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Your Complete Guide to Understand Customer Satisfaction Score(CSAT)
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The CX Insights August 26, 2020 | 10 Min Read

Your Complete Guide to Understand Customer Satisfaction Score(CSAT)

"By 2020, more than 40% of all data analytics projects will relate to an aspect of customer experience." - Gartner

Did you know that as per research by Microsoft, "96% of consumers say customer service is an important factor in their choice of loyalty to a brand."

Clearly, in order to deliver a successful customer experience (CX), you need to understand the nitty-gritty of your customer service efforts. That's not all. A successful CX is one that is persuasive and profitable in equal measure.

But in order to understand its effectiveness, you need to first analyze and measure it. In fact, according to research by Microsoft:

"52% of people around the globe believe that companies need to take action on feedback provided by their customers."

Furthermore, measuring it is also vital to understanding your company's sustainability and gauge its growth trajectory in the years to come. Given that there are over hundreds of customer surveys available, choosing the right CX metric can prove to be a herculean task. 

In this blog, we will look at one of the most widely-used customer surveys, a.k.a, the CSAT score, and cover the burning questions related to it at length. Let's get started. 

What is the Customer Satisfaction (CSAT) Score? 

What-is-CSAT-Score

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Considered to be one of the most straightforward methodologies, the CSAT Score measures a customer's level of satisfaction relating to a brand, purchase, or critical interaction times (think: during the onboarding process, support ticket exchange, phone conversations, etc.)

How is the CSAT Score calculated, and when should you calculate it? 

An effective CSAT score is one that factors in the following qualitative elements relating to your customer service teams:

  • Knowledge level and understanding of the issue
  • Professionalism and responsiveness
  • Ability to provide contextual communication
  • Timely and on-point resolution

Typically, CSAT questions appear at the end of a customer feedback survey and read something like this:

“How would you rate your overall satisfaction with the [product/service] you received?” 

The customer needs to respond to the answer by rating it on a 1 to 5 scale where:

  1. = Very unsatisfied 
  2. = Unsatisfied
  3. = Neutral
  4. = Satisfied
  5. = Very satisfied

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Do you know what's the secret is to the accurate prediction of customer retention? Typically, experts consider the two highest values on the customer feedback surveys - 4 (satisfied) and 5 (very satisfied).

Now that we have understood how to calculate the CSAT score, let's talk about when you should calculate it.

There's no hard-and-fast rule on the frequency and schedule of rolling out the surveys. The core idea is to measure a customer's sentiment, which can happen across diverse touch-points in a customer's lifecycle.

For instance, you can ask a question after a customer has completed reading a knowledge base article to understand its effectiveness or ask them what kind of trouble they're facing when making a payment on the website.

Here's what Nils Vinje, VP of Customer Success at Rainforest QA says about when to administer a CSAT survey. He says:

"The best time to send a customer satisfaction survey is after a meaningful part of the customer lifecycle is completed.

For example, sending a satisfaction survey at the end of the customer's onboarding will help you capture valuable feedback on how to improve the onboarding experience. At this point, the customer likely has made up their mind on whether or not your solution solves their problem, and if it doesn't, you need to know that – ASAP."

When you think about it, there are multiple interaction touch-points and moments in your customer journey – post customer lifecycle stages (read: discovery, evaluation, purchase, use experience, bonding, and advocacy), before renewals, post customer support interactions, etc. – where you should measure their satisfaction with simple, easy-to-understand questions. You can also roll out surveys on a time-based schedule depending on your business' long-term and short-term goals.

Handy tip: When it comes to the frequency of CSAT surveys, Matt Hogan, Head of Customer Success at Intricately, suggests: 

"Deploying customer satisfaction surveys on a rolling basis will keep the constant feedback loop going. The technology available makes it easy to manage this. This way, you're getting a sense of people's feelings when you're not releasing products or doing anything different.

Most companies do this after releasing features or on a controlled schedule, which will influence your responses."

What is considered to be a good Customer Satisfaction Score? 

