What's Customer Satisfaction (CSAT) & How Do You Measure It?

Customer satisfaction (CSAT) is one of the most frequently measured metrics for many different types of businesses. A business’s CSAT score is a critical metric that indicates how happy customers are overall with the business’s products, services and customer experience. Businesses typically use a periodically-administered customer satisfaction survey, or CSAT survey, to track customer satisfaction. 

There are quite a few benefits to keeping track of your business’s customer satisfaction score. The score itself is just a number that tells you how satisfied your customers currently are (or are not). It’s the actions you take to actually improve that number that ultimately make the difference. Nevertheless, your business’s CSAT percentage provides key visibility that is necessary to guide those actions.

It can be difficult to track an ongoing CSAT score because customer satisfaction is heavily dependent upon specific, “here and now” interactions. Most businesses that track customer satisfaction give customers the opportunity to fill out a CSAT survey after significant interactions like purchases, renewals or customer support interactions.

What's CSAT?

CSAT is a very popular metric, yet it’s sometimes misunderstood. The first step towards demystifying customer satisfaction is simply asking: what is CSAT? As we’ve mentioned, CSAT stands for customer satisfaction. It’s a metric that measures how happy or unhappy customers are with the experiences they have during interactions with businesses. Tracking your business’s CSAT score is crucial for understanding how your customers feel about your business’s customer experience and learning what actions you can take to improve it.

How to Calculate CSAT Score?

The next important question is how to calculate CSAT percentage. To calculate your business’s customer satisfaction score, you’ll first administer a simple survey that asks customers to rate their satisfaction with a particular interaction or experience on a scale from 1 (least satisfied) to 5 (most satisfied). For the purposes of your CSAT calculation, you can consider responses of 4 and 5 to be “satisfied” responses. 

Once you’ve collected your survey responses, use this simple CSAT formula:

(# of satisfied customer responses / total # of customer responses) x 100 = CSAT score.

Your business’s CSAT score is expressed as the percentage of customers who are satisfied with your business’s customer experience.

What’s a Good CSAT Score?

Once you understand how to calculate your business’s CSAT score, the next item on the list of CSAT score questions naturally becomes: what is a good CSAT score? There are two ways to interpret this question: “what is considered a ‘satisfied’ customer response?” and “what is a good overall CSAT percentage?” The first question is easier to answer. As we mentioned previously, on a scale of 1 to 5, 4s and 5s are typically considered to be satisfied customers. Customer success teams should be striving for every customer satisfaction survey response to be a 4 or a 5.

On the other hand, the definition of a good CSAT percentage depends somewhat on the industry your business exists within. For example, The American Customer Satisfaction Index considers 75% to be the cutoff between a good and bad customer satisfaction score for businesses in the airline industry in the United States. Customer success professionals should familiarize themselves with CSAT benchmarks in their industries in order to gauge whether or not their CSAT scores are above or below average.

CSAT vs. NPS vs. CES: What's the Difference?

Two other critical business metrics that often come up alongside customer satisfaction are net promoter score (NPS) and customer effort score (CES). CSAT, NPS and CES are three of the most useful and commonly referenced metrics across various industries. This often leads people to wonder about the differences between CSAT vs. NPS vs. CES. Let’s briefly differentiate these three easily-misunderstood terms:

CSAT vs. CES

Customer effort score is a short-term metric that measures how much effort a customer must put forth in order to resolve a problem or achieve another desired outcome. This metric gives you information only about a specific interaction, whereas CSAT can also be used to track long-term customer relationships.

CSAT vs. NPS

Net promoter score is a long-term customer relationship metric that does not pertain to a particular interaction a customer has but rather indicates their overall likelihood of recommending your brand to other people. This is different from customer satisfaction because while you can use CSAT to track customer relationships over time to some degree, CSAT scores are usually tied to specific customer experiences.

CES vs. NPS

Customer effort score and net promoter score differ mainly in whether or not they provide a short or long term indication of customer relationship health. Net promoter score is primarily used to track general, long-term customer loyalty levels, whereas customer effort score is more often used to measure the short-term impact of specific customer experiences. 

CSAT Pros and Cons

Customer satisfaction is one of the most popular metrics for businesses to track because it can reveal whether or not further action needs to be taken to improve customer satisfaction. However, there are both pros and cons associated with CSAT surveys. Let’s explore a few of these CSAT pros and cons.

The pros of measuring customer satisfaction begin with the convenience of CSAT questions. CSAT surveys are typically very short and to-the-point, making it very simple for customers to participate. This means CSAT surveys are often able to achieve relatively high response rates. 

Unfortunately, one con of distributing basically any kind of survey is that many customers will not bother to respond. This means there is little way of knowing whether the results are totally accurate. Customer satisfaction scores can also fluctuate frequently since scores are usually given in the context of specific interactions. 

Why Measure CSAT in 2023?

But after all that, why measure CSAT in the first place? Is it worth it to measure CSAT? Customer satisfaction is an extremely important factor in whether or not your customers stay with your business long-term or churn. Approximately 50% of your customers would switch to a competitor after just one poor experience with your company. Customer satisfaction is one of the key metrics that tells you whether or not your customers are having positive or negative experiences. If your customers are having negative experiences, you need to know as quickly as possible so you can right the ship with only a minimal amount of churn.

How to Improve Your CSAT Score

The ultimate goal of tracking your business’s CSAT percentage is so you can work toward improving it. However, simply distributing a CSAT form to your customers over and over again will do nothing to change their responses. Following customer satisfaction survey best practices can help ensure you get the most accurate indication of whether or not your customer satisfaction score needs to be higher. Here are a few steps you can take to improve CSAT:

1. Create a Customer-centric Culture

First of all, your whole company culture should be aligned on customer-centric goals. Equipping employees with the tools, skills and knowledge to help customers achieve the outcomes they want is a large part of improving customer satisfaction at any organization. Investing in employee education by implementing a learning management system (LMS) is one way to start developing a customer-centric employee culture.

2. Become Obsessed with Customer Outcomes

You cannot begin to improve customer satisfaction until your customer success team becomes completely invested in customer outcomes across the board. It’s absolutely crucial to know what customers want and deliver it to them. Customers care more about the customer experience than they ever have — their desire for outstanding customer experiences can eclipse even their desire for quality products in some situations. It’s critical to pay very close attention to the kinds of experiences your customers want and continually strive to provide them with those experiences. 

3. Meet Your Customers Where They Are

A key aspect of providing an excellent customer experience is making it as simple as possible for customers to access assistance whenever and wherever they need it. When customers need help, they may easily become frustrated if they can’t find a solution to their problem without going through a long list of cumbersome steps. Ensuring customers have fast and intuitive access to product information of all kinds can have a substantial positive impact on customer satisfaction. One of the best ways to give your customers easy access to product knowledge is with a learning management system like Northpass.

4. Empower Your Customers

Empowering your customers is also critical for improving customer satisfaction. Your customers should not need to rely on your customer support team to succeed with products — they should be able to access the resources they need to be self-sufficient product experts. You can use a learning management system like Northpass to make it possible for your customers to continually improve their product knowledge and solve problems for themselves.

5. Create a Community

You can also use learning management software to build a sense of community among your customer base by connecting them. Customer-driven online communities can be a great source of support and knowledge for all your users. 

6. Invest in Your CSMs

Last, but not least: don’t forget to invest in your customer success managers. These roles are critical to the success of all a business’s efforts to improve customer satisfaction. It’s important to ensure your business’s customer success manager has everything they need to drive customer satisfaction.