Customer satisfaction (CSAT) is a key performance indicator (KPI) that measures how happy customers are with a company’s products and/or services.
Most often, CSAT scores are collected from individual customers and averaged. Benchmarking this average over time – as many companies do with a net promoter score (NPS) – enables companies to track how CX improvement initiatives impact customers.
Measuring CSAT regularly also allows companies to identify bottlenecks and various issues that may lead to customer churn. Brands can do this by engaging in either real-time or historical reporting.
Creating a CSAT Survey
To find out how satisfied or happy customers many companies choose to deploy surveys at various stages of the customer journey.
A customer is asked to rate their satisfaction with a service, product, transaction, or interaction by answering a simple question, such as: “On a scale of one to ten, how satisfied were you with your experience?”
While this scale is number drive – i.e. 1-3, 1-5, or 1-10 – companies can also track verbal responses and symbols – including star ratings and emojis – to gather a perception of customer satisfaction.
The difficulty is that satisfaction change throughout the customer journey. As such, it is also critical for CX teams to investigate how CSAT fluctuates across the experience.
To do so, many companies also create longer surveys – handed out to willing participants – which probe satisfaction across various journey touchpoints. However, CX teams must avoid spamming customers.
How to Calculate CSAT? Measurement and Formula
CSAT surveys often crop up in emails, apps, or after customer service interactions. Sometimes they also appear at particular customer journey touchpoints, such as post-purchase or onboarding.
Yet, no matter how companies source CSAT data, they will typically follow one of the following three calculation methods to unearth a CSAT score.
1. The Average Method
Traditionally, companies pose the following question to customer to measure CSAT: “On a scale of 1-10 (or 1-5), how satisfied were you with your experience?” Then, factoring in all the responses, they use the following formula to create a percentage score:
To highlight how this works, consider if five customers responded with a 10, 9, 8, 7, and 6. CSAT rates would equate to 80%, as evident by the calculation below.
Alongside the overall percentage, companies may track of individual scores. Doing so may isolate customers at risk of churn. They may also identify high satisfaction customers who are likely to be more receptive to cross-selling or upselling opportunities.
2. The Positive Experience Method
Sometimes companies monitor CSAT by focusing only on those who report positive experiences. Doing so allows companies to measure what percentage of their customer base have enjoyed the experiences that they strive to deliver and will likely stay loyal to the band.
Again, this calculation method starts by asking customers the question: “On a scale of 1-10, how satisfied were you with your experience?” Based on the answers, business may then apply the following formula:
Showcasing how this works, consider the same scenario as above, where five customers responded to the CSAT question with a 10, 9, 8, 7, and 6. On this occasion, CSAT is 40%, as highlighted below.
(2/5) x 100 = 40%
At moments of truth, which have a significant impact on customer loyalty – this formula often proves beneficial because it highlights how well CX teams are delivering at these critical touchpoints.
However, it does not factor in the varying dissatisfaction levels of unhappy customers. It also does not consider the distribution of scores.
3. The Visual Representation Method
Websites like Yelp, Amazon, and Google Reviews follow a star rating system, where the customer can review and rate a product/service on a scale of one to five stars.
Following such a system, companies can then represent this visually by breaking down by simply finding an average number of stars or by highlighting what percentage of customers choose which rating. Take the following Amazon screenshot as an example:
This visual representation method is useful when helping users make an informed decision. It also helps identify exceptional glitches impacting the customer experience.
Another visual method is to ask customers to reflect on an experience by choosing an emoji. Not only does such a method reflect their satisfaction, but companies may also track sentiment – a cutting-edge CX metric.
Benefits of Understanding CSAT
Measuring CSAT surveys allows companies to unlock the following benefits.
- Customer Communication and Engagement – Understanding the satisfaction of individual customers enables better communication as companies can engage in a proactive outreach program. Such an initiative may aim to retain dissatisfied customers, build relationships with neutral customers, and draw extra value from happy customers.
- Contact Center Troubleshooting – Contact centers can survey customers after every interaction. By measuring how CSAT differs between contact reasons, channels, and agents they can isolate potential issues and address them accordingly.
- Real-Time Intervention – By tracking CSAT in the CRM, agents can make amends with dissatisfied customers next time they call and challenge their perceptions and prevent negative sentiment.
- KPI Correlation – By understanding how spikes and dips in other metrics – such as wait time, agent engagement, and customer effort – impacts CSAT, contact centers gain a better understanding of customer desires. Quality scores is an excellent example. If there is correlation, the scorecard aligns well with what customers want. If there is not, the criteria will likely require tweaking.
Eager to learn more about how other KPIs impact CSAT – as in the final bullet point – check out our article: 5 Important Metrics for Customer Satisfaction
