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Customer Satisfaction Metrics

3 Simple Steps to Measure Customer Satisfaction

Dhivakar Aridoss

Dhivakar Aridoss

Marketing Head

There is an undeniable correlation between how happy customers are and how much revenue an organization makes.

Only satisfied customers are happy customers, and hence there is an importance associated with Customer Satisfaction (CSAT).

Your CSAT is vital because it helps reduce customer churn, boosts customer loyalty & encourages brand advocacy, increases revenue, enables you to stand out from the competition, and provides upselling and cross-selling opportunities.

Let us now look at statistics that bring about the need for CSAT.

According to Customer Experience Trends Report 2021, about 50 percent of respondents said they would switch to a competing brand after just one bad customer experience

57 percent of customers say excellent customer service is a factor of brand loyalty – Zendesk

75 percent of customers are willing to spend more to buy from companies that give them a good customer experience – Zendesk

66% of B2B customers stopped buying after a bad customer service experience, and 52% of B2C customers did the same – Kaizo customer retention statistics

74% of people are likely to switch brands if they find the purchasing process too complicated – Salesforce

Well, thousands of other reports and statistics talk about the importance of Customer Satisfaction (CSAT) and Customer Experience (CX).

Now, let us spend time understanding CSAT and how we measure it.

What Is Customer Satisfaction?

Customer satisfaction measures how happy your customers are with your business, product, services, support, and the assistance they receive.

It is a way for your customer service and support teams to understand that their actions result in happy customers who would go the extra mile to become your advocates.

Satisfied customers are more likely to remain loyal and recommend the business to others, so it is vital for businesses to strive for high levels of customer satisfaction.

Examples of Customer Satisfaction

Let us explain this with some examples.

Example 1

Let us assume you have 1000 customers paying $50 monthly for a subscription to use your software. Your total monthly revenue is $50000. Your CSAT finds out that 20% of them are unhappy with you.

The likelihood of this 20% of customers leaving you for a competitor is high.

So, about $10000 of your revenue is at stake.

Let us assume that 30% of your subscribers are unsatisfied with your offering in the second month.

Now, $15000 revenue is at stake in the second month.

Now, you will have to drill down to find why they are unhappy or dissatisfied with your offerings and rectify them to prevent revenue leakage and customer loss.

Example 2

One of your customers calls your support, asking them to enable a feature on the software, which they are not able to use.

Your support responds in 3 days and takes another week to enable the feature, which is way over the promised SLAs.

Your customer will be dissatisfied with the resolution times, and if it continues, they will most likely leave.

This would be the case for your other customers as well.

So, there is a lot of revenue at stake here as well as customer churn.

In fact, acquiring a new customer can cost five times more than keeping an existing customer. So, preventing churn should be your primary concern.

Studies have found that increasing customer loyalty and retention by only 5% can increase profits from 25-95% and help cut down on customer acquisition costs.

How to Measure Customer Satisfaction?

Why would you measure/track customer satisfaction?

It is for you to find out where you currently stand and that you believe there is room for improvement in your offer.

Measuring customer satisfaction doesn’t have to be complex – it can be done through surveys and analyzing customer data.

There are multiple steps to measuring CSAT. Let us go through them in detail.

1. CSAT Objectives

Let us first define the objectives of measuring CSAT.

The objective of measuring customer satisfaction is to gain a comprehensive understanding of the customer’s experience and to use this information to improve the business and enhance the customer experience.

This can include identifying specific issues that are causing dissatisfaction, as well as understanding what customers value most about the business.

You can identify areas of customer pain points – long wait times, unhelpful customer service, poor product quality, poor UI, etc. 

You can also identify what your customers value the most – product quality, UI, customer service, or the overall shopping experience.

For instance, you may want to measure different facets of your customer interactions:

