. 

Active listening also has the benefit of enabling organisations to collect valuable feedback from their customers. When effectively listened to, customers can provide constructive and important insights that can be used to improve products and service provision. 

Active listening can significantly improve the quality of customer interactions across different communication channels, not only in face-to-face interactions, but also in phone calls, live chats and emails. The quality of service experiences delivered to customers is a major part of keeping them happy, from customer attraction, needs fulfilment, and problem-solving through to loyalty and retention; active listening is an effective and beneficial tool to utilise.

Techniques for Active Listening

Active listening is an important skill in all areas of life, and particularly in customer/service user interactions. Not only does it make the customer feel respected and valued, but it also can help avoid misunderstandings and reduce the potential for conflict. Active listening is foundational to expressing empathy in customer service interactions.

In face-to-face interactions, eye contact is an important part of face-to-face conversation. When you make eye contact with someone, you show them that you are paying attention, that you respect them, and that you are open to what they are saying. 

Eye contact helps to build rapport and trust, it can signal sincerity and honesty, and enables you to see how the other person is reacting, and to adjust your tone and approach if needed. Making eye contact isn’t always easy, it can feel awkward at times, but it is a central part of non-verbal communication. The eyes show a range of emotions that words won’t always convey. 

When making eye contact, you should not stare but should hold another person’s gaze for around four to five seconds at a time. When you break eye contact, instead of looking down, which can make you appear to be avoiding something, look to the side for around a further four to five seconds at a time, then, you can resume eye contact. Avoid looking away too quickly when you break eye contact, as this can make you seem nervous; instead, look away slowly. 

Active listening requires being fully present in the conversation and giving your full attention to the speaker, ensuring that you are not distracted from what the speaker has to say. You should combine maintaining eye contact with other non-verbal gestures and body language such as nodding, to show that you are listening. Nod your head, smile and make small noises such as “yes” and “uh huh”, to show that you are listening and encourage the speaker to continue.

As stated previously, 70% of face-to-face communication is in the body language of both parties. During active listening, your non-verbal behaviours are just as important as what you say. To show the person that you are truly listening to what they are saying, use open, non-threatening body language. This involves not folding your arms, smiling while listening, leaning in, and nodding at key points. When you tilt your head to the side, it can mean you are listening intently and deeply interested in the information that you are hearing.

It is also important in active listening to ‘listen’ to the other person’s body language. For example, crossed arms may be interpreted as defensive body language – people tap their fingers when they are impatient or nervous – even smiles can mean different things, depending on the exact facial expression.

Asking questions is helpful during active listening as it keeps the conversation flowing, and shows that you have listened to what is being said. Questions are not only useful in face-to-face interactions, but they are also important when interacting with customers and/or service users via the telephone, via email or via live chats where you do not have the additional benefit of eye contact and body language.

Open-ended questions show that you are interested in the other person and the conversation. Open-ended questions often begin with or contain:

• What
• Where
• How
• When
• Who
• Why

For example, “How do you feel about…?” “What has been your experience with.…?” “What do you think of…?”

Open-ended questions provide a platform for in-depth insights, allowing the other person to express themselves freely, so that you can gather information to make an informed decision. Since open questions usually ask for an opinion, they show that you respect and value the other person’s opinions and this encourages better communication.

Closed questions are questions that often produce yes or no responses, and can have the effect of closing off the flow of a conversation. However, they are an essential tool for concise responses, such as when reflecting on what the other person has said, for example, “So you feel that…?” “So your experience was…?” “So you think that….?” 

A reflective question repeats or rephrases in your own words what the other person says, or seems to imply. Reflective questions are usually asked as a response to the respondent’s answer to an open or non-directive question. Their usual purpose is to clarify understanding of what the other person really means or feels and to demonstrate that you have really listened to and understood what has been said.

Active listening means listening without judging or jumping to conclusions, as this can get in the way of listening to what is said next. Try to focus on listening and do not assume that you know what is going to be said next. 

Paraphrasing and summarising the conversation helps to prove that you understand what has been said, for example, “Let me make sure that I understand you. What you’re looking for is…” Summarising means restating the main points or key messages of what someone has said in your own words. It shows that you have listened, understood and valued their input. It also helps you clarify, confirm and correct any misunderstandings or gaps in information.

