How to Measure Customer Satisfaction with NPS, CSAT or CES
One of the most important aspects for all businesses large and small is data, particularly on customer satisfaction. Successful businesses use data to drive all of their decision making. Financial data helps a business set price points, careful analysis of results determine the best marketing strategies, and perhaps most importantly, customer feedback influences almost everything about how a successful business operates.
There are several ways to measure customer satisfaction, however there are generally three particular metrics which inform a lot of our business decision making. In this article we’ll take a look at Net Promoter Score (NPS), Customer Satisfaction (CSAT) and Customer Effort Score (CES) to find out what they are and how you can use them effectively to grow your business.
What are Customer Satisfaction Metrics Used For?
Customer satisfaction metrics are used in all types of business to measure various points of the customer experience. As we know, businesses are investing considerable time and energy into creating positive experiences for their customers, whether it be making online purchases easy or making the return and refund process satisfactory.
So, how do you really know if customers are having a positive experience? Total sales don’t tell the entire picture because you may only be converting 10% of leads into actual sales. Low rate of refunds also doesn’t shed much light – it could mean customers love your products but find your website clunky.
The best way to find out what your customers are experiencing is to ask them, and that’s where the three main customer satisfaction metrics come into play. They’re all universally acknowledged, but the way businesses use them can vary greatly.
Net Promoter Score® (NPS®)
What is NPS?
Net Promoter Score (NPS) has been a common metric used since 2003. NPS is specifically designed to assess customer loyalty. It does this by asking the question “How likely are you to recommend this company/service/product to a friend?”
The scale used is 0 (not at all likely) to 10 (extremely likely). Businesses love this metric because it measures overall satisfaction rather than just satisfaction with one aspect of the customer experience. Also, repeat customers are often considered your most valuable customers, so measuring customer loyalty is integral.
How to Calculate NPS
NPS responses are broken up into three groups:
0-6 – Detractors
7-8 – Neutral
9-10 – Promoters
Your total NPS score is calculated by subtracting the percentage of detractors from promoters. For example: (80% promoters – 20% detractors = NPS score of 60)
How to Use NPS
NPS scores are favoured by many businesses because firstly it’s very easy to understand. High NPS scores reflect that you’re likely to get repeat business and customers are likely to share their positive experience online and with friends. A low loyalty score means you have some work to do in improving your customer experience. This is where CSAT and CES can be used in conjunction, to pinpoint the main issues. Of course, taking action to improve NPS is crucial.
Customer loyalty questions can be measured after an individual customer interaction, however it is particularly valuable if you are doing annual or half-yearly surveys to gauge customer satisfaction, as it doesn’t necessarily rely on just one particular interaction.
- Neutral scores can make it difficulty to measure NPS against other companies. For example, Company A may score an NPS of 30 by assessing 60% promoters – 30% detractors (only 10% have answered neutrally). Company B may have an NPS of 30 with 35% promoters – 5% detractors (because 60% answered neutrally). It can be hard to tell which is best – higher percentage of promoters or higher percentage of neutral/lower percentage of detractors.
Customer Satisfaction (CSAT)
What is CSAT?
The CSAT metric (short for Customer Satisfaction) asks customers “How would you rate your overall satisfaction?” While this may appear similar to NPS in the sense that it seeks to find out how satisfied customers are overall, there are some differences. While it does measure a customer’s relationship with your company in a similar way that NPS does, CSAT can be used after individual customer interactions to determine, for example, how you performed on one particular sale.
How to Calculate CSAT
Responses are measured on a five-point scale of very unsatisfied, unsatisfied, neutral, satisfied, and very satisfied, or 0-5 respectively. A satisfied customer is one who answers ‘satisfied’ or ‘very satisfied’ (or 4-5).
Therefore, a percentage is calculated with the following formula: (Satisfied customers) / (total number of responses) x 100 = % of satisfied customers.
How to Use CSAT
CSAT is considered both a customer relationship metric and also a touchpoint metric. This means you can measure overall satisfaction on an annual survey, but also after individual interactions.
In many ways, it is a metric that can also provide the reasons for your score. For example, you conduct an annual survey and have a low CSAT score of 40%. Naturally, you’ll want to find out why. If you’ve been conducting smaller web or pulse surveys throughout the year, you may be able to drill down into which parts of the customer experience people are unsatisfied with. If in-store customer interactions score well, and online sales score poorly, technology is your issue.
- The wording of the CSAT question isn’t standardised, so it can vary from business to business.
- A general customer satisfaction score doesn’t tell the entire picture, because it may not necessarily lead to an increase in referrals and customer loyalty.
Customer Effort Score (CES)
What is CES?
The CES measures how easy a customer found their interaction with your business. To assess this measure, customers are asked to rate their agreement with the statement, “The company made it easy to handle my issue.” A seven-point scale of 0 (strongly disagree) to 7 (strongly agree) is used to determine results.
The idea behind it is to measure how easy your company makes it for your customers to deal with you, and this can include anything from making a simple enquiry through to making a purchase or completing a product return.
How to Calculate CES
The most common way to measure CES is with the simple formula: (Sum of all responses) / (number of responses). For example, if your 100 surveys generate a total sum of 550, your calculation looks like this: 550 / 100 = 5.5
How to Use CES
Asking questions about how easy a customer found their interaction is a great way to drill down into specific aspects of the customer experience. As a touchpoint metric, you’re looking at individual customer interactions so it can be used to assess individual points of the customer journey. It can also be used to provide context around broader metrics like NPS and CSAT.
- Ease of service doesn’t necessarily lead to customer loyalty.
Which Metric is Best to measure Customer Satisfaction?
Net Promoter Score is by far the most popular metric being used today, because of the inherent importance of customer loyalty. In today’s world of social media, the importance of having customers advocating for your business has never been more important.
Having said that, all metrics have different uses, and what is best for one business may not be good for others. What we mean here is that every business has point of difference. Some companies are competitive due to low prices, and in some cases, overall customer satisfaction may not affect their bottom line as long as people can get their products cheaply. Service industries on the other hand, a lot of emphasis is placed on the whole experience (think hotels or restaurants – the food might be great but if the staff are getting orders wrong, aren’t friendly or overcharge you, your overall satisfaction and loyalty is going to be low).
In most cases, it’s important to use all three metrics because in some way they will all inform you around different business outcomes. Your overall satisfaction and loyalty scores (CSAT and NPS) can be explained by finding out your CES score in certain aspects of your business. From there, you can determine where you need to improve to create a better overall customer experience.
As experts in customer surveys and loyalty metrics, Spark Chart can help you get the most out of your customer satisfaction data. If you want to know what your customers are really thinking, so that you can turn detractors into promoters and grow your business, contact our team of survey consultants today and find out how we can help.