  1. You send a survey to your customers as soon as they get off the call to check their satisfaction levels with the resolution provided. This would allow you to understand how well your customer support and service resolved a particular issue. This would act as immediate feedback to your service and support teams for them to improve.
  2. Identify UX bottlenecks and improve them by doing user research and feedback on specific features of your offering. Once you identify the bottlenecks, you can improve the UX and keep your users in the loop on what is being done. This would allow your users to be an active part of improving the customer experience.
  3. Expedite customer support interactions with the most frustrated customers. Let us assume that many of your customers have reported long wait times and resolution times as issues. You understand the feedback, decide to act on it, and improve wait and resolution times. Now, you can go back and communicate the improvements to all those who responded to the survey and run promotions on those enhancements to your larger customer segment.
  4. Operationalize proactive support like self-service portals, knowledge base, and FAQS. You research the customer interactions already available with you and identify the commonly raised queries. Most people would love to solve it themselves, provided they find the answers in a self-service portal, knowledge base, or FAQs. This would reduce the number of interactions agents need to have with your customers to resolve standard queries, allowing them to fix complex queries better.
  5. Run analytics on voice recording to understand the stated and unstated needs of customers. Running analytics on voice recordings can throw up a lot of unknowns, like the customer emotions while interacting with your agents, like long pauses, uncomfortable silences, and other forms of irritation. Besides, you can identify compliance and misselling issues. This can act as an input to improve and be a part of the training inputs for agents.
  6. Test different live chat scripts and support strategies. With live chat scripts, often, you would find that the customers don’t see what they are looking for. They invariably end up using other channels to get their issues resolved. So this would allow you to test different chat scripts to determine if most of the queries are addressed through this channel.

Also, seeking feedback after their interactions will significantly enhance the process and the experience.

2. KPI for Measuring Customer Satisfaction

Multiple metrics can be used to capture customer satisfaction levels. Once you identify the objectives described in the previous section, you can figure out what metric to capture.

A few famous metrics that are commonly used are:

Customer Satisfaction (CSAT) score

CSAT score asks one fundamental question, which is:

How satisfied are you with our product, service, or customer support?

This is typically requested on a scale of 1 to 5 or 1 to 10.

This is a transactional metric used to evaluate a customer’s specific experience. You usually try to get customers to respond to this within 10 to 15 minutes of interacting with you.

Customer Effort Score (CES)

Customer Effort Score (CES) is a metric used to measure the effort required for customers to complete a task or resolve an issue.

CES surveys typically have one question, which is:

How easy was it for you to complete your task today, on a scale of 1 to 5, with 1 being very easy and 5 being very difficult?

CES is a customer service metric that helps organizations understand and identify how easy or difficult it is for customers to interact with them.

Customer Effort Score is typically measured on a scale of 1 to 5, with 1 indicating low effort and 5 indicating high effort.

A low CES score indicates that customers are satisfied with the effort required to interact with a company. In contrast, a high CES score suggests that customers are dissatisfied with the required effort.

By regularly measuring CES, companies can track progress and identify areas where they are doing well and where they need to improve. This would allow them to make data-driven decisions on how to improve the customer experience.

Net Promoter Score (NPS)

NPS asks this question:

How likely is it that you would recommend this company or product to a friend or a colleague?

This is typically requested on a scale of 1 to 10.

Responses 9 and 10 are promoters, 7 and 8 are passives, and anything lower than that is detractors.

You calculate the NPS by subtracting the percentage of detractors from the percentage of promoters.

NPS is used as an indicator of customer loyalty and brand devotion. Almost all teams within an organization consume NPS.

Customer Health Score (CHS)

The customer health score is a metric used to understand customers’ likelihood to grow, stay consistent, or churn.

CHS is the single metric that would allow you to determine if your customers are staying or planning to leave, as it bridges the gap between customer success teams and customers.

This is not a one-question metric.

The customer success teams will have to structure the survey based on their objectives and define the scale. For each value in the scale, plan responses that the customer success would take to address those concerns.

Then this can be a very powerful metric to measure. This can be done through surveys, customer interviews, or customer feedback to become very powerful.

Most SaaS companies use this metric religiously to reduce their customer churn.

3. Customize Your Questions

While what I have written are standard metrics, you can customize your surveys and feedback to include specific questions for which you are seeking answers.

Here are a few thumb rules that you should consider:

  • Shorter surveys tend to have better completion rates
  • Ensure that you would act on the feedback provided. Please respond to all those who filled out the survey on how you are addressing their feedback
  • Offer incentives for providing you with the necessary feedback, as this can help your entire customer community
  • Always have an open-ended question in every survey you conduct. Qualitative user feedback can give you tons of ideas to implement solutions.

Analyze the data that you collect. There is probably a treasure trove of information that would allow you to grow your organization into the next orbit when you act on it.

You can easily segment the survey data and figure out what needs to be done for different demographics. Most importantly, act on every little feedback you get from your customers.

You can use these metrics in isolation or conjunction. For instance, a customer at risk is a detractor on NPS with a negative CSAT score. At the same time, a promoter on NPS with a positive CSAT score will likely be your advocate and a great candidate for cross-selling and upselling initiatives.

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