4 Customer Satisfaction Metrics (NPS, CSAT, CES, & More)
Ah, unhappy customers. The not-so-silent killer of business.
Our teams may deliver, innovate, and grow... but if customers aren't happy, we won't be doing it for long. Can't improve what you don't measure, so...
How do you actually measure customer happiness?
With customer satisfaction metrics.
There are dozens of them, but fret not, we've highlighted four key metrics easy to understand, track, and improve upon.
All right, let's get you the measuring tools you need to improve customer satisfaction.
But first, a definition
What are customer satisfaction metrics?
Customer satisfaction metrics are what companies use to understand how happy customers are with their product, customer service, and overall experience. These metrics provide insights into how well your organization does at delighting customers.
Customer satisfaction metrics also play a crucial role in developing your customer experience strategy. They’re a critical feedback loop that allows you to understand how your customers perceive your business and customer support, then to make course corrections where needed to keep improving.
The 4 main customer satisfaction metrics (and when to use them)
Some customer satisfaction metrics shed light on the performance of specific employees and departments, while others serve as indicators of the overall customer experience, reflecting the efforts of the entire organization.
Let’s dig into the key customer satisfaction metrics and explore benchmarks, examples, and situations where each of them is particularly useful.
1. Net Promoter Score (NPS)
NPS score is a customer satisfaction metric that attempts to gauge your customers’ satisfaction based on their likelihood to refer others to your product or service. If a customer will enthusiastically tell their friends about your product, it’s a good indicator that they’re happy with what you’ve created.
Net Promoter Score is based on a single survey question:
How likely would you be to recommend X to your friend or colleague?
Respondents rate the likelihood of recommending your product or service on a scale from 1 to 10. Based on their rating, they fall into one of three groups:
- Detractors are customers who gave a rating from 1 to 6. They are not satisfied with your product and make up the largest group in the NPS model. That’s because negative customers are often the most likely to talk about their bad experience with you.
- Passives are customers with ratings from 7 to 8. They generally feel good about your product, but they aren’t overly enthusiastic. The NPS model suggests excluding them from the NPS equation.
- Promoters are respondents who provide ratings of 9 or 10. These customers love your product. They’re highly satisfied and likely to spread the good word.
How to calculate Net Promoter Score
First, determine the percentage of promoters and detractors from the total ratings pool.
Then, subtract the percentage of detractors from the percentage of promoters. That gives you your Net Promoter Score:
NPS = % of promoters - % of detractors
Let's say you received 100 responses to your NPS survey. Out of these:
- 50 people gave scores of 9 or 10 (50% promoters)
- 30 people provided ratings of 7 or 8 (30% passives)
- 20 customers appeared to be detractors (20% of the total responses)
In this case, your NPS would be 30, calculated as 50% promoters - 20% detractors.
The good news is you don’t have to calculate your NPS score manually. Popular survey and user analytics tools like Survicate, Qualtrics, or SurveyMonkey can automate the process and handle the job for you.
How do you know if your NPS is good?
NPS can range from -100 (if all customers are detractors) to 100 (when all customers are promoters). But both of those are unlikely — you’ll usually land somewhere between those two extremes.
Any score above 0 is considered a good sign, as it indicates that you have more promoters than detractors. And generally speaking, the higher the number, the better. Benchmarking data varies across industries and company sizes, but according to recent research by Survicate, the overall NPS benchmark is defined at 32.
While benchmarking is helpful, paying attention to your NPS trend is just as important. An increasing NPS trend means that your efforts to improve customer satisfaction are paying off.
But if NPS drops despite your efforts, it’s probably the right time to revisit your customer service strategy and employ more comprehensive customer satisfaction analysis tools – such as customer interviews or analyzing support tickets to better understand the source of customer dissatisfaction.
When to use Net Promoter Score
Theoretically, you can use NPS to track customer satisfaction with any product, service, or even documentation materials and specific touchpoints in the customer journey. While that’s possible, practically speaking, NPS is usually used to assess overall customer satisfaction with a product.
The implementation of NPS can look different depending on the type of business:
- For web apps, it’s common to send email or in-app surveys after the onboarding stage and repeat them every quarter to maintain a regular pulse on the account.
- E-commerce stores typically follow up with an NPS survey via email within a week from the delivery date..
- Brick and mortar stores have more limited options, as digital surveys are rarely possible there. Instead, many stores opt for a physical machine with buttons that customers can press to share their feedback. In recent years, it’s becoming increasingly popular to use QR codes that customers can scan at the exit to provide their NPS score and feedback.
Product and marketing teams often rely on NPS as a key performance indicator (KPI) to gain insights into customer satisfaction and track it over time. However, other departments can also benefit from NPS.
