What is Customer Satisfaction (CSAT) Score? Definition, Calculation, Applications and Advantages

What is the Customer Satisfaction (CSAT) Score?

In simple words, customer satisfaction (CSAT) score is a numeric metric that is a measure of customer satisfaction based on direct feedback received from the customer. It gives a clear picture of how your customer feels about your product or service.

This feedback for customer satisfaction measurement is often collected using an online or on-premise survey question.

For instance, if you are a product-oriented company that wants to understand how many customers are satisfied enough to tentatively continue to be billed over the next 2 financial quarters. The simplest and data-oriented method to get this critical insight is by conducting a feedback survey for every customer up for renewal in the next 6 months. Here, they get asked the CSAT survey question (discussed below) and their responses give you the insight you need for every customer on your billing cycle.

Measure-Customer-Satisfaction-Score

What is the CSAT survey question?

The CSAT survey question is a single question that asks the customer the following question with the respective answer option:

Q: How satisfied are you with our company [company can be replaced by service or any specific function or department for more focused feedback]

Answer Options.

  1. Very satisfied
  2. Somewhat satisfaction
  3. Neutral
  4. Somewhat unsatisfied
  5. Very unsatisfied

For score calculation, responders who select options 1-2 are marked as ‘satisfied’ and options 4-5 as ‘unsatisfied’ customers. Option 3 is for neutral customers.

Note: Net Promoter Score (NPS) and Customer Effort Score (CES) are also often used alongside or as a replacement to the CSAT survey.

How to calculate the CSAT score?

Customer satisfaction score can be calculated by the following formula:

CSAT Score = % of satisfied customers (-) % of unsatisfied customers

For example, A company has surveyed 100 customers and the CSAT survey question yields the following response aggregation:

Very satisfied – 22

Somewhat satisfied – 35

Neutral – 10

Somewhat unsatisfied – 21

Very unsatisfied – 12

So, % of satisfied customer – % of unsatisfied customers = 57 – 43 = 14

CSAT score = 14

This example also shows how CSAT can be negative when a total number of unsatisfied customers exceed the satisfied ones. The range for CSAT score is between -100 to +100, as is the case with NPS and CES.

Applications of CSAT score

CSAT can be a major business ally when used strategically and deployed at important points of customer interactions. Here are some applications areas to get you started:

  • Employee-level deployment

CSAT score is a data-driven metric and the response comes directly from the customer. This makes it a neutral judge of customer satisfaction, versus qualitative analysis of customer sentiments. In other words, its the perfect employee feedback score as well – if a customer gives positive feedback based on their interaction with your customer-facing employee, then that is a positive metric for the employee. If the customer gives a negative response, it is important to evaluate where the employee might be lacking in delivery, or if it is even a customer communication issue or a product issue. Whatever the outcome might be, it is strategically beneficial to deploy the CSAT survey and get customer feedback after every interaction with an individual representative of the company.

  • Team- level deployment

There are several customers facing teams in a mid-to-large size company. It is here that companies often need to understand which team is contributing or lacking in contribution to creating customer success, be it at the post-sales service stage, technical support conversations, account renewal meet, etc. A CSAT score average for all the team members’ should give you the data you need to evaluate your teams based on customer feedback. It’s a neutral, unbiased and data-oriented approach to team-level feedback.

  • Geographical deployment

Your team may in one location or several, but your customers are spread across geographies. Depending on your scale of sales and operations, it is essential for every organization to at least conduct one survey each quarter to understand which countries/regions may be uniformly lacking in customer support and reinforce the required quality.

Advantages of using customer satisfaction (CSAT) score

Below are some of the key strategic business advantages of using CSAT score as a customer success metric:

  • Prevent customer churn

The only way to prevent customer loss is to first know that they might leave. Even today customer exit comes as a shock to many, and yes there are budgetary constraints responsible in many cases. However, a lack of customer satisfaction with the company or a better vendor with better options are still the leading causes of customer churn.

The only way you can prevent this is by first knowing. The best way to know is by asking the customer directly. A simple question with straightforward answer options can go a long way in giving you the right insights at the right time to ensure customer continuity.

  • Increase revenue generation from existing customers

Using CSAT survey – you get a clear picture of who is satisfied, who is somewhat satisfied, who is neutral and so on. The goal for your customer success team is to ensure that customers keep going up the satisfaction ladder. As a customer goes from, let’s say somewhat unsatisfied to somewhat satisfied, this customer is much more likely to renew they account in the next billing cycle. The contrary would be inaction on customer woes and inevitable customer loss. Thus, this improvement of the CSAT score is directly responsible for generating more revenue from existing customers.

  • Create customer communities for product UX tests

Satisfied customers who have renewed their account for more than 2 years – are an excellent source for product UX and feature feedback. One of the popular trends is creating exclusive online customer communities, connecting them with community managers (typically from your UX and customer success team) and getting live feedback from clients on an upcoming product or service updates. Not only does it benefit you financially by increasing your ability to produce features that are customer-validated, your customers feel exclusive, important and heard, thereby tightening their brand loyalty.

 

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