Happy customers help run the business. Learn how chatbots help extend support, satisfying your customers and thus ultimately increasing the CSAT score.

Customer Satisfaction has become one of the most common ways to measure your customer’s happiness with the product or service. In this post, we put together the ultimate guide on Customer Satisfaction Score (full form of CSAT Score.) 

We cover the following topics:

• Why is Customer Satisfaction Important?
• What is a CSAT Score?
• How to Calculate CSAT Score? Methodology
• 1. Composite Customer Satisfaction Score
• 2. Top-2-Box Method.
• What Questions to Ask to Measure CSAT? (CSAT Questions)
• Use Cases
• 1. Customer Complaints
• 2. Prevent Churn and Improve Retention
• 3. Product Development
• 4. Customer Loyalty
• CSAT Score Pros and Cons
• How to Improve CSAT Scores using Chatbots?
• Alternatives
• 1. Net promoter score
• 2. Customer Effort Score

What is a CSAT score and why is it important?  Let’s start off with the first big question.

Why is Customer Satisfaction Important?

Research by Frederick Reichheld of Bain & Company has shown that an increase in customer retention of 5% can increase a company's profits by anywhere between 25% to 95%.

You may not know who Frederick Reichheld is, but the spirit behind his research is universally understood.

Happy customers are great for businesses.

And when you see what satisfied customers mean for your bottom line, it’s easy to see why.

Existing customers who aren’t subjected to high-effort purchase experiences have been shown to:

1. Buy more (higher cart values)
2. Buy more often (more frequently)
3. Close more (60%-70% chance vs 5%-20% for a prospect)
4. Close quicker (in lesser time)
5. Spend more (33% more per purchase) and
6. Save you money (low acquisition costs)

Providing support in a manner that prioritizes customer satisfaction is key.

Companies have started to move away from traditional support tools like phone calls, emails, and tickets. Chatbots and Live Chat have become the new norm.

But measuring something as subjective as “satisfaction” is challenging.

There are just so many types of satisfaction surveys that choosing between them can be daunting.

The three major metrics for Customer Satisfaction are

1. NPS (Net Promoter Score),
2. CES (Customer Effort Score), and
3. CSAT (Customer Satisfaction Score).

Suggested Reading: Customer Support Metrics to Track and How to Improve Them

What is a CSAT Score?

This blog post will cover one of the most popular methods; CSAT, or the Customer Satisfaction Score.

Definition

The Customer Satisfaction Score is one of the most straightforward survey methodologies. It is used to measure customer satisfaction with a business, purchase or interaction.

It is calculated by asking customers a question and having them answer on a scale.

For example: “How satisfied were you with your purchase experience? Please rate on a scale of 1 to 5.”

Methodology

There are two primary methods of calculating a CSAT score.

I. Composite Customer Satisfaction Score

Assume a question, as follow.

“How would you rate your satisfaction with the service you received?”

Respondents pick out options from a predetermined scale that looks like this.

1. Very unsatisfied

2. Unsatisfied

3. Neutral

4. Satisfied

5. Very satisfied

As you can see, each answer has a numerical value attached to it.

i.e. if a customer is very satisfied, he scores the process a “5”.
If the customer is partly satisfied, he scores the process a “4”.
And so on.

Add up the sum total numerical value of the replies. Divide by the total number of responses.

If you had 7 responses with responses that looked like (4+3+5+5+5+4+3), you’d get 4.14.

The value you get is the average score of your process – a.k.a. A Composite Satisfaction Score.

II. Top-2-Box Method.

It is used to calculate the percentage total of your customers who had satisfactory experiences.

Use the following formula.

*# of Satisfied Customers (80)
-----------------
# of Satisfaction Survey Responses (100)

X 100 = % of Satisfied Customers (80%)

*”# of satisfied customers” is calculated using ONLY the users who rated the process “4” or “5”.

By only taking into account the two highest possible response ratings, you can establish the percentile breakdown of the customers who had a favorable experience.

So, if 100 people respond to your survey, and 80 of them answer “Satisfied,” that means you’d have an 80% CSAT score.

What Questions to Ask to Measure CSAT (CSAT Questions)?

Generally, when asking questions to measure CSAT, the customer should be able to answer on a scale. 

Some of the commonly asked questions from which you can gauge customer’s satisfaction scores are:

Use Cases

One of the biggest strengths of the Customer Satisfaction Store lies in its simplicity.

It’s a quick and easy way to close the gaps that would usually exist between company action and customer reaction.

To that end, a CSAT score can be used in various situations.

Customer Complaints

Implementing a CSAT score for customer complaints is a lifesaver. It helps you identify exactly when and where a customer struggled with a problem.

In customer feedback, interactions scored a 4 or 5 are considered reliable.

Customers who’ve had an experience that they score 3 or below however need to be followed up with.

Three metrics should be tracked when using CSAT to handle customer complaints.