Freich Reichheld, the developer of NPS, suggests that it can be a tool to predict customer loyalty. Customer success teams often leverage NPS as a data point for churn prediction models and within customer health score formulas to identify at-risk accounts.
Pros & Cons
- Insights into the overall customer satisfaction.
- Likelihood to recommend a product doesn’t always correlate with customer satisfaction. Nor does it mean customers actually are recommending your product.
- It isn’t always clear where to make improvements based solely on NPS data.
2. Customer satisfaction score (CSAT score)
The CSAT score is a customer satisfaction metric widely used by customer-facing teams to gauge “in-the-moment” customer satisfaction at specific customer touchpoints.
The score is calculated based on a CSAT survey asking customers to rate their recent experience with your company. It’s like a snapshot of the customer’s satisfaction level at that particular moment.
How to calculate CSAT score
Your CSAT score is the percentage of customers who rated their experience positively.
To calculate it, categorize your customer satisfaction survey responses into ‘satisfied’ and ‘unsatisfied’ categories. If you’re using the typical 5-grade scale, you’ll define ratings from 1 to 3 as ‘unsatisfied’ and assume that ratings 4 and 5 indicate satisfied customers.
The next step is to determine the percentage of customers who provided satisfied ratings. This percentage becomes your CSAT score.
CSAT score = (number of ‘satisfied’ ratings / total number of ratings) * 100%
For example, let’s say you have 100 customers complete your survey and 80 of them indicate a satisfaction level of 4 or 5. In that case, your CSAT score would be 80% (80 satisfactory ratings / 100 total number of ratings * 100%).
How do you know if your CSAT score is good?
A CSAT score can range from 0% to 100%. A score under 50% is concerning, because it means you have more unsatisfied customers completing your survey than satisfied customers.
In highly-competitive industries, like SaaS or ecommerce, the benchmark hovers around 80%.
The higher your CSAT score, the better. Just know that achieving a perfect 100% in the long run is unrealistic, even with top-notch service. There will always be some random scores or customers having a bad day. In my experience, a 95% CSAT score is an attainable goal for a high-performing customer service team.
You should also expect a 5%-20% CSAT survey response rate, to get enough data for a reliable score. If you receive fewer ratings, revisit your survey settings, including the timing of your surveys, the messaging you use, and the communication channel.
When to use CSAT
While some companies use CSAT surveys to gauge customer satisfaction with help articles or specific product features, the most common use is to assess the performance of customer-facing teams.
Although you can send a CSAT survey after every customer interaction, I strongly recommend against it. It can be annoying, especially since many of us are bombarded with various surveys on a daily, and sometimes hourly, basis.
Instead, send CSAT surveys as follow-ups after key touchpoints with your team to measure how happy customers are with the service provided. Here are some common touchpoints to consider:
- After a support conversation
- After a sales demo
- After a business review session with your customer success team
- After an in-store purchase
Many companies use CSAT score as a KPI for their customer-facing team, reviewing scores of both individual contributors and teams to evaluate performance.
Pros & Cons
- Allows measurement of customer satisfaction at specific touch points along the customer journey.
- Gives customers an opportunity to provide instant feedback.
- "Satisfaction" is a subjective team, and what it means to be "satisfied" varies due to cultural biases.
- Like any survey, response rates will vary and your results may not always reflect your wider customer base
3. Customer effort score (CES)
Customer effort score indicates how easily customers find it to use your product or get assistance from your team. Unlike traditional satisfaction metrics, CES focuses on measuring the ease of the customer experience.
The score is based on a survey where instead of questions about satisfaction, customers are prompted to assess how easy or difficult it was to complete a task, such as navigating the product or getting the answers they needed.
Customer effort score has been gaining in popularity, often replacing CSAT scores in support teams’ performance management.
The main benefit of using CES is that it helps differentiate between overall product satisfaction and customer satisfaction with the support experience, focusing on how easy it is for customers to receive assistance. If customers consistently find something difficult, you have a clear area you can work on improving.
How to calculate CES
Customer effort score is measured with a 7-point scale. To determine your CES, divide the number of 5, 6, and 7 ratings — customers who rated an experience as easy — by the total number of ratings, then multiply the result by 100%.
CES score = (number of 5, 6, 7 ratings / total number of ratings) * 100%
For example, if 100 customers submit responses and 60 of them give ratings of 5 or higher, your CES score would be 60% (60 ratings of 5 or higher / 100 total number of ratings * 100%).
How do you know if your CES is good?
Your CES score can range from 0% to 100%. The higher your CES score, the better.
But since CES is a relatively new metric (invented by Gartner in 2010), benchmarking data is still limited. And even with more data, there probably won’t ever be a one-size-fits-all number, as products and services can vary in ease of use even within the same industry or across different touchpoints within the same company.
