Customer satisfaction impacts your business in many ways, making it easy to understand why companies invest in measuring the customer experience. Numbers can tell powerful stories, and organizations are spending up to $1.4 million to collect CX metrics — but are they capturing the right data?
You can’t talk about measuring the customer experience without mentioning the two most popular and recognized CX metrics: Customer Satisfaction (CSAT) and Net Promoter Score (NPS). While both CSAT and NPS can reveal how customers feel about your company, neither metric is definitively superior. Each provides unique insights into customer experience, with CSAT focusing on specific interactions and NPS gauging overall loyalty. They are complementary, offering distinct insights that can guide your business decisions.
Understanding customer expectations is crucial to improving satisfaction and loyalty. Monitoring customer experiences helps organizations align their services with what customers anticipate.
Let’s explore both CSAT and NPS to help you understand their differences and identify which one (or both) you should be using to measure your customer experience.
Customer Satisfaction (CSAT)
What is CSAT?
CSAT is a customer satisfaction score. It gauges how satisfied a customer is with your product, service, a specific interaction, or your brand as a whole.
CSAT surveys are simple and easy to understand. Customers answer a variation of the question: “How would you rate your overall satisfaction with the [product/service] you received?” and respond using a 1-5 scale:
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Very unsatisfied
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Unsatisfied
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Neutral
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Satisfied
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Very satisfied
These numbers could also be replaced with icons such as stars or smiley faces to add a more branded touch. Surveys are often distributed immediately after a transaction or communication, as a popup, inside an app, or through SMS. Along with the scale, there’s usually a comment box where respondents can share reasons for their rating.
How is CSAT calculated?
CSAT scores are usually expressed as a percentage from 0-100%, with 100% being the best.
To calculate a percentage CSAT score, use this formula:
(Number of satisfied customers with 4 and 5 scores / Number of survey responses) x 100 = % of satisfied customers
Using the two highest values on feedback surveys (4 and 5) has been shown to be the most accurate predictor of customer retention, so CSAT scores focus on these two values.
Survey results can also be averaged to give you a Composite Customer Satisfaction Score, but this is generally seen as less valuable than the percentage.
When should you measure CSAT?
CSAT can uncover helpful insights into specific aspects or interactions within the customer experience. It’s simple and fast for customers to answer, and captures their satisfaction at a particular moment in time — after receiving customer service, after making a purchase, etc.
You should measure CSAT if you want to pinpoint areas for improvement. By sending CSAT surveys throughout the customer experience, you can identify where in the process customers are most unhappy, and focus your efforts on these pain points to improve customer retention. Additionally, evaluating customer satisfaction at different stages of the customer journey provides valuable insights for improving long-term loyalty and overall customer relationships.
Read: A 5-step action plan to lift your customer satisfaction
Net Promoter Score (NPS)
What is NPS?
NPS is often seen as the “gold standard” in CX metrics. Rather than measuring customer satisfaction at a particular moment in time, it measures a customer’s intentions and loyalty to your company. Customer satisfaction surveys are essential tools for measuring customer satisfaction and loyalty, and NPS surveys play a significant role in this process.
Just like CSAT surveys, NPS surveys are simple and easy to understand. Customers answer: “How likely is it that you’d recommend [brand/product/service] to a friend or colleague?” and respond using a 0-10 scale. Their response puts them into three categories of customers:
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Promoters (9-10): Customers who respond with a 9 or 10 tend to be loyal and enthusiastic customers. These are your MVPs!
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Passives (7-8): Customers who respond with a 7 or 8 are generally happy with their experience, but not as enthusiastic about it as promoters. They could be lured away by competitors.
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Detractors (0-6): Customers who respond with a score from 0 to 6 are unhappy, likely won’t buy from you again, and may even tell others not to do business with you.
Because the question isn’t tied to a specific event, NPS provides insight into how customers feel about you overall. And just like CSAT surveys, NPS surveys usually include a comment box to capture valuable qualitative information about the customer’s reason for their rating.
How is NPS calculated?
CSAT scores are usually expressed as a percentage from 0-100%, with 100% being the best.
To calculate a percentage NPS score, use this formula:
% of Promoters – % of Detractors = NPS
If you use NPS software, you can compare your scores to competitors, which can be powerful for winning buy-in from stakeholders.
When should you measure NPS?
NPS should be used when you want the big picture. It can be leveraged to identify your biggest champions who you should continue to support and nurture. It can also identify customers who need attention. By converting detractors into promoters, you can have a profound impact on customer retention. Studying NPS scores can help enhance customer satisfaction by identifying areas for improvement within customer interactions.
