Customer satisfaction score (CSAT) is an important metric that you can’t do without, as a focus on improving CSAT can lead to a customer-centric culture within the company, where employees are trained and incentivized to prioritize customer needs and satisfaction. This can result in a virtuous cycle of positive customer experiences, increased loyalty, and higher revenue for the business.
What is CSAT?
Customer Satisfaction Score (CSAT) is a metric that evaluates the level of customer satisfaction with a company, or in other words, how well their needs are met.
This score can be calculated for each customer by taking into consideration the number of visits, transactions, and complaints that a customer has experienced with the company. It also measures how satisfied customers are when compared to other similar companies in the same industry.
How do you measure CSAT?
The Customer Satisfaction Score (CSAT) can be measured through a survey where customers rate their experience with a product or service.
In the survey, customers are asked to rate their satisfaction on a scale (e.g., 1-5 or 1-10). The questions to be used for this type of survey are usually in the form of:
“How would you rate your overall satisfaction with the [service] experience?”
Respondents can then answer using the following scales:
- Very unsatisfied
- Unsatisfied
- Neutral
- Satisfied
- Very satisfied
How to calculate CSAT Score
A CSAT score is typically calculated based on the responses of all customers in order to get the full picture. For example, you’ll need to add up all of the ratings provided by customers and divide them by the total number of responses. Then, multiply the result by 100 to get a percentage.
Basically, the formula for calculating CSAT scores should look something like this:
CSAT Score (%) = Sum of all scores / Sum of maximum possible scores * 100
For example, say you carried out a survey of 100 people and received a total of 760 scores (the survey is based on a scale of 1 to 10). We’ll divide this sum of all scores by 1000 and multiply it by 100, and the final satisfaction score that we’ll have is 76%.
CSAT Score (%) = 760 / 1000 * 100 = 76%
It's important to note that CSAT scores should be collected regularly to track changes in customer satisfaction over time. Additionally, it's essential to take action on the feedback received to improve customer satisfaction and loyalty.
When should you measure CSAT?
With all this in mind, the timing when you ask your customers for feedback is also crucial. The timing for sending out a customer satisfaction survey can vary depending on the nature of the business and the type of interaction with the customer. Here are some common scenarios when you should send out customer satisfaction surveys:
- After a purchase: you can send out a survey after a customer makes a purchase to gauge their satisfaction with the product or service.
- After customer support interaction: If a customer contacts your support for assistance, sending out a survey after the interaction can help understand how helpful and efficient your support team is.
- After an event or service: you can send out a survey after an event or service is completed to understand how satisfied the customer is with the overall experience.
- On a regular basis: regular surveys, such as quarterly or annually, to gather feedback on your products or services are also good to see if your offerings are improving
In general, it's important to strike a balance between sending out surveys too frequently and not often enough. Sending out too many surveys can lead to survey fatigue and lower response rates, while not sending out enough surveys can result in missed opportunities to gather valuable customer feedback.
What is a good CSAT score?
While there is no one-size-fits-all answer to what constitutes a good CSAT score, there are some general benchmarks that you can use as a guide.
Typically, a CSAT score of 80% or higher is considered to be a strong indication of customer satisfaction. This means that 8 out of 10 customers are satisfied with their experience with your business.
However, it's important to keep in mind that CSAT scores can vary based on industry, product/service, and customer demographics. For example, customers in certain industries (such as retail) may have higher expectations than others, and as such, a CSAT score of 75% may be considered below average. Additionally, some products or services may naturally have lower satisfaction rates due to their complexity or niche market.
With all this in mind, it's important to establish your own benchmarks based on your specific industry and customer base. A good way to do this is by tracking your CSAT scores over time and comparing them to industry averages. This can help businesses identify areas where they excel and areas where they may need to improve.
Tracking CSAT over time helps improve the customer experience [Source: Filum’s Dynamic Feedback]
Overall, while there is no magic number for what constitutes a good CSAT score, it's important to monitor customer satisfaction and continually work towards improving it.
What are the pros and cons of CSAT?
Widely used as it is, CSAT only contributes to solving one piece of the puzzle. Understanding the drawbacks of this metric and working on utilizing its advantages is the key way to create the ideal customer experience that your customers don’t even know they need:
Pros of CSAT
- Easy to measure: CSAT is a simple and easy-to-use metric. It can be calculated by asking customers to rate their satisfaction on a scale of 1-5 or 1-10.
- Real-time feedback: CSAT can provide businesses with real-time feedback on customer satisfaction, enabling them to respond quickly to any issues or concerns customers may have.
- Helps identify areas for improvement: By measuring CSAT, businesses can identify areas for improvement in their products or services and take steps to address these issues.