First things first, remember that CSAT scores vary by industry. That said, a good score typically lies between 75-85%. Say you have a CSAT score of 75%. This means that three out of every four customers gave you a positive score instead of a negative/neutral one.

Why is CSAT important to customer success?

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CSAT is an indispensable tool that can offer wide-ranging business and customer-centric benefits such as when you need to:

  • Gather and review critical data with respect to your customer's pain points, potential bottlenecks, intents, and expectations with your brand across the customer lifecycle.
  • Understand your target base's expectations and needs so that you tailor your products/services accordingly.
  • Drill-down into - and extract - insights into your customer support team's performance and analyze the customer's experience on a granular level.
  • Compare yourself to competitors and get a big-picture view of how your customer feels at various touch-points during the customer experience.
  • Administer a simple survey to understand customer interaction.
  • Determine whether or not your CX effort was effective in producing customer happiness.
  • Benchmark success or pinpoint issues and take remedial actions to alter the experience from a negative to a positive one.

The Top-5 Measures to Track Customer Satisfaction

"Customer experience (CX) will become the main brand differentiator in 2020, effectively overtaking pricing and product."

  1. Net Promoter Score (NPS): The Growth Indicator

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NPS is one of the best methods to measure customer satisfaction and loyalty. You can use a wide spectrum of channels for this method, such as email, web, text messages, etc. Typically, it is based on a single question like:

"How likely are you to recommend [Company X] to a friend?"

"How satisfied are you with Product X?"

The reader needs to score this question against a 10-point scale (0=Not at all likely, 10=Extremely likely). Here's the formula for the same:

How-To-Calculate-NPS
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If you wish to predict your customer churn rate or re-target lost customers, NPS can become your loyal CX metric. Plus, remember that you can follow up with your customer by asking them an open-ended question like asking customers what they didn’t like about your company.

These types of qualitative questions can offer more insight into your customer's perception of the company and what steps you can take to boost customer satisfaction. 

2. CSAT: The Satisfaction Metric

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As mentioned earlier, CSAT scores measure your customer's satisfaction levels with your company. A CSAT survey typically asks a customer about how satisfied they are with a certain service, product, or interaction. You can use multiple questions that can either be open-ended or closed-ended questions in the same survey.

Additionally, it is recommended that you have a ready repository of diverse questions (think: rate from 1-10, etc.) and multiple forms of a customer satisfaction score so that you can identify new problems and optimize the diversity of the results.

"65% of companies measure NPS compared with 44% that measure CSAT and 14% that measure CES." - Lumoa

3. Customer Effort Score (CES): The Customer Effort Tracker

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For all intents and purposes, CES measures customer satisfaction levels by analyzing efforts that customers make to interact with a brand's products and services. You can use a CES survey:

  • Post a client's interaction with your customer support team.
  • Instantly after a customer has engaged with your product/service in some capacity (e.g., got a subscription, made a payment, etc.).
  • If you wish to measure the overall experience of the customers.

4. Customer Turnover Rate (CTR): The Churn Tracker

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"Reducing churn by just 5% can boost profitability by 75%."

Customer turnover rate - also known as churn rate - is the percentage of an organization's customer base that's lost within a specific time period - usually a month or on an annual basis. A bad churn rate can affect your revenue and profitability.

One of the biggest advantages of using this method is that you can pinpoint at-risk customers and enhance customer retention using customized, real-time data.

5. SERVQUAL: The Quality Metric

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If you wish to measure the service quality of your company, servqual is the ideal method. It is based on a multi-item survey that factors in service expectations and service perceptions. As you can imagine, this provides deep insights into the gap between the service customer's expectations and the actual service they're getting. 

Key takeaway: There are numerous customer satisfaction tools - CX metrics - that can help you collect valuable feedback and improve the customer experience. Plus, if used correctly and consistently, it can help improve your brand loyalty and boost customer retention rates. There's enough research to validate this. As per data, "customers who have a positive CX are 54% more likely to make another purchase." Need we say more?

