Customer Satisfaction (CSAT)

Customer satisfaction is an essential ingredient for business success. That’s why it’s important to know how to quantify and track it using the CSAT metric.

Consumer power is at an all-time high these days. It's time for businesses to leverage customer feedback to improve CX, inspire brand loyalty and increase profitability. Who better to provide input on how to improve your CX than people who spend money with your company? Gathering CX metrics like customer satisfaction scores (CSAT) provides decision-makers with quantitative and qualitative actionable data at key interaction points.

Defining customer satisfaction

There is no universally accepted definition of customer satisfaction. However, most of them agree that customer satisfaction is closely connected to expectations, hence the ongoing debate as to whether it is a cognitive or an emotionally-driven process.

There are many interesting theories used to explain customer satisfaction, but the two considered to best portray the concept are the disconfirmation and value-percept theories.

The first indicates that customers compare a new experience with a standard they already have in mind, and their satisfaction with the product/service depends on whether it lives up to the respective expectations. It is a generally accepted theory, however it is difficult to apply it to all product categories.

According to the expectancy-value theory, customers make judgments about a product’s value and its benefits, based on personal needs and wants. Customer satisfaction levels depend on how close the initial judgment is to the value the product provides after the actual purchase.

To sum up, the difference between the performance of the product a customer interacts with and the personal expectation and needs in relation to it, is what shapes customer satisfaction.

What is CSAT?

CSAT is short for customer satisfaction score. It’s a commonly used metric that acts as a key performance indicator for customer service and product quality in all kinds of businesses. While customer satisfaction as an idea is a general one, CSAT is a more defined metric that’s expressed as a percentage.

This metric measures your customers’ satisfaction with business, purchase, or interaction. Customers are sent a short survey (which typically includes this most important question: “How satisfied are you with your recent interaction or purchase?”) after an interaction with a business or someone in its Support team. The method of scoring can vary (with the most common being ranking service on a scale of 1-5 or Good/Bad). A team’s CSAT score is then calculated as the percentage of positive survey scores.

Calculating CSAT lets you predict customer loyalty and spot weak points in your customer experience program.

How to run a customer satisfaction survey

Create a CSAT survey tailored to your use case

While there are many ways you can run customer surveys to get the highest response rate and quick results, we recommend using an online survey tool like Survicate.

Depending on where your clients hang out and how they reach out to you, you can either run website surveys, mobile app surveys or via email surveys.

Determine the right distribution channels and timing

It’s a good practice to ask your clients to fill out a CSAT survey as they’re using the service or interacting with the exact department you want to measure. For example:

1. Customer service tickets. Assuming you want to measure your customers’ satisfaction with Customer Support, you could ask your customers to fill out your CSAT survey right after a support representative resolves their query.
2. Website pop-up survey. Also, if you’re looking to assess a new feature, you could have your survey pop up on the screen as they’re using it. You can surely see what we mean here!

As for timing - Bear in mind that customer expectations can often shift. Some clients will show considerable interest and excitement with your tool (i.e., novice enthusiasm), which will drop once they’ve been with you for a while.

To make sure you’re assessing your client satisfaction from similar groups, you can decide to run a CSAT after onboarding, before subscription renewal, after you’ve run a webinar, etc.

How to calculate CSAT

To calculate a CSAT score from your survey data, you’ll use the responses of 4 (satisfied) and 5 (very satisfied). It has been shown that using the two highest values on feedback surveys is the most accurate predictor of customer retention.

To do this calculation you’ll also need to know the total number of responses you’ve received. This number is easy to locate if you’re running your customer feedback program through a centralized platform.

Use this formula to arrive at a percentage score:

(Number of satisfied customers (4 and 5) / Number of survey responses) x 100 = % of satisfied customers

Measuring customer satisfaction scores

If you want an overly-simplified answer: 100% would be fantastic – 0% would be terrible.

But it can be a little more nuanced than that.

CSAT scores vary by industry. The American Customer Satisfaction Index (ACSI) measures average CSAT scores across 10 different industries. According to its 2020 data, if you’re scoring over 80% then no matter what industry your business is in, you’re doing really well.On the flip side, regardless of your industry, if your CSAT score is below 60%, there is lots of room for improvement.

That being said, a good score will typically fall between 75% and 85%. Since CSAT measures only your promoter scores, it’s difficult to obtain a near-perfect score. Having a score of 75% means that three out of every four customers gave you a positive score instead of a negative or neutral one.

But really, what counts as a good CSAT score will depend on where your business is starting out. In other words, focus on your own business first. Collect feedback via surveys and social media, stay on top of the metrics and try to identify room for improvements.

Then, compare past CSAT scores to current ones to make sure you’re either improving the CSAT score or staying consistently high. That way, you’ll have data driving new business decisions.

Why measure CSAT?

Below are the main advantages of using customer satisfaction scores to measure customer success.

Learn About Your Customers

If your business meets customer expectations most of the time, you're more likely to retain customers. By gathering feedback at key customer touchpoints, you learn how effectively you're meeting their expectations. Over time, you'll gather data that highlights any pain points or bottlenecks in the customer journey.

Improve Customer Loyalty and Experience

CSAT scores aren't there to make you feel bad about your brand or discipline your team. The point of gathering feedback is to make tangible improvements to your business that affect your customers. While your vision drives the company, customers are the only people who can tell you if they're satisfied with it or not.

It's easy to get caught up in your own standards and expectations. But ultimately, your customers are the ones spending money and are best placed to see issues you might be blind to. As Nate Masterson, CMO of Maple Holistics says, “Vendors or service providers often have a predetermined definition of what a satisfied customer looks like. The cost of having your own standards can be detrimental to your business because you can't account for the problems you’re blind to. It’s obviously important to have standards, but you should be more concerned with your customers' expectations.”

Reduce Customer Churn

When you have hundreds, thousands or millions of customers, it can be hard to determine who's unhappy and why. Customer surveys help you identify unhappy customers before they churn, at key points of the customer lifecycle. This provides a unique opportunity to make amendments before losing that customer forever.

If you're able to turn an unhappy customer into a satisfied customer, there's a good chance they'll become a loyal brand ambassador.

Inspire Loyalty

Customer loyalty describes when a consumer is inclined to do repeat business with your company based on goodwill. Average order value and customer lifetime value are the metrics you can use to measure levels of customer engagement and retention.

Demonstrate Trustworthiness

You can use great satisfaction scores to set yourself apart from competitors in your market by publishing them. If you place scores alongside first response times, you'll assure potential customers that post-purchase customer care is fast and high-quality.

How does CSAT differ from Net Promoter Score (NPS) and Customer Effort Score (CES)?

CSAT measures customer satisfaction with a product or service, whereas Net Promoter Score (NPS) measures customer loyalty to the organization. CES (Customer Effort Score) meanwhile, measures how easy or difficult a customer has found it to complete their tasks with you.

CSAT targets a “here and now” reaction to a specific interaction, product, or event, but it is limited when it comes to measuring a customer’s ongoing relationship with a company.

CSAT can also be used in multiple contexts to focus on specific parts of the customer experience, e.g., “How would you rate your overall satisfaction with the telephone service you received/helpfulness of assistant/delivery?’”

Conversely, the NPS’s single-question loyalty measure, “How likely is it that you would recommend [Organization X/Product Y/Service Z] to a friend or colleague?” asks customers to take a much wider view of the brand or product, and focuses on their intention, rather than their overall feeling of satisfaction.

CES complements the two, adding an extra dimension to the CSAT experience data and helping to predict the likelihood of future loyalty from customers. Like the others, it’s a single-question metric with a scale of possible responses.