When responding to customer emails, it is important to thoroughly read and understand the customer’s issue. Since email does not allow for real-time feedback, ensuring clarity in the response is critical. Summarising the main points before giving a solution can help ensure that both parties are on the same page.

Understanding Customer Needs

Actively listening to customers is about connecting with them. It involves paying close attention to their needs and understanding how you can help them achieve their goals. Customers are more likely to engage with an organisation that they feel genuinely understands their needs, preferences and/or concerns. 

Customer needs, preferences and/or concerns are the psychological and physical motivations that drive a customer to make an enquiry, to make a purchase, to use a service or to make a complaint. Knowing how to meet those customer needs, preferences and/or concerns encourages customers to engage and/or purchase, and promotes customer satisfaction, loyalty and retention.

Take the example of a customer who is looking to purchase a new computer. The main reason for the purchase is to upgrade to a better operating system as it is used predominately for working from home. However, after working hours other members of the family use the computer for school work, gaming, downloading films etc. The customer does have a budget in mind, but might be a little flexible to ensure that they get the specification that they need. Here are the transcripts of two interactions the customer had with staff at a major computer supplier:

Transcript scenario 1

Customer: “I am looking for a new computer.”

Staff member 1: “Great, we have a huge variety, laptops, desktop PCs and tablets. Prices start at around £399, but we can arrange monthly terms for purchases over £499. Why don’t you take a look around the showroom to see which one you like and let me know when you are ready for a demonstration.”

Customer: “Thank you.”

Transcript scenario 2

Staff member 2: “Hello, how can I help you?”

Customer: “I am looking for a new computer.”

Staff member 2: “Great, what type of computer are you looking for?”

Customer: “I am not really sure.”

Staff member 2: “No problem, tell me what you will be using the computer for.”

Customer: “Mainly for my work.”

Staff member 2: “You say mainly for your work, what else will you need the computer to do?”

Customer: “My family want to use it for gaming.”

Staff member 2: “How important is that aspect as it will require a higher specification?”

Customer: “The most important aspect is my work, but if the price is not too high then I can consider a higher spec.”

Staff member 2: “That’s great, we have a number of products in stock that will meet both specifications. What is your budget limit?”

Customer: “Around £900, but if I can spend less…”

Staff member 2: “So you are saying that both the specification and price are important to you, is that right?”

Customer: “Yes, I don’t want to pay more than I have to, but I want to get the best within my price range.”

Staff member 2: “Let’s have a look at some models that meet your needs, I will explain the features and benefits of each to help you decide.”

Customer: “Thanks.”

Which of the two interactions do you think uncovered and addressed the customer’s needs and preferences? 

The interaction in scenario 1 would have left the customer no better informed than if they had not spoken to a staff member. The customer will have felt that their custom was unimportant and they would probably have left the supplier without purchasing. The customer would not have been inclined to recommend the supplier to friends and family, although they possibly may recommend that others avoid the supplier because of the lack of customer service.

Active listening techniques used in scenario 2 enabled the staff member to uncover what was important to the customer, and allowed the staff member to pinpoint suitable products to demonstrate and explain. In this interaction, the customer felt listened to and valued, and may be inclined to recommend the supplier to friends and family because of the good customer service they received. 

Impact on Problem Resolution

Complaints are an essential part of the relationship customers have with businesses. Customers know that organisations are not perfect, but by actively listening to the customer, demonstrating that they take the customer’s viewpoint seriously and are dedicated to not only hearing them but acting on what they say, organisations can turn a dissatisfied and disgruntled person into one who feels valued and listened to. If a customer is pointing out that an organisation is falling short somewhere, they have in effect provided a valuable service in identifying an area for improvement.

Studies reveal that only 4% of unhappy customers complain directly to the organisation. That leaves a staggering 96% who will silently walk away, probably taking their custom to a competitor. The high cost of acquiring new customers is five to ten times more expensive than retaining an existing customer. 

Consider this scenario:

A customer ordered a new smartphone online; however, when the smartphone arrived the customer discovered that the screen was cracked. They immediately contacted the organisation that they ordered it from. The customer service representative empathised and promptly acknowledged the issue, apologised for the inconvenience, and offered to send a replacement device free of charge, which would take 3–5 working days. The customer stated that it was not convenient as they would now be working away from home for a month and needed the phone now. The conversation continued as follows:

Customer: “I am really irritated by this, I paid a fortune for this phone, I need it for my work NOW!”

