CSAT- an acronym for Customer Satisfaction is a commonly-used key performance indicator used to track how satisfied customers are with an organization’s products and/or services.
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An important measure of a company’s success is its customers’ satisfaction with its offerings. While they may be buying from you, it’s not necessary that they’re also highly satisfied with your products or services, and are intended on staying loyal to your brand. This is why it becomes imperative for companies to measure their customers’ satisfaction and use it to improve the overall customer experience.
This blog will introduce you to CSAT- its meaning, definition, importance, and the formula to calculate the CSAT score.
Let’s get started.
What is CSAT Score?
CSAT score, or customer satisfaction score, is a customer loyalty and satisfaction metric that measures how happy your customers are with an action your business took, or with certain products/services.
CSAT surveys feature a question asking customers to rate a product or service on a five point scale: 1, indicating the customer is very dissatisfied with the product and 5 indicating they’re very satisfied.
See what question types are possible with a sample survey!
Why is CSAT Important?
CSAT scores help measure customer satisfaction and customer loyalty and help organization’s gauge customer reactions to particular interactions or experiences. Satisfied customers are likely to spend more and stay longer with your organization. Additionally, they may even share their positive experiences with others, potentially bringing in more business.
CSAT is a touchpoint metric, as well as a relationship metric.
As a touchpoint metric, it can be used to collect feedback after certain customer interactions at every point of customer journey. This helps understand customer satisfaction at every point of their journey and can highlight the points in which the organization may not be providing a good customer experience.
As a relationship metric, the CSAT score can be used to measure and evaluate overall customer experience with the organization. This gives organizations an idea of overall customer satisfaction on their end-to-end experience.
How is CSAT Measured
While considering the 5-point scale in a CSAT survey, these are the connotations of each rating:
- Rating of 1: Very dissatisfied
- Rating of 2: Somewhat dissatisfied
- Rating of 3: Neither satisfied nor dissatisfied, or Neutral
- Rating of 4: Somewhat Satisfied
- Rating of 5: Very Satisfied
While calculating the CSAT score, the total number of responses and the number of satisfied ratings (ratings of 4 and 5) are considered.
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How to Calculate CSAT
A CSAT is the sum of all positive responses, divided by the total responses collected, then multiplied by 100.
The outcome received is the overall percentage of satisfied customers.
So, the following formula can be used to calculate CSAT score:
Number of 4 and 5 responses/ Total number of responses X 100=CSAT
CSAT scores are expressed as a percentage so will range from 0% to 100%.
For example, if 100 people respond to your survey and 75 of them are satisfied (they chose a score of 4 or 5, satisfied/very satisfied), then you have a CSAT score of 75%.
Such a CSAT score indicates that a majority of people are satisfied with your offering while there’s enough room for improvement.
CSAT scores can be pulled from surveys like the example below by taking the number of positive (5 – 7) responses from the total responses collected.\
What is the difference between CSAT and NPS?
While NPS and CSAT all measure how your company, products, and services are perceived by your customers, there are nuances that make them stand out from each other.
CSAT is Customer Satisfaction, which helps you measure how happy and satisfied customers are with the products they have used while NPS is a Net Promoter Score, which helps you measure customer’s loyalty and how likely they are to recommend your product to their friends and family.
NPS is more correlated with customer loyalty than other metrics, and it is more focused on long-term growth because the NPS question asks about the intention to recommend in the future, rather than focusing on current satisfaction.
On the other hand, customer satisfaction is about current sentiment about an immediate interaction, and customer satisfaction is a more holistic view of loyalty to a brand.
What is a good CSAT score?
According to the American Customer Satisfaction Index, the current overall customer satisfaction in the U.S is 76.5%. However, benchmarks vary by industry.
The benchmark for a good CSAT score can be defined by the industry your organization is a part of. In the American cell phone industry, 80 is the benchmark CSAT score. However, in the social media industry, 70 is the benchmark score. Therefore, a CSAT score of 75 would be considered bad for an organization in the American cell phone industry but would be good for an organization in the social media industry.
As the benchmarks for what is good depending on the industry you’re in, organizations often compare their CSAT score with the industry benchmark.
Improve Your CSAT Scores to Ensure Growth
Entrepreneurial success is all about customer satisfaction. Measuring the CSAT score will put in light how successful are your customer experience strategies. 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. When you understand how satisfaction ties with revenue, you can start to make a marketing impact.
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