As a business owner or marketing manager, you already know that measuring customer satisfaction is critical to the success of your brand. But with such a wide range of customer satisfaction metrics available, where do you even begin?
Turns out, measuring how satisfied your customers are with your product is a bit different than measuring how likely your customers are to recommend your product. And measuring how likely they are to recommend your product is different from measuring how much it costs to win a new customer.
To help you navigate the nuances of customer satisfaction, we’ve chosen three core metrics: CSAT, NPS, and CES. Learning about these metrics will help you understand how to improve CX and generate happier, more loyal customers.
CSAT may be the most basic customer satisfaction metric. It’s useful for gathering reactions to specific experiences (such as customer support interactions or specific product purchases), but it doesn’t measure overall customer loyalty.
Still, CSAT can be a valuable indication of where you stand in your industry.
CSAT is gathered simply by asking your customer base, How would you rate your overall satisfaction with product/service X?
Survey takers typically provide a rating on a scale of 1-5.
Customers who gave you a 4 or 5 are considered “very satisfied.” Anyone who gives you a 3 or below is considered “unsatisfied.”
To calculate your CSAT, you’ll divide the number of satisfied customers (4’s and 5’s) by the number of unsatisfied customers (3’s and below). Then multiply by 100 to get the percentage of satisfied customers relative to unsatisfied customers.
[(# of satisfied customers) / (# of unsatisfied customers)] x 100 = CSAT
When looking at your CSAT, you may want to take a look at industry benchmarks to see how your score measures up against comparable businesses.
Incidentally, industries with the highest overall CSAT scores include Breweries, Food Manufacturers, and Banks, measuring 85, 82, and 81, respectively. Industries with lower CSAT averages include Internet Service Providers (62) and Video-on-Demand services (68).
More important than comparing your score to an industry benchmark, however, will be “competing against” your own scores and taking measures to continue improving your CSAT.
NPS is a customer satisfaction metric that gives you a different sort of insight: how likely your customers are to recommend your product or service to a friend.
By asking this question, an NPS survey effectively measures a customer’s satisfaction with your brand and their loyalty to your brand.
Needless to say, happy customers are great. They might buy from you again, and they won’t tell friends and family that your product or service is terrible.
But a loyal customer is far more valuable. A loyal customer will not only repurchase from you; they’ll tell others about your brand.
They’re unlikely to complain and more likely to provide testimonials, reviews, and feedback. Finally, they’re far less price-sensitive than most customers, and they usually have no problem accepting an upsell or even a price increase.
Net Promoter Score helps you to gather valuable intel about the loyalty of your customer base by asking one simple question, typically followed by an opportunity to give open-ended feedback.
Your NPS question will typically read, How likely are you to recommend [X] to a friend or colleague?
On this scale, respondents can select 0 (not likely at all) to 10 (extremely likely to recommend).
From these responses, customers can be grouped into one of three categories: promoters, detractors, and passives.
Promoters have given you a 9 or 10. They’re thrilled with your brand, and ready to spread the good news.
Passives have given you a 7 or 8. They may be happy customers, but they’re not necessarily brand evangelists. They’re satisfied, but not over-the-top impressed.
Finally, detractors have given you a 6 or below. These unhappy customers have typically been let down by your product, customer support, payment process, or tech support.
Once you have your scores for promoters, passives and detractors, you can calculate your overall NPS using the following formula:
[# of promoters / Total # of survey takers] - [# of detractors / Total # of survey takers] = NPS
With this score, you’ll either be left with a positive number or a negative number.
A positive NPS indicates that you have more promoters than detractors, while a negative score indicates that you have more detractors. A “0” simply shows that you have an even number of both promoters and detractors.
Of course, you’ll want to aim for a 100. But in general, any positive score is considered “good,” and anything above a 50 is “excellent.”
The second portion of your NPS survey will be an open-ended question, providing your survey takers with an opportunity to explain their ratings.
Open-ended feedback is a key part of “closing the loop” on your Net Promoter Score. For example, if a customer gave you a 4, you’ll certainly want to know why. And discovering that their 4 was the result of a faulty feature on your product will help you to troubleshoot the product and make improvements. Ultimately, this strategy will help you to avoid generating more detractors in the future.
Customer Effort Score, or CES, is based on the idea that your customers will be most satisfied when their problems are solved quickly and easily. It’s best generated after a specific touchpoint, such as an interaction with a service rep or a product purchase.
CES works a little differently than the previous two metrics. Rather than asking your customers a question, you’ll make a statement with which they can agree or disagree.
For example, you’ll make the following statement: _Today’s checkout process was easy. Or, It’s easy to use product x._
Then, your survey takers have an opportunity to respond on a scale of 1-7, with 1 being “Strongly Disagree” and 7 being “Strongly Agree.”
In order to measure your CES, you’ll measure the total number of people who gave a positive response (5-7), and divide that figure by the total number of survey takers.
Total # of positive responses / Total # of survey takers = CES
As with most other metrics, it may be more helpful for you to continually measure your own personal CES and track changes over time rather than try to measure your score against industry standards.
While CES is useful for anticipating the likelihood of a future purchase, it doesn’t necessarily measure overall rates of general customer loyalty or satisfaction. Not only that, but a CES survey won’t provide you with actionable feedback that will help you make improvements.
Still, Customer Effort Score is a valuable metric that you may want to work into your overall customer satisfaction strategy.
Don’t Forget: 7 Business Metrics Every Owner Should Be Tracking
Understanding your customer experience is infinitely useful to your business. Knowing why your customers are satisfied and loyal (or dissatisfied and angry) can help you prevent churn, raise customer satisfaction, and generate new buyers.
But in order to make customer satisfaction metrics successful, you’ll need to commit to continually tracking metrics and acting on the insights you gain. Ultimately, using a customer satisfaction strategy together with purpose built customer satisfaction software like Thermostat can make the job easier — and help you improve your product or service, generate new leads, and ultimately, increase your profits.
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