1. The number of complaints received.
2. The time it took to reach out to the customer who complained.
3. The total number of complaints resolved.

Prevent Churn and Improve Retention

CSAT is a leading indicator of customer churn. More customers giving a bad CSAT rating indicate a bad experience. 

Avoiding churn and retaining customers is arguably the most important factor in the growth of a business. 

We’ve heard this many times (because it’s the ultimate truth) that acquiring customers is 5 to 25 times more expensive than keeping existing customers.

By understanding how your customers feel, you can prevent churn and increase retention.  

Product Development

If you’re launching a new product or feature, it helps to know how your customers are receiving it.

Hence, feedback through CSAT scores can help you identify problems with your new additions.

That is, by measuring satisfaction at each stage of improvement, you’ll be able to engage with customers better.

Customer Loyalty

The probability of selling to an existing customer is up to 14 times higher than the probability of selling to a new customer.

Thus, customers who are engaged exhibit loyalty. By encouraging them to be a part of the decision process, you can make them feel like cogs in a larger machine.

So, you can use CSAT to listen to their feedback, incentivize openness, and keep them informed when their suggestions are implemented.

CSAT Score Pros and Cons

Pros

Cheap – CSAT scores don’t cost much. If you have a live chat provider, you can build one for free.

Easy – CSAT is easy to answer, and understand. The extracted data can be easily analyzed and very actionable.

Benchmarked – The American Customer Satisfaction Index provides stats dating back to 1995. You can use this to compare where you to stand to industry standards.

High response – Questions on CSAT are short, immediate and precise. This means they have high response rates since they aren’t a hassle to fill out.

Versatility – You can use lots of entry fields for CSAT scores, like emojis, stars or ratings.

Validation – Customers who are encouraged to give feedback – even negative – are more engaged than the average customer.

Cons

Subjective – “Satisfaction” is a word that is open to interpretation. “Five star” is not the same as “highly satisfied”.

Skewed – Research has shown that for every customer who files a complaint, there are 26 customers who don’t say anything. They simply up and leave.

Cultural bias – Besides the basics like survey language, there are serious cultural biases at play in surveys. American customers are often extreme in their scoring (0’s or 10’s), while Europeans are most restrained.

Short term – CSAT score isn’t as impactful as other survey tools. Simly clicking a button isn’t an engaging experience for a customer, especially one you know thousands of other customers have filled.

How to Improve CSAT Scores Using Chatbots?

The best way to ensure a good CSAT score is by providing delightful customer experiences.

Conversational AI Chatbots can not only collect feedback but also improve customer experience.

We look at how you can do that below. 

Ask for Customer Feedback 

Regularly ask customers how their experience with your company or product was. 

If not, unhappy customers will reach to social media and leave bad reviews and comments. 

And once you have customer’s feedback, ensure you are actually listening to them and working on improving the product. 

Proactive Communication

It’s important to keep customers in the know when you expect any issues to arise. 

Educating customers proactively and answering their questions on time will ensure they are better prepared for bad experiences. 

Omnichannel Presence

Be available to your customers on different platforms and channels. 

Make it easy for your customers to reach out to you, be it for a new purchase or for grievance. 

While you are available on multiple platforms, ensure it’s synced across and your response is quick. There is nothing better than responding quickly to an angry customer. 

Wow Your Customers

Providing smart, personalised experiences lead to happy customers. 

There are many small things that you can do that’ll delight your customers. Some of them are:

• Answering their questions quickly, accurately and in their preferred language
• Providing 24×7 service
• Identifying issues before they arise and proactively communicating it

Alternatives

In case you’re looking at alternatives, CSAT has two distinct rivals. The Net Promoter Score (NPS) and the Customer Effort Score (CES).

Net promoter score

The NPS follows a simple idea.

Customers fall into one of three categories – promoters, passives, or detractors.

Promoters are the kind of customers who’d go around and sell pro-bono for you. They’re loyal, often repeat customers who stick by you.

Passives are neither here, nor there. They lack enthusiasm and loyalty, often quite susceptible to switching to another company.

Detractors are those customers who don’t like you or your product/service. They could even be liabilities to your business.

NPS is calculated by asking a customer, “How likely is it that you would recommend us to a friend?”

And, the numerical scores categorize customers: Detractors have scores in the 0-6 scores range; Passives are in the 7-8 range; Promoters have scores in the 9-10 range.

Customer Effort Score

Much like the NPS, the Customer Effort Score aims to answer a simple question.

How much effort did a customer have to exert in order to have their needs met by your company?

A high effort experience would make for disloyal and generally unhappy customers.

CES is usually the go-to metric to determine customer loyalty. In fact, it’s the best indicator of it.

You can ask: “How much effort did you personally have to put forth to handle your request on a scale of 1-5?”

Customers choose between 1 and 5. A very low effort would be indicated by 1 and 5 would indicate a very high effort.