Lorie Gallaway was shocked when Amazon charged her $1,000 for expedited shipping when she ordered $24 paper plates for Christmas. When Lorie disputed the charge, she was even more shocked when Amazon responded saying she wasn’t overcharged. Eventually, Lorie did get her refund, but she’s hesitant to order from Amazon again.
There are two important lessons for businesses here. One, excellent customer care isn’t a one-time thing and you have to keep at it year-round. And two, it’s imperative to take action on customer complaints as fast as possible or you’ll find it difficult to retain customers in the long run.
Customer satisfaction score or CSAT is one way your business can keep a tab on brand loyalty, customer success, and drive business growth. In this article, we’ll discuss what a customer satisfaction score is, how it impacts your revenue, and what you can do to improve it.
CSAT scores are important customer loyalty metrics that measure customer satisfaction and happiness with a product, service, or specific interaction. The more happy customers you have, the more word-of-mouth (WOM) and repeat purchases for your business.
Conversely, your CSAT score can also help you understand if there are underperforming areas of your business. Either way, the insight is crucial in understanding how your business is performing and where you can grow.
Besides CSAT, Net Promoter Score (NPS) and Customer Effort Score (CES) are the other metrics you need to measure for a top-notch Voice of the Customer (VoC) program.
Often, brands will use CSAT and NPS surveys to measure your customer sentiment, but the main difference between them is that CSAT measures short-term customer satisfaction, while your NPS score indicates long-term loyalty.
Collecting responses to a simple question like “How satisfied were you with the experience?” is the first step to obtaining a CSAT score. Sending CSAT surveys — via different touch points — throughout the customer journey also helps gather insights about their pain points.
Responses to any single question may follow a verbal, numeric, or graphic rating scale.
Here's a table breaking down the survey responses:
The formula for calculating a CSAT score is straightforward. Here’s how you do it:
Here are some examples of positive responses:
CSAT scores vary across industries, but a score above 75% is considered good. If you want a benchmark specific to your industry, check out the American Customer Satisfaction Index's (ACSI) results.
Let’s say that TeeStore, our made-up clothing store, sends out surveys to 10,000 customers and receives 1,000 responses. Their final responses (on a 5-point scale) look like this:
Out of the 1,000 respondents, 500 of them gave a 4 or 5, indicating a positive experience. That means TeeStore’s CSAT score is 50% (500/1000 x 100% = 50%) — leaving much room to improve.
Being able to tie CSAT scores back to revenue is important for customer service teams. Let’s see how much revenue TeeStore is losing based on their churn rate. We’re taking arbitrary churn rates, but you should look at your data for the correct churn rates.
If you don’t have these numbers, start with the average churn rate calculated by the PwC. Their recent study showed 59% of people in the US will switch to another brand after several bad customer experiences.
We've included our calculations below, assuming that the Average Revenue Per User (ARPU) is $500.
Leaving $210,000 on the table is painful for most small businesses, but the solution usually isn’t complicated. Let’s say most people who rated TeeStore’s services a 1 or 2 noted their customer service took too long to respond.
TeeStore quickly hired a customer support provider like Chatdesk to address customers’ inquiries faster — and saw their CSAT score increase by 15 points. The number of unsatisfactory ratings decreased, and the satisfactory ratings improved. Their new ratings looked like this:
Using the same formula above to calculate revenue loss, we see TeeStore saved $22,500 ($210,000-$187,500) from a 15-point increase in their CSAT score. So, an increase in CSAT by 1 point increases their revenue by $1,500.
So, you’ve sent out a customer satisfaction survey and calculated your CSAT score. If your score is less than ideal, the next step is to convert this feedback into actionable steps that will help you obtain good CSAT scores and meet customer expectations. Here’s how you can achieve this:
Set up alerts to receive notifications when feedback comes in so a team member can appropriately follow up with the customer.
Train your staff to handle negative and positive feedback and decide the appropriate response and how they’ll reach out to the customer (email, chat, phone, etc.)
Also, decide the intended outcome of the customer interaction beforehand (save the customer, improve customer retention, etc.) and set up customer satisfaction metrics to know if the customer is satisfied with your follow-up and service.
Once the feedback has come in, apologize to your customer, even if it seems futile, and take immediate action to show you’re actively listening to them.
On the other hand, if a satisfied customer gives you positive feedback, send them a personalized thank you note to keep them coming back for more.
Collecting and acting on customer feedback shouldn’t be a one-time thing. Keep tabs on customer sentiments with a tool like Chatdesk. It aggregates and analyzes feedback from all your channels — including social media — to give you super-comprehensive customer insights with way less effort.
Onboarding and integration only takes a few steps, and we offer a free trial (no credit card required) to get you started.