CSAT Score: The complete guide to Customer Satisfaction index
Learn what a CSAT score is, how to ask for it and the several methods of calculation
What does CSAT stand for?
CSAT stands for Customer Satisfaction and it refers to one of the most widely used indicators in the Customer Experience practice: the CSAT Score.
What is the CSAT Score? Definition and purpose
In order to keep your business healthy you need to make sure to either fulfill or overcome your customer’s expectations. In a nutshell, to make your customer “happy”. This is where customer satisfaction score comes in. The Customer Satisfaction Score is a tool to measure how satisfied your customers are with your product/service. Your average customer satisfaction score reflects your customers´ experience with your product and it can be a benchmark of how well your business is going to do.
The importance of Customer Satisfaction
When a consumer buys a product, she has certain expectations. If the product meets the expectations, the customer won't jump with glee saying “ Isn't it wonderful, it actually worked”. Good quality services/products are the norm these days, not the exception. With hundreds of astounding options on the table, we quickly get used to having what we want and when these expectations fail, our experience lingers. The bar is getting higher and higher. It's important that we stay above this bar to delight our customers. It’s vital to adapt to these standards otherwise a significant chunk of customers would leave. This observational truth is confirmed by scientific proofs: in fact Research suggests that customer satisfaction is related to brand loyalty which impacts directly on profitability.
To understand the ebb and flow of our customers’ expectations, we need to feel their pulse and monitor the change. Information like this is hard to get, but once obtained, it is indispensable.
The science behind the Customer satisfaction
There are a lot of factors contributing to the success and failure of business, customer satisfaction is one of them. The American Customer Satisfaction Index (ACSI) cause and effect model developed at the University of Michigan is an equation which links customer satisfaction to its determinants namely:
- Perceived quality
- Customer expectations
- Perceived value
And, in turn, to its consequences:
- Customer loyalty
- Customer complaints
It is an excellent model to gauge a company's profitability. The survey measures how the drivers of satisfaction impacts the output.
According to the model, when the customer buys the product or service, it leads to perceived quality and perceived value which includes his prior experience. The recent customer consumption experience and the customer's evaluation has an impact on the perceived value. So, perceived quality generates perceived value. The ACSI model predicts that as both perceived value and perceived quality increase, customer satisfaction should increase. Not to forget, all the three drivers of satisfaction impact customer satisfaction which in turn leads to complaints or loyal customers. Customer loyalty is a vital index of the model as it is a factor of profitability.
Customer Satisfaction question
You might be wondering how customer satisfaction score is achieved. Formally, at the end of customer feedback surveys the following question is asked:
“How would you rate your overall satisfaction with the service you received?”
Customers rate their satisfaction on a five-point Likert Scale (or ten-point scale):
- Very unsatisfied
- Very satisfied
In alternative to the classical likert scale you can also see the scale converted into happy and unhappy smileys or directly into numbers.
CSAT Score Calculation
Here are some tangible ways to uncover your customers’ perspective. There are different formulas to calculate the CSAT Score:
The results of the respondents are converted into numbers and averaged in order to obtain the average. In a 5 point scale 1 will correspond to the lowest level of satisfaction and 5 to the max satisfaction score.
For example, let’s say that we asked our question to four customers and they gave us the following responses.
We would simply divide the sum of the scores (14) by the number of respondents (4):
Average CSAT Score→ 14/4 = 3,5 out of 5
2. Top 2 Boxes (T2B)
The second method to obtain the CSAT score is to focus on the number of respondents that declares to be either satisfied or very satisfied. Using a 5 points scale those that rated the service/product 4 and 5 out of 5. From there the name “Top 2 Boxes”.
The Top 2 Boxes score (also T2B) is usually expressed as a percentage from 0 to 100%.
Top 2 Boxes = (Satisfied + Very Satisfied customers) / (Number of respondents) x 100
Coming back to the same example seen before, 2 respondents out of 4 have pressed the satisfied or very satisfied button (4 and 5), then your T2B CSAT Score will be 50%.
Why? Well, just take a look at the T2B CSAT Score calculation below.
Top 2 Boxes CSAT Score → 2/4 x 100 = 50%
3. Bottom 2 Boxes (B2B)
The third formula to calculate the Customer Satisfaction Score is actually the exact opposite of the Top 2 Boxes. Here, we take into account only the bottom two lowest possible response ratings. In a 5 points scale the rating of 1 and 2 out of 5 are marked as ‘Bottom 2 box score’.
The Bottom 2 Boxes score (also B2B) is usually expressed as a percentage from 0 to 100%.
Bottom 2 Boxes = (Unsatisfied + very unsatisfied customers) / (Number of respondents) x 100
What is a good CSAT score?
Customer satisfaction scores are dependent on country and industry. This is why a general guideline shouldn’t be taken too strictly. It is recommendable to create your own benchmarks weighting the specificity of the business you are operating in.
Another general tip is to stress the changes that happen over time. Even a small change in the CSAT score may be the signal of a change in the churn rate (for services) or in the repetition rate of the purchase (for products).
CSAT Score By Industry
Below you can find several industry benchmarks for CSAT score, according to the American Customer Satisfaction Index.
How to improve Customer Satisfaction score?
Customer Satisfaction score is directly related to Customer retention and loyalty. We have also seen the importance of keeping track of these scores. Using constant customer feedback and customer satisfaction surveys, one learns how to improve their scores and keep abreast with the customer expectations, business changes and market trends. So what’s the bottomline? Here are the proven tricks:
Step 1. Train employees
Above all, employees are an asset of the company, and to let them help you, you must help them. Basically, let them know the inside-out of the customer experience, customer insights and their impact on experience. According to the American Society for Training and Development (ASTD), organizations that invest in employee development enjoyed higher profit margins of 24%. So, the importance of employee training has a significant impact on customer satisfaction.
Step 2. Deep dive
After having the customer feedback in hand, you should analyse all the facts, use predictive analytics and statistics to decide the next course of action in the best interest of customers. According to the Harvard Business Review understanding customer analytics leads to an improved customer satisfaction score. A Case Study conducted by ComTec, shows how the CSAT rating can be leveraged by predictive analytics.
Step 3. Be responsive
You need to be transparent and deliver what is promised. In this case you need to listen instead of hearing and make the necessary changes. The customer should not feel like they are bashing their head against a brick wall. As a company, you should tear down the wall. According to the Forbes Survey, effective listening leads to customer retention.
On a final note The Customer Satisfaction score has a more dynamic spectrum, and it is just not limited to a quantity. It is one of the viable tools to improve customer satisfaction, and know the hearts and minds of customers. It all depends on how you work on that score to improvise it by doing more research and not just analyzing numerical data.
Choosing the right partner to help you implement a CSAT recurrent survey is as important as to know the theory behind the score. Why should you consider Ratenow as a partner in the implementation of Voice of the Customer/patient programs:
- We have years of experience in the implementation of Voice of the customer programs for small and large businesses.
- Our platform, Ratenow Analytics is thought to give you actionable information for your business decisions.
- We can provide you with country and industry specific benchmarks.
- We provide only customized solutions
Do not hesitate to get in contact with us. We are eager to know about your project and explain how we can help.