By Asanjay Fernando
In the competitive landscape of today’s business world, understanding and measuring customer satisfaction is crucial for the long-term success of any organization. Customer Satisfaction (CSAT) is a metric that helps businesses gauge the level of satisfaction among their customers regarding the products or services they offer. By regularly assessing CSAT, companies can identify areas of improvement, build brand loyalty, and ultimately enhance their overall customer experience.
What is a CSAT?
CSAT is a metric used to measure how satisfied customers are with a particular interaction, product or service. It is typically measured through surveys, where customers are asked to rate their satisfaction for a series of questions on a scale. The most common scale ranges from 1 to 5 or 1 to 10, with 1 being the least satisfied and 5 or 10 being the most satisfied. This can also be in the form of emojis, smiley faces or color pallets (green for positive & red for negative). The purpose of a CSAT is to collect user feedback and gain insights into improvement areas in order to enhance the customer experience.
How CSAT is generally Calculated?
CSAT is calculated by several methods, one of such being, taking the sum of positive responses (e.g., scores of 4 or 5 on a 5-point scale) and dividing it by the total number of responses. The result is then multiplied by 100 to obtain a percentage.
CSAT = (Number of Positive Responses / Total Number of Responses
Common method of CSAT calculation
- To measure a CSAT, customers are provided with a feedback survey consisting of a recommended maximum of 8-10 questions focused on the types of engagements. Each of the questions are focused on the performance of the service provider and the quality of the service rendered to the client while one (typically the last question) focusing on the client’s likelihood of promoting the company as a preferable service provider to other potential clients. This question helps to calculate the Net Promoter Score (NPS)*.
- For the initial questions, the customer gets to select one response each on the rating scale & below is an example from a scale of 0–5:
- For the NPS question, the customer gets the responses which are focused on recommendation & promotability. Below is an example of 0–5 rating scale:
- Once the evaluator chooses responses to all questions, an average of the corresponding ratings (excluding 0) will be calculated as the CSAT rating for the engagement in concern.
- An engagement can be a one-time service provided by the vendor to the client or a service provided over a longer period of time. For continuous engagements, you may choose to obtain client feedback periodically such as monthly, quarterly, semi-annually etc.,
What Is a Good CSAT Score?
- The interpretation of a “good” CSAT score can vary depending on the scale used and industry standards. However, a commonly accepted benchmark is to consider a CSAT score of 70% and above as good. This means that if you use a scale of 1 to 5, a score of 3.5 or above would be considered satisfactory.
- It’s important to note that what constitutes a good CSAT score can also depend on industry norms and specific organizational goals. Some industries may have higher or lower average CSAT scores based on customer expectations and the nature of the products or services provided.
- In a recent study done by Retently in 2023, it has been found that in some of the most popular industries, average CSAT scores have been obtained as below.
Common Methods of CSAT collection
- Physical questionnaire (printed form)
- Online questionnaire (eg: Google forms, survey monkey, survey planet etc.,)
- Touch screens & interactive interfaces (kiosks in Banks & shopping malls).
- Phone calls (you will be requested to participate on a short survey after a customer service interaction over a call)
- Emails, SMS, WhatsApp or other messaging services
- Physical engagement (vendor representative will meet you in person to obtain feedback. Eg: Chef at a restaurant will come to your table for feedback on food etc.,).
What if you receive a low CSAT rating as defined by your organization?
If your organization has defined, for an example 70% as the benchmark, which constitutes to a rating of 3.5 or above (in a 0–5 scale) as acceptable, receiving a low CSAT score can not only be an indication of the poor performance & quality of service, but also can be a valuable opportunity for improvement and learning more about customer concerns or dissatisfaction. Here are some steps you can take if you receive a low CSAT score:
1. Analyze the Feedback:
Look at the specific comments or feedback provided along with the score. Understanding the reasons behind the low score is crucial for addressing the root causes.
2. Identify Trends:
Check if there are common themes or patterns in the feedback. Identifying recurring issues can help you prioritize and address the most significant areas of concern.
3. Customer Outreach:
Reach out to the customers who provided low scores for more detailed feedback. This can provide additional insights and allow you to show your commitment to resolving any issues they may have.
4. Root Cause Analysis:
Conduct a thorough analysis to identify the root causes of the problems. It could be related to product issues, service delivery, communication, or other factors.
5. Implement Changes:
Based on the analysis, implement changes to address the identified issues. This could involve process improvements, additional training for team members, or enhancements to your product or service.
6. Communicate Improvements:
Inform your customers about the changes you’ve made in response to their feedback. This not only demonstrates your commitment to customer satisfaction but also helps rebuild trust.
7. Monitor Progress:
Continuously monitor your CSAT scores and other relevant metrics to gauge the impact of the changes you’ve implemented. Regularly assess customer feedback to ensure ongoing improvements.
A low CSAT score, when handled effectively, can be an opportunity to strengthen customer relationships and enhance your overall business performance. It demonstrates a commitment to listening to customers and taking proactive steps to address their concerns.
However, there can be situations where the customer rates the project performance lower because of certain misunderstandings, conflict of the scope and confused roles and responsibilities agreed at the project initiation stage. if this is the case, it is advisable to have a constructive discussion with the client with sufficient data to back your argument.
The Net Promoter Score (NPS)*
NPS is a widely used metric that measures customer loyalty and satisfaction based on the likelihood of customers recommending a company’s products or services to others. It was introduced by Fred Reichheld in 2003 through an article titled “The One Number You Need to Grow,” which was published in the Harvard Business Review; and has since gained popularity as a simple yet effective way to gauge customer advocacy.
The Net Promoter Score (NPS) = % of Promoters − % of Detractors
NPS refers to customer loyalty based on the score given to the NPS specific question in the CSAT survey.
5 — Promoter | 4 — Passive | 3 to 1 — Detractors
“Promoter” represents a company’s most loyal customers; those who are likely to act as brand ambassadors.
“Passive” means clients who are neutral. They don’t really recommend your product or service to anyone, but they are also not particularly dissatisfied.
“Detractors” are clients who’s least likely to recommend your company and most likely to churn.
Other ways to measure customer satisfaction:
- Customer Feedback Forms to provide open-ended comments about their experiences.
- Monitor online platforms, review websites, and social media for customer reviews and ratings.
- Customer Interviews and focus groups such as one-on-one interviews or group sessions.
- Repeat business and retention rates.
- Use social media listening tools to monitor conversations about your brand.
- Benchmarking against competitors.
- Employees who interact with customers directly can provide valuable insights into customer satisfaction.
Conclusion
In the age of customer-centricity, businesses cannot afford to overlook the importance of Customer Satisfaction (CSAT). Regularly measuring and analyzing CSAT scores provides valuable insights that can drive improvements and enhance the overall customer experience. As companies strive to stay ahead in a competitive landscape, prioritizing customer satisfaction is a strategic imperative that can lead to long-term success and sustainable growth.
Additionally, while CSAT is a valuable metric, it’s often beneficial to consider it in conjunction with other customer experience metrics and feedback channels to get a more comprehensive understanding of customer satisfaction and identify areas for improvement.
You can visit www.axonect.com to know more about its Axonect Product Suite respectively.
