The long-debated question regarding customer satisfaction comes down to CSAT vs. NPS. CSAT stands for customer satisfaction score, while NPS stands for net promoter score.
Both metrics have their own strengths and weaknesses. To determine the customer success metric relevant to your business, you need to look at how each aligns with your objectives.
NPS might be the best choice if you want to improve the customer experience and increase customer loyalty. But CSAT is more relevant if you’d like to measure the effectiveness of a specific customer interaction’s effectiveness. One metric should not exclude the other.
CSAT and NPS are very effective when used together. For example, our support team has built an automated workflow to measure overall customer satisfaction with NPS surveys. They also use CSAT to evaluate specific interactions (e.g., after they close a support ticket, evaluate a new product feature, etc.).
Jump to section:
- CSAT vs. NPS: Key differences
- What is CSAT, and how to calculate it?
- What is NPS, and how to calculate it?
- CSAT vs. NPS: Which customer success metric is right for your business?
CSAT vs. NPS: Key differences
Both CSAT and NPS are indexes that measure customer satisfaction, but they have different formulas and interpretations.
CSAT measures customer satisfaction by asking clients to rate their satisfaction level on various scales. It provides an immediate snapshot of customer sentiment and doesn’t include predictions or evolutionary trends.
NPS measures customer loyalty by assessing how likely clients are to recommend a product or service to a friend or colleague on a certain scale (usually ranging from 0 to 10). It’s a forward-looking metric that measures how likely your customers are to engage with your brand in the future.
Summing up, CSAT is a measure of how satisfied customers are with their experience with your product, while NPS is a measure of how likely they are to recommend your company’s products or services to people they know.
Now, let’s break down each metric individually to see how each contributes to understanding customer satisfaction and loyalty.
Customer satisfaction score (CSAT)
The best way to provide continuous customer satisfaction is to monitor your customers’ needs and expectations. Let’s examine how CSAT helps you achieve that and how you can correctly assess it.
What is CSAT?
CSAT determines how satisfied customers are with your company’s products or services. You can use it to identify areas for improvement.
It has different variations, as per below.
- OSAT score: OSAT stands for “overall satisfaction”. It is a measure that assesses how satisfied customers are with your product, service, or brand overall. In customer experience management, the OSAT meaning involves understanding customer satisfaction across various touchpoints.
- NSAT score: The NSAT meaning refers to “net satisfaction,” focusing on balancing satisfied and dissatisfied responses. In various industries, NSAT is a crucial indicator of satisfaction, reflecting the percentage of respondents who are “satisfied” or “very satisfied.” It provides valuable insights into customer sentiment and loyalty potential.
You can find your CSAT value by surveying customers and asking them to rate their level of satisfaction on a scale from 1 to 10. Other types of scales include a 1-5 ranking or even open-ended questions to measure client satisfaction levels.
You can also measure CSAT on a two-level rating scale. This scale offers customers the option to choose between “satisfied” and “not satisfied.”
Albeit less informative, the two-level rating scale gives you a basic understanding of customer satisfaction, and it can be followed up by an open-ended question. Two-level rating scales are excellent for gathering clear answers about very specific aspects of the customer experience.
How to calculate the CSAT rating
To calculate your company’s CSAT, you need to divide the number of satisfied customers by the total number of responses you received and multiply the result by 100.
Another way to calculate your CSAT is to express the number of satisfied customers as a percentage. For example, if a company surveyed 100 customers and 80 of them responded with a score of 8 or higher, the company’s CSAT rating is 80%.
What is a good CSAT score?
As you’ve probably guessed, CSAT scores reflect the share of satisfied customers out of the total. Although “good” CSAT scores may differ across sectors, higher percentages are generally a positive sign.
A recent report shows how the average customer satisfaction scores vary by industry:
Image source: retently.com
How to use CSAT
There are several ways you can use your company’s CSAT to improve your bottom line.
- Use the feedback from your CSAT survey to improve your customer service. This will ensure that your customers have a positive experience, which leads to repeat purchases and enhances customer retention.
- Further analyze the results to identify areas where customer satisfaction is lacking. Make changes to your support processes, products, or services to better meet customer needs.
- Conduct CSAT surveys regularly to track changes in customer satisfaction over time. This will help you identify the impact of any changes you’ve made and pinpoint any new areas you can improve upon.
- Use the CSAT results to develop personalized client strategies that target crucial segments of your main audience and bring increased customer loyalty.
How to improve your CSAT
Here are the most effective ways to improve your CSAT.
- Make sure that your staff is up to date with their training and equipped to handle customer complaints and questions in a professional manner. Zappos improved its CSAT score using minimal resources simply by focusing on providing excellent customer service.
- Address issues quickly. When a customer has a problem, address it as soon as possible to minimize dissatisfaction. Even if you don’t have a solution available yet, answering their queries will show that you’ve taken an interest in their concerns and are doing your best to remedy the situation.
