CSAT vs NPS - Choosing the right metrics to measure customer experience
There are plenty of different ways to approach your customers to measure their experiences. Two of the most popular are Customer Satisfaction Score, referred to as CSAT and Net Promoter Score, known as NPS. Those that have used one or the other in the past will often prefer it due to familiarity, but there are distinct differences between the two approaches.
So how do you know which one is right for you and your business? Below is some background of each of the scores, the benefits of each and what we think the best approach is for any business to take.
Customer Satisfaction Score (CSAT)
A Customer Satisfaction Score (CSAT) will show you how satisfied your customers are with your product, service, interaction or overall business.
What is CSAT?
A Customer Satisfaction score is gathered by asking your customers how satisfied they are with your product or service. It can be combined within a broader survey with other questions or it can be asked as a standalone question. Usually, respondents are asked to provide a rating from 1-5, unsatisfied through to very satisfied.
Measuring your customers’ satisfaction allows you to hone in on specifics. Rather than their overall feeling of your business, you can relate it to the specific product, service or interaction if you choose. It can quickly highlight areas or times that you need to improve the interactions with your customers.
Why is CSAT important?
Using CSAT after an interaction can help to gain an understanding of the “here and now” view of your business. Whether you tailor the question to be about a specific interaction or your overall business, because you’re asking about satisfaction, it tends to give a reflection on how customers see your business through the lens of now.
Also because of the flexibility of the question, you can gather CSAT data throughout the customer lifecycle and compare it. Is there a drop off after a certain time period where they’ve forgotten about you, or is your service not as good any more?
What is the metric used for measuring CSAT?
To measure your CSAT, if using the standard rating of 1-5, you want to begin by calculating how many respondents gave you a 4 or 5. Divide this by the number of respondents you have, then times by 100 to show you the number of satisfied customers you have as a percentage.
If using a different scale, you can modify how many respondents you include in your calculations. The responses of 4 (satisfied) and 5 (very satisfied) have been shown to be accurate in predicting customer retention, which is an important metric for most businesses. If your customers are at the very least “satisfied” then they are unlikely to switch brands without a strong incentive.
When should you measure CSAT?
CSAT can be used as an overall relational metric, reaching out to your customers on a regular schedule. Alternatively, it can be used on a transactional basis, asking customers for feedback after a certain interaction. Depending on what you want to measure, what your goals are and what question you are asking will help you define the best way to implement CSAT for your business.
Net Promoter Score (NPS)
Another common way to understand your customers’ experience is to use Net Promoter Score (NPS) to gain insights into how they view your business.
What is NPS?
NPS is a metric focused on if your existing customer base would recommend you to friends and family. The power of NPS is the value consumers place in recommendations from other people.
It also shows their loyalty to your business overall, rather than how a specific interaction went. This broad view of your business allows you to take a more holistic view and can highlight segments where you need to improve the customer experience as we all want more people who would recommend our business to others. You can work out how to calculate your NPS score here.
Why is NPS important?
NPS is an important metric as it measures customer loyalty. Many studies have shown it is much cheaper to keep existing customers rather than finding new ones. So understanding more about how loyal your customers are and what you can do to increase this can help reduce customer acquisition costs and reduce churn.
By asking the follow-up question, alongside a simple quantitative metric, you can also gain ideas on how to improve your NPS. Those that have given you a low rating can share with you why, which can show you what you need to change. High scores show you what you need to keep or roll out more broadly.
H3: What is the metric used for measuring NPS?
To measure your NPS, you ask your customers how likely they are to recommend your business, on a scale of 1-10. Scores from 1-6 are classed as Detractors, 7-8 are Passives and 9-10 are Promoters. To calculate your score, subtract the percentage of Detractors from your percentage of Promoters, ignoring the Passives. Your NPS score can be anywhere from -100 to +100 but is most likely to fall somewhere in the middle.
Although it can be tempting to compare your score to other businesses, it is best to only do so within your industry and geographical location. In some industries or geographical location, scores will be low as people are unlikely to make any sort of recommendation.
When should you measure NPS?
There are two different schedules you can use when measuring NPS. The first is transactional and can be scheduled to be asked after an interaction such as a service request, purchase or phone call. This helps gauge how the interaction specifically impacts the overall brand reputation and can highlight areas that need improvement.
The other option is focused more on the relational nature of your interactions with customers and can be rolled out on a monthly, quarterly or annual basis. This depends on what is most efficient for your business. If you’re making a lot of changes and improvements, you may wish to conduct surveys on a more regular basis to see the impacts.
CSAT vs NPS: Which one should you use?
|The simplicity. Using a single data point makes it easy to compare customers during their lifecycle or after specific interactions. It’s also easy to benchmark against others in your industry.||With a single data point, it can be hard to dig into why people responded in a certain way. Without the right follow-up question, you can be left in the dark.|
|Better response rates. People understand the question asked in NPS surveys and this generally leads to higher response rates to your emails.||It’s measuring intention. Just because a customer says that they would recommend your business, doesn’t mean that they’re actively doing that.|
|Specificity. You’re able to see how customers feel about your business after a certain interaction which can highlight which need improvement.||Lack of applicability. Just because a customer was satisfied with the interaction or with your product, doesn’t necessarily mean that they'll be a repeat customer.|
|Versatility. You can tailor the question to be more relevant depending on who and when you’re asking.||Narrow focus. CSAT usually is only asking about one interaction which may be opposite to how they feel about your business overall.|
How NPS and CSAT can be used together
A single measurement isn’t going to tell you the whole picture of what a customer thinks about your business. To counteract the pros and cons of both styles of customer experience surveys, it’s a great idea to use them together to get a more holistic view.
Because NPS is generally a better reflection of customers' overall view of your business, it can give you an idea of broad customer loyalty and brand perception. On a more tactical level, the CSAT data can highlight what is happening on a day-to-day level and what interactions are leading to which NPS results.
By combining what information you’re asking from your customers you can see the impacts of single interactions, changes that you make and improvements to the customer experience. Your CSAT may improve quickly but NPS can be slower to improve as customers are reflecting on all interactions with your business.