Having a higher CES score than your competitors doesn't necessarily imply that your customers are less satisfied or unhappy (although reducing customer effort is almost always a good idea). A high score can simply indicate that your product is more feature-rich and advanced, or that you need to invest more in customer onboarding.
To gauge the effectiveness of your customer experience efforts, monitor how your CES changes over time and look for trends.
When to use customer effort score
CES is becoming increasingly popular as a KPI for customer-facing teams aiming to provide more effortless service. According to some research, creating experiences that are consistently easy is a more reliable predictor of customer loyalty than other metrics.
Common touchpoints to send CES survey include:
- After receiving assistance from your customer support team
- After engaging with your product or service for the first time
- When viewing self-service resources.
Survey timing is crucial for CES. Aim to send it immediately after the measured experience, while the memory is still fresh in your customer’s mind. Significant delays can lead to inaccurate scores as customers will struggle to recall all the details.
Pros & Cons
- Highly actionable, providing insight into exact touchpoints requiring the most effort from customers.
- May be a better predictor of customer loyalty than CSAT.
- Can be misleading without context or without understanding the overall complexity of the product or service.
4. Churn rate
Churn rate is the ultimate customer satisfaction metric, because it measures the rate at which you lose customers. When customers cancel their service with you, it’s usually a clear indicator that they’re unhappy or that they found an option they prefer more.
Satisfied customers are less likely to leave – as long as your product isn’t seasonal and there’s a strong product-market fit, of course.
Although it’s a broad-reaching metric that’s impacted by way more than just your customer support team, churn rate can help you find connections between your customer experience efforts and business success.
How to calculate churn rate
Calculating customer churn rate is quite straight-forward and can be done on a weekly, monthly, quarterly, or annual basis.
First, divide the number of customers lost during a given period of time by the number of customers you had at the beginning of that period. Then, multiply the result by 100%.
Churn rate = (number of customers lost / number of customers at the beginning of time period) * 100%
For example, if you start a month with 100 customers and lose 20 customers by the end of the month, your monthly churn rate would be 20% (20 customers lost / 100 customers at the beginning of the month * 100%).
Tools like Profitwell or Baremetrics can seamlessly integrate with your payment systems and retrieve the real-time churn rate with a button click. Both tools offer churn rate forecasts, help identify correlations, and can even reduce churn.
For example, by automating follow-ups on overdue invoices when churn is primarily attributed to failed charges rather than intentional cancellations.
Is your churn rate reasonable?
A high churn rate undermines business growth, because it means all of the effort and money you’re spending to attract new customers is worth less. Even if your sales team is doing their jobs well, your business may not grow. A high churn rate can signal issues with customer experience and potential misalignment with your ideal customer profile (ICP).
When to use churn rate
Churn rate is crucial for all subscription businesses, especially when it comes to financial reporting and forecasting. The lower your churn rate, the more valuable each customer is and the more revenue you’ll see from them over time.
Despite your efforts, some customers will churn and it’s normal. Churn rate doesn’t always indicate dissatisfaction — a customer might love your product, but find they no longer have a need for it, so they cancel. Or perhaps their budget got cut and they were forced to make a tough decision.
If your churn rate is higher than expected, make time to dig into the triggers leading to churn. Churn rate is a lagging metric — you can’t measure it until after you’ve lost those customers. So when you see churn rate increasing, you need to move quickly to get ahead of it and find ways to improve your product and your customer experience.
Understanding the reasons customers churn is a critical first step in identifying ways to address issues and improve customer retention.
Pros & Cons
- Helps understand the effect of customer satisfaction on finances and growth
- Not very actionable on its own. It requires further investigation and analysis to identify specific areas for improvement.
- Affected by a vast range of factors, making it difficult to pinpoint underlying issues
Going beyond metrics
While metrics and quantified data are excellent for setting KPIs and identifying trends, it's crucial to delve deeper than a simple rating to truly understand your customers. Creating opportunities for them to share open-ended feedback openly and frequently is key.
In my experience, adding a free-text field to our CSAT survey proved invaluable. We discovered that, despite poor metrics, customers were quite content, and all the low ratings stemmed from a few easily fixable product issues. They were happy with our customer service, but their dissatisfaction with the product was showing up in our CSAT surveys.
The opposite is possible, too. You may find that while customers are happy with the specific experiences you measure, they may not be satisfied with your overall product.
These examples highlight why customer feedback is so crucial. The more you can make people feel heard and valued, the more open and honest feedback you’ll receive. With tools like Missive, you can automate follow-ups with customers, giving them opportunities to feel heard, appreciated, and motivated to share more. This ultimately helps you improve your customer experience and boosts your bottom line.
If you're keen on taking control of your team communications & customer support, give Missive a try for free!