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Happy customers are loyal customers, but how do you know what they feel? The Customer Satisfaction Score provides important clues to boost your business.

Customer Satisfaction Score (CSAT): The Happy Customer KPI

Why Customer Satisfaction Score is Important

Customer satisfaction has always been crucial to the health and growth of a business – but in this age of social media, unhappy customers wield greater power than ever before. An angry tweet, blog post, or Facebook rant may go viral, causing irreversible damage to a brand. On the flip side, satisfied customers – your brand “ambassadors” – often promote and recommend their favorite businesses to others, increasing both loyalty and revenue.

According to Forbes.com, poor customer service costs $338.5 billion globally each year. In the United States alone, that’s about $83 billion, or an average of $289 per lost relationship, making customer satisfaction research a hugely important industry.

Before the 1980s, businesses largely focused on the quality of their products and were rarely consumer-oriented. This approach gradually changed as big-name consultants and management gurus gained prominence and advocated the importance of good customer relations.

Later developments included Computer Assisted Telephone Interviewing (CATI), new B2B research techniques, and the birth of advanced CRM systems. Now much of today’s customer satisfaction research takes place on-line.

Emolytics is at the forefront of new trends in analytics and data collection. Our scientifically designed feedback tool is highly effective at measuring Customer Satisfaction Score (CSAT) and other key performance indicators (KPIs) on a continuous day-to-day basis. Unlike conventional measurement tools, many of which only generate a few reports each year and do not provide sufficient data for sound decision-making, our high customer response rate means real-time KPI data you can implement immediately in order to improve customer service.

How the CSAT Performance Indicator is Calculated

You may be wondering how customer satisfaction is actually measured. Typically, some variation of the following question is asked at the end of a customer feedback survey:

“How would you rate your overall satisfaction with the service you received?”

CSAT scores are expressed on a scale of 0 to 100 percent, with a score of 100 representing tota

CSAT scores are expressed on a scale of 0 to 100 percent, with a score of 100 representing tota

Respondents rate their satisfaction on a scale of 1 to 5 as follows:

  1. Very unsatisfied
  2. Unsatisfied
  3. Neutral
  4. Satisfied
  5. Very satisfied

The results are then averaged for a composite Customer Satisfaction Score.

More commonly, however, CSAT scores are expressed on a scale of 0 to 100 percent, with a score of 100 representing total customer satisfaction.

This is done by plugging the number of satisfied customers into the following formula, keeping in mind that only respondents rating their satisfaction as “4” or “5” should be included:

# of Satisfied Customers
————————————————-
# of Satisfaction Survey Responses
X 100 = % of Satisfied Customers

This method of calculation is called the “top-2-box” measure of customer satisfaction because it only takes into account the two highest possible response ratings: “satisfied” and “very satisfied.” Studies have shown that the two highest values on customer feedback surveys are the most accurate at predicting customer retention.

Pros and Cons of the Customer Satisfaction Score

All KPI metrics have their pros and cons, and the Customer Satisfaction Score is no exception.

The Good:

  • CSAT surveys are relatively cheap and easy to implement. The quantitative data they provide is easy to understand and can be used to quickly identify trends and possible solutions.
  • CSAT scores are easily benchmarked. The American Customer Satisfaction Index provides on-line stats dating back to 1995, which can be used to compare your organization’s scores with competitors industry wide.
  • Customers feel respected when asked to offer their opinions. The opportunity to provide feedback – even if negative – can itself be a means of improving customer relations.

The Bad:

  • Satisfaction is a subjective concept, and the word “satisfied” means different things to different people. To some, it might mean that their experience was average or okay. To others, it might mean that every aspect of their experience was ideal or perfect.
  • Satisfaction occupies only a small space in the vast spectrum of emotions one might feel. The ability to measure a customer’s other emotions, both positive and negative, is thus crucial to deducing true satisfaction.
  • Customers in the “neutral” and “dissatisfied” categories often don’t fill out surveys, making the potential for skewed results high.

How to Implement CSAT as a KPI in your Business

High CSAT scores are the goal of every business or organization, but what you do with your score is just as important as the score itself. Here are just a few practical examples of how Emolytics partners are leveraging their CSAT scores in order to run their businesses more efficiently:

CSAT to Handle Customer Complaints

Most experts agree that CSAT scores of 3 or less require follow-up action. For best results, the following figures should be tracked:

  • The number of complaints or negative ratings received;
  • How long it takes to respond to an issue (companies responding within 10 hours often enjoy CSAT scores of over 90%);
  • The percent of issues resolved (within a single interaction is ideal).

CSAT in Product Development

Feedback from customers can help you pinpoint problems with new and existing services and products. By measuring satisfaction each time you make an improvement, you will better be able to meet customer expectations.

CSAT to Improve Customer Loyalty

Engaged customers are loyal customers, and it should be your mission to engage them on every level – listening to their feedback, offering them incentives, and keeping them informed each time you implement a new suggestion. Studies show clear links between customer satisfaction and other metrics, such as willingness to pay (WTP) and customer retention.

CSAT to Engage Employees

Use CSAT to Engage Employees

Use CSAT to Engage Employees

Customers are not the only ones needing engagement. A study conducted across 472 restaurants belonging to a national chain in the United States examined the relationship between employee and consumer satisfaction. Data was collected from 342,308 customers and 3,009 employees over a period of one year.

For restaurants with CSAT scores above the chain average, 78% of the employees also expressed a level of satisfaction that was above the average. In contrast, in restaurants with CSAT scores below the average, only 21% of employees expressed a high level of satisfaction.

What is the situation in your own organization? CSAT scores provide important clues. If scores are low, look to your employees. How do they feel about their working conditions, including salaries, benefits, working hours, and their relationships with management and co-workers?

3 Quick Wins to Turn your CSAT Survey into a Growth Hack

  1. Ask at the right time. Surveys should be done when an interaction is still fresh in a customer’s mind. Waiting too long often results in a lower response rate and the tendency to “rationalize” answers. Quick “emotion” based answers offer the most accurate results.
  2. Dig deeper. A good CSAT score does not tell the whole story. Customers may be satisfied regarding a particular service, but that does not automatically mean they are loyal. The CSAT score should thus be viewed alongside other KPIs for a more complete picture.
  3. Keep customers informed. One study of European companies showed that 95% collected customer feedback, but only 5% told their customers of any changes they had implemented. Keeping customers in the loop shows that you value their input.

Getting Started with Customer Satisfaction Score

The Customer Satisfaction Score is much more than just a number. It is a highly actionable consumer-oriented metric that reveals important information about your business. Use it to improve customer relations, streamline training procedures, develop new products or services, and – ultimately – to boost your bottom line.

Is your score increasing? Good news, that means you’re doing something right! But if you find your score dropping or even remaining stagnant, that means it’s time to start taking a serious look at how you handle customer service. The Emolytics feedback tool works in conjunction with the CSAT KPI to capture authentic real-time emotions regarding how your customers feel about the services you provide. The resultant “Emoscore” works as a guide to help you implement meaningful changes that can impact the future performance of your business.

Ready to get started? Request a free consultation with one of our KPI experts. Or just try our tool for free!

CTO and Co-Founder at Emolytics, David Frenay is an Engineer, Physicist and Entrepreneur. He is Passionate about data, web dev, psychology, entrepreneurship and complexity science.

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