CSAT is short for Customer Satisfaction, which is a commonly-used key performance indicator used to track how satisfied customers are with your organisation’s products and/or services.
How Is CSAT Measured?
CSAT is measured by one or more variations of this question that usually appears at the end of a customer feedback survey:
“How would you rate your overall satisfaction with the [goods/service] you received?”
Respondents use the following 1 to 5 scale:
1. Very unsatisfied
5. Very satisfied
Overall, how satisfied were you with samcx?
The results can be averaged out to give a Composite Customer Satisfaction Score, although CSAT scores are more usually expressed as a percentage scale: 100% being total customer satisfaction, 0% total customer dissatisfaction.
To do this, only responses of 4 (satisfied) and 5 (very satisfied) are included in the calculation, as it has been shown that using the two highest values on feedback surveys is the most accurate predictor of customer retention.
(Number of satisfied customers (4 and 5) / Number of survey responses) x 100 = % of satisfied customers
How Does CSAT Differ From Net Promoter Score (NPS)?
CSAT measures customer satisfaction with a product or service, whereas Net Promoter Score (NPS) measures customer loyalty to the organisation.
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 use multiple questions 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 [Organisation 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.
CSAT, like NPS, is just a measure of customer experience. It’s what you do with the scores to drive and improve it that really counts. CSAT (and NPS) scores should be supplemented with further qualitative research to understand the drivers behind the scores so you can take action to improve key areas.
Linking CSAT to Revenue
Measuring customer satisfaction in a vacuum is pointless, but when you understand how satisfaction relates to revenue, you can start to make a marketing impact. Tracking overall profitability by customer is called Customer Lifetime Value and it’s the next step in your journey to becoming a customer experience guru.