Customer Satisfaction Score

Updated on April 16, 2024
Article byAswathi Jayachandran
Reviewed byDheeraj Vaidya, CFA, FRM

What Is A Customer Satisfaction Score (CSAT)?

Customer Satisfaction Score (CSAT) is a measure used to evaluate customer satisfaction with a purchase, business, or interaction. It is a straightforward way to measure consumer satisfaction based on a survey scale. Hence, these scores play a crucial role in understanding and improving customer satisfaction.

Customer Satisfaction Score

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Customer Satisfaction Score (wallstreetmojo.com)

Customer satisfaction is essential for businesses as it allows for improvements and an understanding of customer needs. Calculating the customer satisfaction score helps businesses measure their overall satisfaction levels. Customer service efforts and overall customer experience often rely on these scores to gauge success. Companies typically obtain these scores by asking customers to rate their satisfaction on a scale through customer surveys.

Key Takeaways

  • The customer satisfaction score is a metric used to evaluate customer satisfaction based on surveys. It helps businesses understand and improve customer satisfaction, leading to a more successful company.
  • CSAT surveys are important tools that identify and resolve consumer complaints, allowing companies to address issues and enhance customer experiences.
  • Improving customer satisfaction involves providing helpful and timely assistance, training agents, offering self-service options, personalizing interactions, resolving pain points, assessing customer feedback, and optimizing procedures.
  • These are different from the Net Promoter Score (NPS), which measures the overall perception of a brand and the likelihood of customer recommendations.

Customer Satisfaction Score Explained

Customer satisfaction score (CSAT) is a metric used to evaluate customer satisfaction with a company’s products, services, or overall experience. Consumer satisfaction score surveys, are an essential tool that helps companies identify and resolve consumer complaints. Moreover, CSAT scores collect feedback from multiple viewpoints to assist in discovering the most critical problems consumers are having and how to fix them.

Targeted CSAT surveys can be employed in a variety of industries. They can be used to pinpoint problems with products, sales, internal procedures, onboarding, customer support, and other crucial viewpoints. This data-driven strategy may raise positive customer experience, boost brand loyalty, and enhance employee and customer experiences.

Maintaining a customer-satisfaction focus throughout the customer journey gives businesses unique insights into their customers’ wants and preferences. By publishing CSAT scores and first-response times, businesses can demonstrate prompt and excellent after-sale support, which can help them stand out from the competition.

Another advantage of CSAT is a decrease in client turnover. Businesses can address customer turnover or churn rate early on by using this metric to identify risky clients. Customers want and expect positive experiences, and tracking improvements and their long-term effects are made easier by tracking and calculating CSAT scores. All of these positively contribute to the business’s growth and expansion, resulting in profits.

Hence, the most common CSAT scale is a 5-point or 7-point scale. Here, the customers are asked to express their satisfaction by choosing a rating that best reflects their experience. It’s important to note that what constitutes a good customer satisfaction score can be subjective. It may depend on industry standards, benchmarks, and the specific goals and expectations of the business. However, as a general guideline, a CSAT score of 70% or above is often considered good.

Financial Modeling & Valuation Courses Bundle (25+ Hours Video Series)

–>> If you want to learn Financial Modeling & Valuation professionally , then do check this ​Financial Modeling & Valuation Course Bundle​ (25+ hours of video tutorials with step by step McDonald’s Financial Model). Unlock the art of financial modeling and valuation with a comprehensive course covering McDonald’s forecast methodologies, advanced valuation techniques, and financial statements.

How To Calculate?

It can be evaluated using the following steps:

#1 – Creation Of An Actionable Plan

Creating a plan is the first step to calculating customer satisfaction. The plan outlines steps that a company can take to assess customer satisfaction before gathering customer data and implementing a strategy.

#2 – Designing The Satisfaction Survey

A customer satisfaction survey is a crucial step in calculating CSAT. It gives businesses the opportunity to gain insights into their customers’ perceptions of their company. These surveys typically use a linear scale and can include additional questions. Open-ended questions are recommended to allow respondents to express their opinions.

#3 – Delivering Survey

Choose the appropriate method, such as an online form or email survey, to deliver the survey to consumers. It can be used to prompt customers to complete it after making a purchase, downloading the app, spending time on the website, or signing up for the email list. Adding a reward for survey completion to increase response rates can also be done.

#4 – Data Analysis Of The Survey

After administering a survey, it’s crucial to analyze the data. Online platforms often automatically compile and create graphs for the data, making it easier to interpret. Dividing the responses into two categories, satisfied and unsatisfied, can make the process much simpler. Determine the criteria for each category, such as a satisfied customer answering eight, above five, or even a ten on a scale from one to 10. Separating the data into these categories and counting the number of customers in each is another way to do it.

#5 – Calculation Of CSAT Using Customer Satisfaction Score Formula

The customer satisfaction score formula is:

CSAT =Total number of satisfied customers / total data responses x 100.

