Customer Satisfaction Score metric
CSAT Index is a shortened abbreviation of Customer Satisfaction Score – one of the key indicators used to assess user or customer satisfaction with their experience with a product or service. The level of customer satisfaction score directly influences retention, customer acquisition cost, and long-term loyalty to the company brand.
How to calculate CSAT?
The CSAT is calculated based on the data that is provided during customer surveys, answering the questions:
“How would you rate your overall satisfaction with the product or service you received?” A respondent is asked to use a scale from 1 to 5, where: ‘1’ – very dissatisfied and ‘5’ – very satisfied.
The Customer Satisfaction Score is calculated as a percentage, where 100% is maximum customer satisfaction, and 0% is minimum.
The CSAT score is calculated as the number of “5 – very satisfied” and “4 – satisfied” scores with the total number of scores.
(number of “5 – very satisfied” + “4 – satisfied”)/ total number of ratings x 100% = % CSAT.
In addition to the CSAT, we recommend using indicators such as:
- Loyalty Index NPS (Net Promoter Score) – an indicator that characterizes the level of customer loyalty to the brand, and the likelihood of providing a recommendation for interaction with the company
- Index of Customer Effort Score (CES) – an indicator that assesses the ease of achieving the client’s goal when using a product or ordering services.
Mistakes of CSAT measurement
Several common mistakes occur when evaluating and interpreting customer experience indexes (CSAT, NPS, and others).
Drawing conclusions on a small sample of respondents
For example, you have 10,000 customers among whom you conducted a survey. When asked, “How would you rate your overall satisfaction with the product or service you received?” you only have 200 responses, which is not enough for a qualitative assessment of the CSAT index. The accuracy of such an estimate would be no more than 85%, with a margin of error of >5%. For at least 95% confidence (“accuracy”) and a margin of error of 3%, you must have at least 956 responses.
To avoid this error, we suggest using a calculator for planning sociological studies.
Lack of customer segmentation
In our practice, we often meet companies that output a single CSAT or NPS for all clients when conducting research. But suppose you look at the estimates in terms of individual customer segments. In that case, it is very likely they will be different because the needs of each segment and the criteria of customer experience may be different.
A differentiated approach to research and evaluation will allow you not to miss changes in the overall perception of your experience by specific customer segments and react in time to deteriorating results.
The difference between CSAT and NPS
The Customer Satisfaction Score focuses on customer satisfaction from current interactions, while the Net Promoter Score focuses on long-term customer loyalty.
The CSAT allows you to evaluate each of the company’s service elements, such as “Are you satisfied with your visit to our store today?”
NPS answers a customer’s overall perception of their relationship experience with the business.
CSAT and DSAT (Dissatisfaction Score)
Companies mainly focus on determining customer satisfaction scores. Most formulas suggest only satisfaction scores for comparison, rejecting neutral scores and not concentrating on negative scores (NPS, CSAT, CSI, CES). Marketers know frustrated customers tend to share their experience stories, which affects company perceptions actively. The DSAT allows you to bring focus and track the dynamics of those who didn’t like the interaction experience.
Calculating the DSAT is similar to the CSAT or NPS. Only in the numerator do we estimate the amount of negative feedback from our customers. Ideally, the company should try to move “detractors” into brand promoters, but even moving into the neutral customer group will yield good results. Detractors are customers who are more likely to criticize, not recommend, or spread the word about their negative interaction experience. Promoters are customers who act as advocates for your brand, willingly spreading the word about the company’s products and services that shine a good light on them. They are loyal customers.
How to increase the Customer Satisfaction Score?
The first thing to note is the need to systematically measure the level of interaction between a company and its customers. Unfortunately, as our CX Research showed, many companies do not do it systematically and do not have a dedicated function that would deal with this issue.
The customer experience evaluation takes place on an emotional level, although rational factors such as price, distance, and physical properties of goods influence the overall result. Therefore, take care of the following factors:
- Invest in creating a digital user experience. Digitalization of customer interaction reduces bureaucracy and time spent on collecting metrics.
- Set up a channel for feedback from the user to the business. On the one hand, this will allow you to measure experience constantly. On the other, modern customer wants to share their thoughts “immediately.”
- Train your employees to take care of the client’s needs and instruct them how to react in situations when a customer is having “a bad experience.”
- Assure transparent pricing and a wide assortment.
- Provide personalization of communication and service offerings
- Do pleasant and unexpected little trinkets
It is not the complete list of factors, and for each business and customer segment, it should be formed individually.
Disadvantages of CSAT
The disadvantages of using the CSAT are that it focuses on current interactions and does not allow you to assess and predict future behavior. Also, dissatisfied customers participating in surveys can affect the accuracy of the index.
For a comprehensive assessment of customer experience and attitude towards your company, we recommend using a set of 5 key loyalty KPIs and taking advantage of your customer service audits and surveys.
Craft Innovations team can help measure your customers’ loyalty and satisfaction and develop a customized plan to increase your CSAT, NPS, and CES scores. Let’s talk.