By this period every year, it’s typical for organizations to review the key metrics for evaluating their progress. Then with a view to improving the metrics, targets are set for the New Year. Usually, these metrics include sales, revenue, and ultimately profit.
So, all too often, there’s a missing metric – the customer satisfaction metric. And this is ironical because customer satisfaction is not only as important as sales, revenue and profit, but it also has a strong relationship with them.
If the customers are not satisfied enough to return repeatedly, it will be an uphill task to sustainably grow revenue and profit, no matter how good an organization’s sales performance is.
To buttress this relationship empirically, after a study, Reichheld and Sasser estimate that a 5% increase in customer loyalty can produce profit increases from 25% to 85%. And customer loyalty is a function of customer satisfaction.
Thus, evidently, customer satisfaction is crucial. So crucial that its metric shouldn’t be missing. When it’s missing, it means that customer satisfaction is not being tracked.
And the painful implication of not tracking customer satisfaction is that improving it becomes difficult because in the words of Peter Drucker, “You cannot improve what you don’t measure.”
That’s why smart organizations consider customer satisfaction metric as part of their key metrics. By doing so, they are made to be tracking customer satisfaction and improving it.
Your organization can do so as well.
To help, in this article, I’ll give an overview of 3 most commonly used customer satisfaction metrics.
1. Net Promoter Score® (NPS)
NPS is a customer satisfaction metric that helps you to measure the overall loyalty your customers have to your organization.
NPS surveys are short and easy and feature one question that asks customers how likely they are to recommend your products, services, or brand to other people.
Here’s an example:
Figure 1: NPS Survey Sample
As depicted above, respondents normally answer using a 0-10 scale, with 10 being “Very Likely” and 0 being “Very Unlikely.” The 0-10 scale makes it easier for you to segment customers according to their responses:
- 9-10 – Promoters (customers who love your organization and will actively promote it)
- 7-8 – Passives (customers who like your organization but don’t love it yet)
- 0-6 – Detractors (clients who are unhappy with your organization and are at risk of churning)
Depending on how many and what kind of answers you get, your NPS can be somewhere in the -100 and 100 range. Anything under 0 is usually a bad sign, a score between 0 and 30 is normally a good score, a score between 30 and 70 is a great score, and anything over 70 means you have very high loyalty levels.
To calculate your NPS, you will have to subtract the percentage of Detractors from the percentage of Promoters. That is:
NPS = % of Promoters – % of Detractors
That’s not all, though. The single question must be followed up by an open-ended question – one that asks respondents what made them give that particular score. You can also use other open-ended questions – like asking clients what they didn’t like about your organization, or what you can do to improve their customer experience.
Those kinds of questions can offer you more insight into how customers view your organization, and what actions you need to take to enjoy higher NPS.
2. Customer Satisfaction Score (CSAT)
CSAT is a customer satisfaction metric that directly measures and quantifies the degree to which customers are satisfied with a service, product or experience.
CSAT surveys are ideally sent when you want to see how satisfied your customers are with a certain service, product, or interaction with your organization.
For instance, you can send a CSAT survey after a customer has completed an onboarding process to see how efficient it is and if any improvements are necessary.
Here’s an example:
Figure 2: CSAT Survey Sample
Respondents can usually rate their satisfaction with answers in the “Very Satisfied – Very Dissatisfied” range. Alternatively, you can also let respondents rate their answers in the 1-5 or 1-10 range.
CSAT surveys are not limited to a single question. If you want, you can use multiple questions and have open-ended and closed-ended questions in the same survey.
The CSAT score is an average based on the survey results. Generally, these scores are expressed in a percentage – from 0% to 100%.
Here’s an easy way to calculate a CSAT (customer satisfaction) score – take the number of “Satisfied” respondents (those who answer in the “Somewhat Satisfied-Very Satisfied” range), divide it by the number of received responses, and multiply it by 100.
So, if 100 people respond to your survey, and 80 of them are “Satisfied,” that means you’d have an 80% CSAT score.
3. Customer Effort Score (CES)
CES is a metric that’s used to measure customer satisfaction levels by focusing on the efforts customers make to interact with your organization’s services and products.
The idea is for the survey to help you find out if customers have a hard time performing certain actions when interacting with your organization, and take the necessary actions according to the survey data to streamline processes.
CES surveys are usually used:
- Right after a customer interacted with customer support
- Immediately after a customer interacted with a product/service and made a purchase/got a subscription
- Whenever a business wants to measure the overall experience consumers have with their products/services
CES surveys generally use a single question to ask customers how easy or difficult it is to perform a certain action – whether it is getting help from the support team, buying a product, or leaving a review.
Here’s an example:
Figure 3: CES Survey Sample
Respondents will get to choose between multiple answers – normally ranging from “Very Difficult” to “Very Easy”. And they can be numbered as well.
The collected customer feedback is then analyzed to find the average.
If most answers are positive (in the “Easy-Very Easy” category), it means customer satisfaction levels are quite decent for your organization since customers have an easy time using your services/products.
If the answers are negative (in the “Difficult-Very Difficult” category), that means you are in need of improvements to make the interaction with your organization easier.
Having had an overview of NPS, CSAT and CES, you may be wondering which one of them is better.
But it would be unfair to compare them as they have different core purposes, and deal with different aspects of the customer journey. They are connected, complement one another, and could be used together at specific stages of the customer lifecycle.
Nevertheless, while CSAT and CES measure isolated cases at specific touchpoints, NPS deals with a broader aspect – customer loyalty. This makes it appealing.