NPS vs. CSAT - A Guide to Measuring Customer Happiness

NPS vs. CSATA Guide to Measuring Customer Happiness

The most successful businesses are data-driven. They are the companies where leadership bases their decisions on preset metrics that they regularly track. Goals are determined and adjustments are made with numbers serving as rationale.

All this is great, but how does that play with customer service? When it comes to the touchy-feely aspects of a business,

where do numbers factor in?

Many companies use the Net Promoter Score® (NPS), while others prefer to measure the CSAT score, or customer

satisfaction score.

Here is a breakdown of the two scores, the difference between the two and some best practices for measuring both:

Net Promoter Score® (NPS)

What is NPS?

Net Promoter Score (NPS) is a commonly used tool for assessing customer loyalty that was introduced in a 2003 article in the Harvard Business Review. A company’s NPS, relative to the scores of their competitors, is a predictor of growth. NPS is ideally an ongoing exercise in the life of a company rather than a one-time test.

There are two types of NPS: transactional and relationship. Transactional NPS is taken immediately after an interaction with a company and is used mostly as an assessment of that particular interaction. Relationship NPS is taken at regular intervals to assess the overall state of the customer-company relationship.


How is NPS calculated?

NPS is calculated based on two questions:

1. On a scale of 1-10, how likely is it that you would recommend our company/ product/ service to a friend or colleague?

2. Why?

Respondents answer the first question with a number from 0 to 10, with 0 being extremely unlikely and 10 being extremely likely. Customers are then given the chance to explain their first choice in an optional second question that yields qualitative results.


NPS scores are divided into three buckets. 0-6 are considered Detractors: Customers who are unhappy and can damage a brand. 7-8 are Passives: Satisfied but unenthusiastic customers. 9-10 are Promoters: Loyal enthusiasts who will fuel growth.

NPS is calculated by subtracting the percentage difference between the Promoters and the Detractors. Companies can score anywhere from -100 to 100.


% Promoters = Net Promoter Score% Detractors-

What is a ‘good’ NPS?

NPS scores vary widely based on a number of factors, including industry and age of the company. Ideally, companies compare their NPS to their own past scores so that they can track progress. Companies can also benchmark against competitors’ NPS if that data is available.


Customer Satisfaction Score (CSAT)

What is CSAT?

In a general sense, CSAT stands for customer satisfaction. Customer satisfaction is based upon how happy a customer is about a specific product, transaction, interaction, etc. with a company. The term “CSAT” is most often used in the context of a “CSAT score,” which describes a numerical measure of customer satisfaction.


How is CSAT measured?

To measure CSAT, businesses directly ask the applicable customer base to rate their satisfaction of an event, product or service. This typically comes in the form of a survey communicated through some channel to the customer (direct mail, email, phone, etc).


The exact wording of the CSAT question and the corresponding rating system used in surveys varies from organization to organization. This means that there is no industry-standard way to measure CSAT. A few commonly used questions include:

• Were you satisfied with ___? (Yes/No)• On a scale of 1-10, how satisfied are you with ___?• How would you rate your satisfaction with ___? • (Unsatisfied, Somewhat Satisfied, Very Satisfied, etc)


For CSAT questions that don’t simply require a binary answer, it’s up your business to decide which answers count as “satisfied” and which do not. For example, you may decide that, on a scale of 1-10, anything above a ‘6’ rating counts will be deemed as satisfied.

A CSAT score, then, does not have one unified measurement. The numerical score itself will depend on exactly what question is being asked. That being said, one could perform this general calculation to determine the proportion of satisfied customers:


# of customers who responded as “satisfied”

= % of satisfied customers

# of total customers surveyed

/

What is a ‘good’ CSAT score?

Since CSAT scores vary widely based on the type of CSAT question asked, there is no one definition of what a good CSAT score is. A general rule of thumb is to try to get your percentage of satisfied customers as close as possible to 100%. It may also be useful to benchmark your scores against other companies in your industry.

Depending on what exactly your business is having customers rate their satisfaction on, your CSAT score may also constantly be in flux. For example, a customer service team’s CSAT score of interactions with customers will change in real-time with the conclusion of every new interaction. Alternately, a company that sends out a quarterly survey to measure CSAT on a specific product will only have one score until the next survey is sent out.


NPS vs. CSAT

CSAT and NPS both measure customer sentiment, but they do so in distinct ways. The first major difference between the two is that NPS has a very defined process and measurement trademarked by specific organizations, while CSAT is a more general concept. This is apparent in the guidelines (or lack thereof) for each.

NPS vs. CSAT

The second major difference is in what the two values measure. NPS is a measurement of customer loyalty. In contrast, CSAT scores are strictly a measurement of customer happiness. This means that while CSAT scores can help predict churn, they cannot predict customer retention. This is because low satisfaction generally leads to attrition, while high satisfaction does not necessarily guarantee that a customer will return for repeat business.

Although CSAT cannot predict customer loyalty, it can be used to capture the sentiments of your customers at any given moment. The measurement also provides more flexibility than NPS, which is limited to one preset survey question. A business could choose to customize their CSAT question according to their needs, ultimately allowing them to identify and explore their strengths and weaknesses.

NPS vs. CSAT

How can NPS be used to improve your call center?

There are seven steps to improving the customer experience in your call center using NPS:

1. Conduct NPS survey2. Calculate NPS

3. Compare NPS to past scores and/or to competitors’ NPS4. Thoroughly review written responses to “Why did you choose that number?”

5. Reply to customer responses6. Identify key sticking points

7. Adjust accordingly

NPS vs. CSAT

What are some CSAT best practices?

1. Use targeted survey questionsAs you brainstorm potential survey questions, think about the factors that go into the product, service or interaction. Use these factors to guide the creation of your question.

2. Be consistentAsk the exact same CSAT survey question every time and make sure that the survey is sent out at the correct time, whether it be every quarter or after every interaction.

3. Consider using other measurements in tandemThe beauty of CSAT is that it plays well with other sentiment measurements such as NPS or the increasingly popular Customer Effort Score (CES).

NPS vs. CSAT

Measuring NPS and CSAT scores can go a long way in determining how your business is performing in the eyes of your customers. These metrics are simple, yet adaptable to a variety of circumstances and can be used in conjunction with other sentiment measurements.

NPS vs. CSAT

Once you’ve determined your NPS and CSAT score, what can you do next?

You’re going to to need Talkdesk’s advanced call center software to measure and improve upon all the metrics that will have an impact on your scores.

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