Customer service representative: “I am sorry for this and understand that you are disappointed that we have not delivered the phone in good working order. When are you leaving on your business trip?”

Customer: “The day after tomorrow.”

Customer service representative: “If I could arrange a courier to collect the damaged phone and supply you with a replacement tomorrow, would this be convenient, or would you prefer for me to arrange a full refund once we receive the damaged phone back in our warehouse?”

Customer: “Can you guarantee the phone will be with me tomorrow?”

Customer service representative: “Let me speak to the courier now; would you like to hold or prefer me to call you back?”

Customer: “I’ll hold.”

3 minutes later.

Customer service representative: “I am sorry to keep you waiting. I have checked that we have that model in stock, and have arranged a courier to deliver your new phone and collect the damaged one between 2 pm and 4 pm tomorrow afternoon, is this OK?”

Customer: “Thank you, that is fine.”

Customer service representative: “Is there anything else I can help you with?”

Customer: “Not at present.”

Customer service representative: “Please feel free to call me if I can help with anything else.”

It is very easy for customer service representatives to dismiss a customer’s concerns, or in this scenario, to blame the delivery company for the issue; however, this does not demonstrate an effective problem resolution, nor leave the customer with a positive impression of the organisation. 

By actively listening and allowing the customer to express their concerns fully without interruption, demonstrating empathy and understanding, the customer service representative was able to respond promptly to the customer’s issues, providing clear and actionable solutions to address their concerns effectively. By offering a gesture of goodwill by arranging a courier, the customer service representative was able to rebuild trust and satisfaction.

Training and Developing Active Listening Skills

For some people, active listening comes naturally, for most it is a skill that you can learn and develop. By becoming a better listener, you can improve your productivity and your ability to influence, persuade and negotiate. 

As we have seen, active listening directly impacts the customer experience so it is important that anyone interacting with customers at whatever stage of the customer journey understand the different components of active listening and have the opportunity to practise these in the safe environment of training. 

Comprehensive training programmes are the cornerstone of successful active listening implementation. These programmes should equip employees with a deep understanding of active listening principles, techniques, and their practical application in customer interactions. In training, practising role-playing by simulating real-life scenarios, including upset customers, offers a safe space for employees to practise their skills, receive feedback and refine their approach, and helps employees to become more effective listeners.

Active listening is a skill that improves with practice. To practise active listening, engage in conversations where you consciously focus on improving your listening skills. Try paraphrasing what you have heard, seeking feedback on your listening abilities, and making adjustments based on that feedback. Practise asking open-ended questions and asking others to elaborate on statements that you do not fully understand.

Key tips to increase active listening skills include:

• Be open and flexible – enter conversations with an open mind.
• Listen and hear – concentrate on genuinely understanding what the other person is expressing without instantly evaluating or critiquing their thoughts.
• Suspend judgement until sufficient information is obtained – even if you have initial reactions to the other person’s remarks, withhold judgement until you have listened to their entire message.
• Strive for understanding – instead of criticising or dismissing the ideas of others, aim to understand their reasoning and the underlying motivations behind their statements.

Learning the benefits of active listening will make you a better communicator, so keep refreshing and refining your active listening skills through continual professional development (CPD), as they may become rusty or complacent over time. 

Real-Life Examples

Retailers John Lewis and Waitrose have long had a reputation for providing excellent customer service. Both are frequently in the top ten of the Institute of Customer Service UK Customer Satisfaction Index. When interviewed by CBS News, Victoria Simpson, development manager for customer service at John Lewis, explained the retailer’s reputation for good customer service is built on the concept of being a core part of its corporate culture. “It’s not delivered from the top-down”, she said. “Front-line staff are expected to make decisions affecting customer service by themselves. They are encouraged to come up with ideas to improve customer service, which are fed back up to managers. A happy and engaged workforce passes that satisfaction on to customers.” She had a few words of advice to other retailers and other businesses on how to achieve exemplary customer service:

• “Ask customers what they want and listen to their response. Get their feedback through a multiplicity of channels, including the shop floor.
• Actually do something with the information that is fed back. It’s tempting to feel that once the information has been gathered, the job is done. Your processes and culture need to be altered as a result.
• Talk to front-line staff. They have insights no one else can form. It makes them feel good too and hopefully they will pass that feeling on to customers.”