- Personalize the customer experience to create a sense of loyalty and trust.
- Encourage customers to share their opinions and concerns and take that feedback into account. Amazon does a great job at implementing customer feedback: it offers a customer feedback forum for idea submission and has installed an “A-to-Z Guarantee” policy that enables clients to file complaints about third-party sellers.
- Follow up with customers after an issue has been fixed to ensure that they are satisfied with the outcome.
CSAT pros and cons
Like any metric, CSAT is not infallible. Here are the main pros and cons of using it to assess customer satisfaction levels.
- It’s a very straightforward metric everyone can understand and use to improve their businesses.
- You can apply different scales to different audiences — personalization will increase response rates.
- You can customize questions to get more accurate answers and fine-tune your product accordingly.
- Results might lack accuracy because most people refuse to take surveys. This means that the percentage of clients who rate your services may not be indicative of your company’s efforts or overall performance.
- CSAT does not measure customer loyalty. It simply indicates customer satisfaction ratings after specific interactions.
- The CSAT score is indicative of a passing state: It assesses how clients feel about your product on the spot, but it fails to provide insight into its potential evolution.
Net promoter score (NPS)
NPS offers actionable insights into how to build the best possible customer experience. Let’s see how you can use it to grow your business.
What is NPS?
NPS predicts business growth and measures customers’ willingness to recommend your company’s products or services to others.
It is based on single-question surveys that ask customers to rate their likelihood of recommending your company on a scale of 0 to 10, with 10 being the most likely.
How to calculate the NPS rating
You can easily calculate your company’s NPS by subtracting the percentage of Detractors from the percentage of Promoters. A positive NPS indicates that more customers are Promoters than Detractors, while a negative NPS indicates the opposite.
🎭 Our NPS calculator provides an easy way to track customer sentiment using your latest feedback numbers.
What is a good NPS score?
A good NPS score shows that your customers are happy with your company’s products or services. Generally, any score above 0 means you have more promoters than detractors, which is a positive sign.
In 2024, business-to-business (B2B) industries have shown diverse average NPS scores:
Image source: retently.com
How to use NPS
Make better business decisions and boost your return on investment (ROI) by following these steps.
- Use collected data to segment your customer base and identify key clusters that are most likely to generate the highest ROI. This will help you calibrate your marketing and sales efforts more effectively.
- Communicate with your customers to understand their needs and expectations. This will strengthen your business relationships and increase your customer base’s loyalty.
- Monitor your competitors and understand how they are performing in terms of customer satisfaction. This will give you a better understanding of where you need to focus your efforts to improve your product or service.
How to improve NPS
There are multiple ways to improve your company’s NPS.
- Create and foster strong client relationships by developing personal connections. This is easily achieved using personalized communications and by rewarding loyal clients with discounts, exclusive deals, etc.
- Focus on improving the quality of your product. Use the feedback you receive to address clients’ concerns and adjust your product to better meet their needs.
- Ensure that customer service is as close to flawless as possible. Offer timely and effective support, regularly train agents, and include chatbots to ensure 24/7 customer service.
🤝 At Textmagic, we focus on staying in touch with clients on every channel. You can, too, by using integrations to receive prompt notifications for client follow-ups (including on Slack).
NPS pros and cons
These are the main advantages and disadvantages of using NPS to assess and improve customer satisfaction levels.
PROS
- NPS provides actionable data that you can use to track your company’s performance and make tweaks.
- It is a valuable tool to use for customer acquisition and retention.
- It allows you to match your scores against industry benchmarks and see where there is room for improvement.
CONS
- Because NPS is based on single-question surveys, it lacks details about what specifically your customers liked or disliked. This makes it harder to adjust your services to clients’ needs.
- It lacks consistency across every client segment. For instance, first-time buyers tend to be more categorical and rely on a single experience when rating a product, while repeat customers already have a history with the brand and are more likely to recommend it to friends or family.
- It covers only one aspect of the customer satisfaction spectrum and excludes the rest, such as quality, customer service, or ease of use.
CSAT vs. NPS — which one is right for you?
In the end, it’s not really a matter of CSAT vs. NPS, but a matter of CSAT and NPS working together. If you’re looking to find out which product features are of interest to your clients and where to invest more cash flow for R&D, CSAT is the metric to check out. If you want to get an overview of your business as a whole, NPS is better.
Another difference between the two is their versatility. NPS is usually limited to single-question surveys, while CSAT includes different types of questions.
You can include a limited number of open-ended questions in an NPS survey, but this can be more time-consuming and may lead to lower response rates. It will, however, offer valuable insights into customer satisfaction and areas for improvement.
Either way, both metrics will offer relevant insight into customer satisfaction levels and how you can improve on them. Ideally, you should look into both (and consider other customer success metrics as well) to grow your business sustainably.
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