What is the difference between CSAT Score and NPS? 

               CSAT                                                                                                                     NPS                                         
Measures a user’s satisfaction with a product or service. Measures customer loyalty to the brand.
Comprises of statements where customers rate their agreement or disagreement with the brand's offerings. Comprises a single question on a customer's overall interaction with a company.
Targets the immediate reaction to a specific interaction, product, or event; it does not measure a customer’s ongoing relationship with a company. Targets a customer's intention rather than their overall feeling of satisfaction.
Makes use of multiple questions to focus on specific parts of the customer experience. Makes use of a single question to measure a customer's loyalty to the company.
E.g.: “How would you rate your overall satisfaction with the phone call you just received?" E.g.: “How likely are you to recommend Product Y to a friend?"

Take-home message: One of the biggest drawbacks of the CSAT survey is that it does not offer tangible results. For instance, say a customer actively suggests that they would recommend your brand to a friend. This means that the customer is inclined towards using the brand and may convert into a brand advocate with the right marketing.

Unfortunately, you cannot draw a similar conclusion with the terms "satisfactory experience." There's no tangible call-to-action or results that a company can leverage immediately and without further investigation of the data collected.

Industry-Wise CSAT Scores: At a Glance

Moving on, let's look at the industry-wise CSAT scores according to the American Customer Satisfaction Index:

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Advantage & Disadvantages of CSAT Score 

Advantages of the CSAT Score:

  • It is a simple, quick, intuitive, and easy survey.
  • You can track customer satisfaction across the customer lifecycle and tie the results to key moments in the customer's experience.
  • You can improve your customer experience based on real-time data.
  • You can combine your customer-centric insights with business strategies and measure the effectiveness of key moments.
  • Owing to its simplicity, you can conduct the survey multiple times and across touch-points for the best results.
  • You can use a flexible and wide-ranging rating scale - from stars and emojis to numbers and customer emotions.
  • You can leverage a higher response rate as customers prefer answering shorter surveys.

Disadvantages of the CSAT Score:

  • CSAT measures only your promoter scores. Hence, it’s difficult to obtain a near-perfect score.
  • There is an increased chance of cultural bias.
  • The prevalence of wide-ranging benchmark data across industries and companies leads to ambiguity relating to what's considered to be effective and non-effective.
  • More often than not, the survey takes into account short-term sentiment.
  • "Satisfaction", by itself, is a subjective word, so the answers cannot be generalized.
  • Skewed results occur often as customers in the "neutral" and "dissatisfied" categories don't tend to fill the survey.
  • Optimizing for 'satisfaction' may not map to the company's intrinsic goals, such as lifetime value, retention, activation, etc.

Jared Spool, the founder of UIE, explains why satisfaction as a word does not seem to live up to the industry benchmark. He says:

"I'm going to give you a list of attitudinal words ... [and ] I want to see if you can pick out the one that's a little different than the rest. I've got "delightful," "amazing," "awesome," "excellent," "remarkable," "incredible," and "satisfactory." Which word is different than the others? 

...Yes, satisfactory. Why is that word different? Well, if we were talking about a restaurant, a restaurant we loved, would we say, "Wow, that was incredibly satisfactory"?  

No. We'd use something like delicious. Satisfactory is this neutral word. It's like edible. No one raves about a restaurant that is edible. "Oh my God, you should've gone to this place we went to last night. It was extremely edible!" We've set ourselves a low bar. [And] we can do so much better." 

Closing Thoughts

All things considered, CSAT is a measure of customer experience. The scores by themselves are of no value if you don't end up acting on them.

The end-goal should be to use CSAT scores along with qualitative research to get a pulse of where your company stand's in the customer's eyes and gain insights into the key pain-points that are driving user perception and behavior.  

One final piece of advice: It is important that you measure customer satisfaction in relation to revenue (as opposed to looking at it in silos) to optimize your marketing efforts. So there you go. Now that you have in-depth knowledge about how to use CSAT scores, focus on improving your CX using real-time data and honest feedback from customers. 

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