Customer satisfaction scores (CSAT) measure the degree to which a product or service meets a customer’s expectations and needs. CSAT is one of the most important factors for business success, affecting customer loyalty, retention, referrals, revenue, and profitability.
According to a study by Bain & Company, increasing customer retention rates by 5% can increase profits by 25% to 95%—see this article in Harvard Business Review.
Companies use various customer satisfaction metrics to measure and improve their performance. Some of the most common customer service stats are:
- Customer Satisfaction Score (CSAT): This metric asks customers how satisfied they are with a product or service on a scale of 1 to 5, where 1 is very dissatisfied and 5 is very satisfied. The CSAT is calculated by dividing the number of satisfied customers (those who give a score of 4 or 5) by the total number of customers who responded.
- Customer Effort Score (CES): This metric asks customers how easy or difficult it was to interact with a product or service on a scale of 1 to 7, where 1 is very easy and 7 is very difficult. The CES is calculated by taking the average of all the scores given by the customers.
- Net Promoter Score (NPS): This metric asks customers how likely they are to recommend a product or service to others on a scale of 0 to 10. Customers who give a score of 9 or 10 are considered promoters, while those who give a score of 0 to 6 are considered detractors. The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters.
In this article, we will focus on one of the most widely used and simple customer satisfaction metrics: CSAT. We will explain what CSAT is, how it works, why it matters, and how you can improve it for your business.
More: How to Calculate NPS
What is CSAT?
CSAT stands for Customer Satisfaction Score, and it is a metric that measures how satisfied customers are with a product or service. It is one of the simplest and most widely used customer satisfaction metrics, as it can help businesses understand their customers’ needs, expectations, and preferences, as well as identify areas for improvement.
CSAT is calculated by asking customers to rate their satisfaction with a product or service on a scale of 1 to 5, where 1 is very dissatisfied and 5 is very satisfied.
The CSAT score is then expressed as a percentage of the number of satisfied customers (those who gave a score of 4 or 5) divided by the total number of customers who responded to the survey. For example, if 80 out of 100 customers gave a score of 4 or 5, the CSAT score would be 80%.
The 1 to 5 scale used in CSAT surveys is based on the Likert scale, which is a common method of measuring attitudes and opinions.
The scale allows customers to express their degree of satisfaction or dissatisfaction with a product or service, rather than just a binary yes or no answer. The scale also provides a range of options that can capture the nuances and variations of customer satisfaction.
However, the scale also has some limitations. It may:
- Be influenced by cultural differences, as some customers may have different interpretations of what each number means
- Be affected by response bias, as some customers may tend to choose the extreme or middle options, or avoid giving negative feedback
- Not reflect the overall customer experience, as some customers may base their rating on a single aspect or interaction, rather than the whole product or service.
Therefore, it is important to use CSAT surveys in conjunction with other customer satisfaction metrics and methods, such as NPS (Net Promoter Score), CES (Customer Effort Score), customer reviews, feedback forms, interviews, etc.
By doing so, businesses can gain a more comprehensive and accurate picture of their customer satisfaction levels and how to improve them.
How to Measure CSAT
To collect customer feedback for CSAT measurement, you need to follow these steps:
- Define your goals and objectives. What do you want to learn from your customers? How will you use the feedback to improve your business? How will you measure your success?
- Design your CSAT survey. Choose a type of survey that suits your needs, such as a post-purchase survey, a post-service survey, a website feedback survey, or a product feedback survey. Customize your survey layout and questions to match your brand and voice. Use clear and simple language, and avoid leading or biased questions.
- Choose your survey trigger and medium. Decide when and how you want to send your survey to your customers, such as after a purchase, after a service interaction, after a website visit, or after a product usage. You can use different mediums to deliver your survey, such as email, SMS, web, app, or phone.
- Analyze your survey data. Collect and organize your survey responses, and calculate your CSAT score using the formula: CSAT = (Number of satisfied responses / Total number of responses) x 100%. You can also segment your data by different criteria, such as customer demographics, purchase history, product features, or service channels.
- Take action and repeat. Use the feedback to identify areas of improvement, and implement changes to enhance your customer experience. Monitor your CSAT score over time, and repeat the process regularly to keep track of your performance and customer satisfaction.