Sending NPS surveys on a consistent basis allows you to monitor customer sentiment over time. Studying NPS scores can help you better understand your target market — the people who are likely to become your best and most loyal customers (promoters).
CSAT and NPS: How they complement each other
CSAT and NPS can both provide valuable insights. CSAT is helpful for pinpointing specific areas for improvement, while NPS gives you a big picture view where you can track overall customer satisfaction over time.
Think of CSAT as your short-term customer satisfaction, and NPS as your long-term game. You could have a satisfied customer, but that doesn’t necessarily mean they’re going to recommend you to a friend.
Earning a high NPS score is harder than achieving a high CSAT score, but it’s all connected. If you work to improve CSAT scores, it’s likely that your NPS scores will also improve. CX professionals know that a customer’s overall perception of your brand is the sum of every interaction they have with you. Improving those individual moments adds up.
Read: Why you might be wasting your CX metrics (and what to do instead)
The bottom line
Both CSAT and NPS capture customer sentiment. CSAT captures customer satisfaction at a specific moment in time (after a transaction, customer service interaction, etc.), while NPS captures the customer’s overall sentiment.
Many companies choose to monitor both, using CSAT for targeted feedback and NPS to track the overall customer experience.
Glance Guided CX solutions work to improve both CSAT and NPS scores. Our visual engagement tools help you deliver engaging, human-to-human guidance when your customers need it most — which increases customer satisfaction, loyalty, retention, and value.
Ready to take your customer experience to the next level? Take a demo today
Jan 31, 2023 5:44:53 AM
Key Differences Between CSAT and NPS
Understanding the key differences between CSAT and NPS is crucial for effectively measuring customer experience. While both metrics provide valuable insights, they do so in distinct ways that can impact how you interpret and act on customer feedback.
Scale of Measurement
One of the most significant differences between CSAT and NPS lies in their scale of measurement. CSAT typically employs a straightforward rating scale, often ranging from 1 to 5 stars or similar formats. Customers are asked to express their satisfaction level based on their recent interaction, with higher ratings indicating greater satisfaction. This simple scale makes it easy for customers to provide quick feedback and for businesses to gauge customer sentiment at a glance.
In contrast, NPS uses a single question with a 0-10 point scale, asking customers about their likelihood of recommending a product or service to others. This broader scale allows for a more nuanced understanding of customer sentiment, categorizing respondents into promoters, passives, and detractors. By capturing the likelihood of recommendation, NPS provides deeper insights into customer loyalty and overall brand perception.
Survey Frequency and Timing
The frequency and timing of surveys also set CSAT and NPS apart. CSAT surveys are typically triggered after specific customer touchpoints or transactions, such as after a purchase or a customer service interaction. This approach provides immediate feedback on the customer’s experience, allowing businesses to quickly identify and address any issues.
On the other hand, NPS surveys are often conducted periodically, such as quarterly or annually. This timing allows businesses to gauge overall brand sentiment and customer loyalty over a longer period. By tracking NPS scores over time, companies can monitor trends in customer sentiment and make strategic decisions to enhance customer loyalty and satisfaction.
Choosing the Right Metric for Your Business
Deciding between CSAT and NPS depends on your specific business objectives and the context in which you want to measure customer experience. Both metrics offer unique advantages, and understanding when to use each can help you gain a comprehensive view of your customers’ needs and preferences.
When to Use CSAT
CSAT is particularly useful for measuring satisfaction with specific transactional interactions. It provides immediate feedback, allowing businesses to identify areas for improvement and make timely adjustments. For instance, if you want to know how satisfied customers are with a recent purchase or a customer service interaction, CSAT surveys can provide quick and actionable insights.
CSAT is also suitable for businesses with a high volume of customer interactions, as it enables them to track satisfaction over time and identify trends. By regularly collecting CSAT data, you can pinpoint recurring issues and address them promptly, enhancing overall customer satisfaction.
Additionally, CSAT is a valuable metric for businesses with a strong focus on customer service. It provides targeted feedback that can help you improve specific aspects of your service, leading to better customer experiences and higher satisfaction levels.
When deciding between CSAT and NPS, consider the specific objectives and context of your business. If you need to measure satisfaction with specific interactions or transactions, CSAT may be the better choice. However, if you’re looking to gauge overall brand sentiment and customer loyalty, NPS is likely a better fit. Ultimately, both metrics are valuable tools for measuring customer satisfaction and loyalty, and using them in conjunction can provide a more comprehensive understanding of your customers’ needs and preferences.