- Provides a benchmark: CSAT provides a benchmark for businesses to measure their performance against their competitors and track improvements over time.
Cons of CSAT
- Limited in scope: CSAT only measures customer satisfaction at a specific point in time and may not provide a complete picture of the customer experience.
- Does not measure loyalty: While CSAT can indicate how satisfied customers are with a particular product or service, it does not measure customer loyalty or the likelihood that a customer will return to make future purchases.
- Subject to biases: CSAT scores can be influenced by biases, such as a customer's mood or personal preferences, which can impact the accuracy of the results.
- May not be representative: Like all data, the sample size and composition of customers surveyed can impact the accuracy of the CSAT results. If the sample size is too small or not representative of the customer base, the results may not accurately reflect overall customer satisfaction.
How does CSAT differ from NPS and CES?
CSAT (Customer Satisfaction Score), NPS (Net Promoter Score), and CES (Customer Effort Score) are three commonly used metrics and while all three metrics provide insights into customer satisfaction, they differ in their approach and what they measure, along with their goals.
CSAT is ultimately a transactional metric, meaning it measures the satisfaction of a specific interaction or transaction with a company. The goal of CSAT is to understand how well a company meets customer expectations and identify areas for improvement.
NPS, on the other hand, measures the loyalty of customers to a company or brand. NPS is calculated based on a single question that asks customers how likely they are to recommend a company or brand to others on a scale of 0-10. Based on their response, customers are divided into three categories: promoters, passives, and detractors. NPS is a relationship metric, meaning it measures the overall loyalty of a customer to a company or brand.
And lastly, CES (Customer Effort Score) measures how easy or difficult it is for customers to interact with a company. It usually involves asking customers to rate their effort on a scale of 1-5 or 1-10 to accomplish a particular task or resolve an issue. Similarly to CSAT, CES is also a transactional metric, but where it differs is its goal as it helps identify where a company can reduce customer effort and improve the customer experience.
In summary, while all three metrics aim to measure customer satisfaction, they differ in their approach and what they measure. CSAT measures customer satisfaction with a specific product or service, NPS measures customer loyalty to a company or brand, and CES measures customer effort required to complete a specific task or interaction with a company.
How to use CSAT effectively
To use CSAT (Customer Satisfaction) effectively, here are some key steps you can follow:
Define your goals: Before you start measuring CSAT, it's important to define your goals and objectives. What do you want to achieve with CSAT? Are you looking to improve customer loyalty, reduce churn, or increase revenue? Setting clear goals will help you focus your efforts and ensure you're measuring the right metrics.
Choose the right questions: The questions you ask to measure CSAT should be specific, relevant, and easy for customers to answer. For example, you could ask customers to rate their satisfaction with a particular product feature or the quality of customer service they received. Be sure to keep your questions consistent across all surveys and avoid leading or biased questions.
Determine your sample size: To ensure that your CSAT scores are accurate, you'll need to survey a representative sample of your customer base. The sample size will depend on the size of your customer base and the level of precision you require. You can use statistical tools to determine the appropriate sample size for your surveys.
Analyze the results: Once you've collected your CSAT data, you'll need to analyze the results to identify patterns, trends, and areas for improvement. Look for patterns in customer feedback and identify areas where you can make changes to improve customer satisfaction.
Take action: Based on your analysis, take action to improve customer satisfaction. This could involve changes to your product or service offerings, improvements to your customer service processes, or changes to your marketing and sales strategies. Be sure to communicate any changes to your customers and track the impact on your CSAT scores over time.
Monitor progress: CSAT is an ongoing process, and it's important to monitor your progress over time. Regularly collect CSAT data and track your progress toward your goals. This will help you identify areas where you need to make further improvements and ensure that you're on track to achieve your objectives.
Linking CSAT to revenue
Research suggests that improving customer satisfaction can have a positive impact on revenue. According to a study by the Temkin Group, companies that earn $1 billion annually can expect to earn an additional $700 million within three years of investing in customer experience. This is because satisfied customers are more likely to become repeat customers, refer others to the company, and leave positive reviews, all of which can lead to increased revenue.
In addition to increased revenue, companies with high CSAT scores may also experience cost savings. Satisfied customers are less likely to require support or returns, reducing the cost of customer service and improving the company's bottom line.
Conclusion
Businesses that prioritize CSAT are better positioned to build long-term customer relationships, drive growth, and stay ahead of the competition. By listening to their customers and continuously improving the customer experience, businesses can differentiate themselves in the market and build a loyal customer base that is more likely to return and recommend the business to others.
In case you're looking to get started with your CXM (customer experience management) strategies, check out our free guide which goes into great detail about how a customer experience management framework is necessary for sustainable growth and excellent customer experiences.