Examples of CSAT survey questions and formats
- How satisfied are you with your recent purchase from us? (Very unsatisfied / Unsatisfied / Neutral / Satisfied / Very satisfied)
- How would you rate the quality of our product? (1-5 stars)
- How likely are you to recommend our service to a friend or colleague? (0-10 scale)
- How do you feel about our website? (Emoji scale)
- What did you like most about our app? (Open-ended text)
When to Measure CSAT
The timing for soliciting customer feedback depends on the type of product or service you offer and the kind of interaction you have with your customers. Generally, there are two types of interactions: discrete and long-term.
Discrete interactions are those that have a clear beginning and end, such as a purchase, a service call, a website visit, or a product trial. These interactions are usually short and specific, and they can be measured by a single CSAT survey.
The best time to send a CSAT survey for discrete interactions is right after the interaction is completed, or within a few hours or days. This way, you can capture the customer’s immediate satisfaction with the interaction, and get feedback on how to improve it.
Long-term experiences are those that involve ongoing relationships with customers, such as subscriptions, memberships, contracts, or loyalty programs. These experiences are usually longer and more complex, and they can be measured by multiple CSAT surveys over time.
The best time to send a CSAT survey for long-term experiences is at key moments in the customer journey, such as after an onboarding process, after a major feature update, after a renewal or cancellation, or after a quarterly or bi-yearly check-in. This way, you can track the customer’s satisfaction with the overall experience, and get feedback on how to enhance it.
CSAT is a “right here, right now” metric that reflects how satisfied customers are with a specific interaction or experience at a given point in time. It is not a measure of customer loyalty, retention, or advocacy. Therefore, it is important to send CSAT surveys at the right time to get accurate and actionable feedback from your customers. By doing so, you can improve your customer satisfaction and deliver better products or services.
Interpreting CSAT Scores
A good CSAT score is one that reflects a high level of customer satisfaction with your products or services. However, there is no universal standard for what constitutes a good CSAT score, as it may vary depending on your industry, your target market, your goals, and your expectations.
One way to determine if your CSAT score is good is to use benchmark data and industry standards for comparison. You can look at the average CSAT scores of your competitors, peers, or industry as a whole, and see how you stack up against them. For example, according to the American Customer Satisfaction Index (ACSI), the average CSAT score across all industries in 2022 was 75.9.
Another way to determine if your CSAT score is good is to track your progress and continuous measurement. You can compare your current CSAT score with your past performance, and see if you have improved or declined over time.
You can also set realistic and achievable goals for your CSAT score, and monitor how well you meet them. By doing so, you can identify your strengths and weaknesses, and take actions to enhance your customer satisfaction.
Ultimately, a good CSAT score is one that meets or exceeds your expectations and reflects the value you deliver to your customers. It is not enough to just have a high CSAT score; you also need to maintain it and improve it over time.
By measuring and analyzing your CSAT score regularly, you can gain insights into your customer experience, and make data-driven decisions to optimize it.
Pros and Cons of CSAT
Customer Satisfaction scores (CSAT) can help businesses understand their customers’ needs, preferences, and expectations, and improve their customer experience. However, CSAT also has some advantages and limitations that you should be aware of.
Advantages of customer satisfaction scores
It’s easy to measure and calculate
You can use a simple survey question with a rating scale, such as “How satisfied are you with your purchase?” and then divide the number of satisfied responses by the total number of responses to get your CSAT score.
It is flexible and customizable
You can use different types of rating scales, such as stars, emojis, or numbers, and adjust them to suit your audience and context. You can also ask multiple questions to measure different aspects of customer satisfaction, such as quality, service, value, etc.
It has high response rates
Because CSAT surveys are short and simple, customers are more likely to complete them and provide feedback. This can help you collect more data and insights from your customers.
Limitations of CSAT
It can be biased and subjective
Customers may have different expectations and standards for satisfaction, and their responses may be influenced by factors such as mood, emotions, or external events. For example, a customer may give a low CSAT score because they had a bad day, not because they were unhappy with your product or service.