Amazon are big believers in the philosophy of actively listening to customers, with CEO Jeff Bezos admitting: “We are not competitor obsessed, we are customer obsessed”. For them, that means refunding or replacing lost packages, or just taking a customer’s number to call them back when dealing with an issue. 

Here is a small selection of real-life customer reviews taken from Trustpilot that highlight the importance of active listening in the customer interaction process to ensure customer satisfaction.

Monzo Bank

“Efficient and competent company. Great company to deal with. Their banking app is easy to install and to use. Regular statements and updates, with lots of other information about their various products available all in one place. Customer service are friendly, helpful and efficient.”

“Feedback from Mr. Hamza Khan: I have been using Monzo Bank’s services for the past year, and I am incredibly impressed with your overall performance. Your customer service team is exceptional; they always respond promptly and handle my queries with professionalism and care. The app is user-friendly and makes managing my finances so much easier. I love the real-time notifications and transparency in transactions. Your innovative features, like the budgeting tools, have helped me save money and keep track of my spending. You truly understand the needs of your customers and deliver outstanding service every time. I highly recommend Monzo to anyone looking for a modern, efficient banking experience in the UK. Keep up the fantastic work!”

Trailfinders

“Successful Booking – Rhodes. We talked to Jack today, at Worcester Trailfinders. Jack was very helpful and understood our requirements and came up with possible travel destinations. We left the shop booking there and then and that is in itself an accolade to Jack’s approach. We have also been on holiday last year and trusted Jack with the choice. Now looking back and reflecting on our last year’s adventure we were extremely pleased with the hotel, beach and overall vibe of the place. It was a very happy experience at Daios Cove, Crete.”

“The service we had from our local office in Exeter cannot be faulted. Our travel adviser Marie Dorsey understood our brief and our budget and spent time working through flights to get the best possible option. Marie seemed genuinely excited for us for our plans which made the whole experience less stressful.”

Richer Sounds

“Excellent service. Geoff at Brighton store helped us. I went in to buy a new projector as we were having continuous problems with our old unit. He listened to us carefully then diagnosed the fault to cabling and fire stick. He sold us a cable and I replaced the firestick via Amazon. The unit is now functioning perfectly and I saved over £1000.”

“Richer Sounds listen and deliver. The attention to detail and explanation of my purchase was incredible. Patrick listened with patience and interest as I explained what I was looking for. He assessed the product information and arranged the sale and delivery accordingly. You never get fobbed off at Richer Sounds who listen and deliver. Thank you.”

Octopus Energy

“Thank you for your services and understanding of what your customers are facing, and that’s by listening, responding, using all your methods of contact to reach the clients. – appreciate your way of problem-solving. – the options you have for clients to choose. Thank you to everyone who tried to help me. Your staff:- Zuhaib, Nicole, Lily Jesson, Pete Miller and Adrian. Others I have not mentioned their names I will do. The date of my experience started 08/03/2024 to present. During this period I have experienced high standards of services and met staff who are keen to run a business with sense of responsibility. Good job and thanks to all.”

“Great service I had a fantastic experience sorting out my new energy contract. The service was excellent from start to finish. Carly took the time to understand my specific needs and found a plan that perfectly meets my requirements. The process was smooth and hassle-free, and I felt well-informed at every step. I’m really impressed with the level of care and attention I received from Carly. Thank you.”

Conclusion

As we have highlighted in this article, active listening involves fully engaging with customers, not only through hearing their words but also by comprehending their emotions, perceptions, concerns and underlying needs. It requires undivided attention, empathy and a genuine desire to understand. Customer service should be customer-centric; active listening keeps that in mind and will help the customer according to their wants and needs. 

Active listening brings numerous benefits to both customers and businesses. It makes the customer feel heard and valued. Among all customers, around three quarters point to a good customer experience as an important factor in their purchasing decisions, behind price and product quality. Customers are willing to pay more for the customer service experience qualities that matter most to them. 

For businesses, gathering data through long-term active listening is an important strategy for improving business operations. Customers are the best source of information for finding out about an organisation’s gaps and failings. These insights could then be incorporated into future business strategies. 

Active listening is not merely an effective communication skill, it has tangible effects on customer satisfaction and business outcomes.