The result should be between 0 and 100, which represents an overall level of customer satisfaction. Hence, calculating the average customer satisfaction score can also provide valuable insights

#6 – Development Of Appropriate Strategy 

Upon calculating the customer satisfaction score, the business can create a strategy to enhance or maintain customer satisfaction. Analysis of the feedback and proper implementation of suitable actions are necessary.

Examples

Let us look at a few examples to understand the concept better:

Example #1

Suppose Best Buy is an online retail company in the US. They send out a customer satisfaction score survey after each purchase, asking customers to rate their satisfaction on a scale of 1 to 10, with 10 being the highest. They received 500 responses from recent customers. Out of those, 150 customers rated their satisfaction as 10. Let us calculate the CSAT score:

To calculate the CSAT score for Best Buy Ltd:

CSAT score = Total number of satisfied customers / total data responses x 100. 

In this case, the number of satisfied customers is 150, and the total number of respondents is 500.

  • CSAT score = (150 / 500) * 100
  • CSAT Score = 30%

Therefore, the CSAT score for  Best Buy Ltd based on the given data is 30%.

Therefore, the firm has a CSAT score of 30%. Hence, this means that out of the 500 customers who responded to the survey, only 30% of them rated their satisfaction as the highest possible score of 10.

A CSAT score of 30% indicates that there is room for improvement in customer satisfaction for the firm. Therefore, a significant portion of customers may still need to be more satisfied with their experience. Thus, the company may need to analyze the feedback received from customers, identify areas for improvement, and take action to address any issues or concerns raised. 

Example #2

 A multinational provider of digital solutions and technology consulting, on December 6th, 2023, revealed that it placed second in the German 2023 IT Sourcing Study conducted by Whitelane Research. This prestigious independent research group specializes in IT sourcing studies on customer satisfaction and trends throughout Europe. The industry average of 74% is far below LTIMindtree’s overall customer satisfaction score of 80%.

Every LTIMindtree client who participated in the study’s poll expressed satisfaction with the business. LTIMindtree specifically placed first for transformational innovation and second for service delivery quality. Moreover, LTIMindtree was one of just two businesses to achieve a customer satisfaction score at least 5% higher than average in each of the four key performance indicators (KPIs) (transformative innovation, account management, service performance, and price level).

How To Improve?

The level of help received has a significant impact on how satisfied customers are. Agents must receive training on the use of customer service tools geared explicitly for creating unforgettable encounters. Self-service articles, team-wide training, and internal help desks can all help achieve this. It is essential to be open and honest about wait times because agents require time to respond to inquiries and confer with one another.

Chatbots and other alternatives to phone assistance, such as messages or callbacks, can cut down on wait times and relieve agents of some of the workload of their job. Automated time estimations in real-time can also be helpful. By giving customers broader access to knowledge bases and empowering them to handle problems on their own, self-service options can enhance customer experiences. Additionally, this allows agents to concentrate on more challenging jobs.

Enhancing customer assistance, personalizing interactions, resolving pain spots, assessing customer feedback, and optimizing procedures can all be implemented to raise customer satisfaction. They are offering self-service options and clear documentation to allow customers to find answers to their questions or solve problems independently, as well as using customer insights to drive innovation. Identify opportunities to enhance your products or services based on customer needs and market trends.

Customer Satisfaction Score vs Net Promoter Score 

The differences between both the concepts are given as follows:

  • Net Promoter Score (NPS) measures the overall perception a customer has of the brand, not just their impression of a specific interaction or purchase. Whereas, CSAT measures the level of satisfaction a customer has with a company, service, or product.
  • NPS is commonly used by businesses to evaluate the likelihood of customers referring others. Moreover, businesses typically use CSAT to measure customer satisfaction levels.
  • Hence, NPS is beneficial for assessing product/service quality, customer support, and overall customer experience. Companies also view NPS as a growth indicator, as it indicates the likelihood of customers recommending their business to others. In addition, CSAT scores offer valuable insights into specific aspects of the customer experience and can be applied to various types of customer interactions.

Frequently Asked Questions (FAQs)

How often should customer satisfaction be measured?

Customer satisfaction should be measured regularly to track trends and identify areas for improvement. The frequency of evaluation can vary depending on the business, but it is common to measure CSAT on a quarterly or annual basis.

What are the disadvantages of CSAT?

CSAT has some disadvantages, including its limited scope, potential bias in responses, and lack of context. CSAT surveys often focus on specific interactions or experiences, which may not capture the overall customer sentiment. Additionally, CSAT scores may need to provide detailed insights into the underlying reasons for customer satisfaction or dissatisfaction.

How does CSAT affect revenue?

CSAT can indirectly impact revenue by influencing customer loyalty, repeat purchases, and recommendations. Higher CSAT scores often correlate with increased customer loyalty and retention, leading to higher customer lifetime value. Satisfied customers are more likely to support the brand further, leading to positive word-of-mouth marketing and potential revenue growth.

This article has been a guide to what is Customer Satisfaction Score. We explain how to calculate & improve it, its comparison with net promoter score, and examples. You may also find some useful articles here –

Reader Interactions

Leave a Reply

Your email address will not be published. Required fields are marked *