It lacks granularity and specificity
CSAT surveys may not capture the reasons behind customer satisfaction or dissatisfaction, or the areas of improvement for your business. For example, a customer may give a high CSAT score because they liked the product, but they may have had issues with the delivery or the payment process that you are not aware of.
It is not a predictor of customer loyalty or retention
While CSAT scores provide valuable insights into a customer’s immediate satisfaction with a specific transaction or interaction, it’s crucial to understand the limitations of this metric. CSAT scores capture a snapshot of sentiment at a particular moment in time but do not necessarily offer a comprehensive view of a customer’s overall relationship or long-term loyalty to a brand.
CSAT scores vs. other metrics
CSAT surveys measure how customers feel at a specific point in time, but they do not indicate how likely they are to stay with your business, buy more from you, or recommend you to others. For example, a customer may give a high CSAT score but still switch to a competitor if they offer a better deal or service.
CSAT is not the only metric that you can use to measure customer satisfaction. There are other metrics that can complement CSAT and provide a more holistic view of your customer experience. Two of the most popular ones are Net Promoter Score (NPS) and Customer Effort Score (CES).
NPS measures how likely customers are to recommend your business to others, based on a scale of 0 to 10. It segments your customers into promoters (9-10), passives (7-8), and detractors (0-6), and calculates your NPS score by subtracting the percentage of detractors from the percentage of promoters. NPS is mainly used as a relationship metric that reflects customer loyalty and advocacy.
Number of responses
who rated you
9 or 10
Number of responses
who rated you
7 or 8
Number of responses
who rated you a
6 or below
CES measures how easy or difficult it is for customers to complete a task or transaction with your business, such as making a purchase, using a product, or contacting support. It asks customers to rate their effort on a scale of 1 to 5 or 7, where 1 is very low effort and 5 or 7 is very high effort. CES is mainly used as a transactional metric that reflects customer frustration and satisfaction.
Some of the differences between CSAT, NPS, and CES are:
- CSAT focuses on customer satisfaction with a specific aspect of your business, NPS focuses on customer loyalty and willingness to recommend your business, and CES focuses on customer ease and convenience when interacting with your business.
- CSAT uses different types of rating scales that can vary depending on the context, NPS uses a standard scale of 0 to 10 that can be benchmarked across industries and competitors, and CES uses a scale of 1 to 5 or 7 that can be compared across different tasks or transactions.
- CSAT is influenced by customer expectations and emotions, NPS is influenced by customer trust and advocacy, and CES is influenced by customer effort and frustration.
Depending on your goals and objectives, you may want to use one or more of these metrics to measure your customer satisfaction. You can also combine them to get a more comprehensive picture of your customer experience. For example, you can use CSAT to measure how satisfied customers are with different aspects of your product or service, NPS to measure how loyal they are to your brand and how likely they are to refer others to you, and CES to measure how easy it is for them to do business with you.
Using CSAT to improve customer experience
While Customer Satisfaction (CSAT) scores are valuable metrics for gauging customer happiness and overall satisfaction with a product or service, they have limitations when it comes to understanding the underlying reasons behind customers’ sentiments. Quantitative data like CSAT scores provide a numerical snapshot of customer satisfaction, but it lacks context and depth. To gain a comprehensive understanding of customer experiences and perceptions, businesses must complement CSAT scores with qualitative research.
Qualitative research involves:
- In-depth interviews
- Focus groups
- Open-ended surveys
These allow customers to express their thoughts, feelings, and experiences in their own words. By combining quantitative data from CSAT scores with qualitative insights, businesses can gain a more holistic understanding of customer sentiment and uncover valuable details that help them make informed decisions.
Qualitative research can reveal the “why” behind certain CSAT scores, identify emerging patterns, and highlight specific pain points that customers might not express through numerical ratings alone.
By incorporating qualitative research alongside CSAT scores, businesses can:
Uncover Root Causes
Qualitative research can reveal the underlying reasons for high or low CSAT scores, helping businesses identify the specific aspects of their products or services that are contributing to customer satisfaction or dissatisfaction.
Understand Customer Preferences
Qualitative research allows businesses to understand customer needs, preferences, and expectations better, helping them tailor their offerings to meet customer demands effectively.
Fine-tune Customer Support
Through qualitative feedback, businesses can gain insights into the effectiveness of their customer support and identify areas that require improvement.
Discover New Opportunities
Qualitative research can help businesses discover untapped opportunities, identify unmet customer needs, and innovate their offerings accordingly.
Enhance product development
By understanding customers’ pain points and preferences, businesses can refine their product development processes to create more customer-centric solutions.
Linking CSAT to Revenue and Customer Lifetime Value
CSAT scores can serve as important leading indicators for a business’s financial performance and customer loyalty. Satisfied customers are more likely to be loyal and repeat customers, which ultimately impacts a company’s revenue and customer lifetime value (CLV). Here’s how businesses can link CSAT to revenue and CLV:
High CSAT scores indicate satisfied customers who are more likely to return for future purchases or services. Repeat business boosts revenue and increases the CLV of individual customers.
Satisfied customers are more inclined to spread positive word-of-mouth recommendations, attracting new customers and driving revenue growth.
High CSAT scores correlate with higher customer loyalty. Loyal customers tend to spend more over time, leading to increased CLV.
Low CSAT scores often precede customer churn. By addressing customer satisfaction issues, businesses can reduce churn rates and retain more customers, consequently impacting CLV positively.
Upselling and cross-selling opportunities
Satisfied customers are more receptive to upselling and cross-selling efforts, leading to increased revenue per customer.
Using CSAT to Identify Areas for Improvement in Customer Experience
CSAT scores act as a valuable diagnostic tool for identifying strengths and weaknesses in a business’s customer experience. By analyzing CSAT data, businesses can pinpoint areas that need improvement and work towards enhancing the overall customer journey. Here’s how CSAT can be utilized for this purpose:
Analyzing Low Scores
Low CSAT scores highlight areas where customers are dissatisfied. By focusing on these aspects, businesses can make targeted improvements to address specific pain points.
Comparing across touchpoints
CSAT scores can be gathered at different touchpoints in the customer journey. Comparing scores across these touchpoints can reveal where the experience is excelling and where it needs enhancement.
Monitoring trends over time
Tracking CSAT scores over time enables businesses to gauge the effectiveness of their improvement efforts. Positive trends indicate successful initiatives, while negative trends signal areas that require more attention.
Identifying common complaints
Analyzing qualitative feedback from low CSAT scores can help businesses identify recurring complaints and issues. Addressing these issues can lead to significant improvements in customer satisfaction.
Benchmarking against competitors
CSAT scores can be benchmarked against competitors to identify areas where a business is falling behind or excelling in comparison. This competitive analysis can drive strategic improvements.
Customer Satisfaction (CSAT) is a vital metric that measures how content and fulfilled customers are with a product, service, or overall experience. It plays a crucial role in understanding customer sentiment, identifying pain points, and gauging the effectiveness of a business’s offerings. CSAT enables companies to evaluate their customer-centricity, make data-driven decisions, and foster long-term loyalty by addressing customer needs and expectations.
Integrating CSAT into a comprehensive customer experience program is a strategic move for businesses aiming to build strong customer relationships and drive growth. CSAT provides actionable feedback that allows businesses to align their strategies with customer preferences, optimize products and services, and improve overall customer experience. By actively seeking customer feedback through CSAT surveys and incorporating the findings into their operations, businesses can enhance customer loyalty, attract new customers through positive word-of-mouth, and gain a competitive edge in their industry
The value of CSAT lies not only in its initial measurement but in its continuous assessment and improvement. Customer preferences and expectations evolve over time, and businesses must adapt accordingly to maintain high satisfaction levels. Regularly measuring CSAT helps identify emerging trends, detect potential issues early on, and implement timely adjustments to address customer concerns. By committing to ongoing measurement and improvement, businesses can sustainably:
- Achieve long-term success in a highly competitive market
- Enhance customer satisfaction
- Foster loyalty
While CSAT scores provide crucial quantitative insights, they must be complemented with qualitative research to gain a deeper understanding of customer sentiment. By linking CSAT scores to revenue and CLV and leveraging them to identify areas for improvement, businesses can strengthen their customer experience and drive sustainable growth.
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