If you can’t measure it, you can’t improve it. When it comes to customer experience that feels true, but the reality is that there is no real consensus on the best way of measuring customer experience. Two of the most popular ways are Customer Satisfaction (CSAT) and Net Promoter Score (NPS) – but what are they and what are the advantages of each?
Of course you can always measure both but which should you prioritise: CSAT or NPS? Or is there another metric that you should use.
Understanding CSAT and NPS
Customer Satisfaction (CSAT) and Net Promoter Score (NPS) are two significant metrics that businesses use to measure customer loyalty. Introduced by the management consulting firm Bain in 2003, NPS is a reliable indicator of customers’ willingness to recommend your business.
NPS is calculated by asking customers how likely they are to recommend your company or product to a friend or family member on a scale of 0-10. Anyone who gives you a score of 0-6 is a detractor, 7 or 8 makes them passive or neutral, and 9 or 10 makes them a promoter. The NPS is the % of Detractors subtracted from the % of Promoters.
So an NPS score can go from -100 to 100, but generally speaking anything positive is where you want to be. Above 20 is great, and above 50 is amazing.
In contrast, CSAT, which provides a standardized measurement across industries, helps gauge immediate customer satisfaction post interaction or transaction. The score typically ranges from one to five with higher values being predictors of customer retention.
So an average CSAT score is typically rated as a score up to 5.
What’s neat about both measurements is they give you a simple number to understand. But in their simplicity they can hide more important details underneath the surface.
The Advantages of CSAT in Retail
Customer Satisfaction by its very nature tends to be on a case-by-case basis. So it’s often a measurement of a specific interaction, usually with sales or customer service. For that reason it’s a great way of being able to compare the performance of customer service agents.
For instance, if one particular agent gets a particularly low CSAT, you can look to see what they are doing differently and look to coach them.
Similarly, if a particular type of customer service conversation results in a low customer satisfaction, you can dig in to see what could be improved about the process. All of which allows you to find ways to improve the customer experience, boost customer loyalty and ultimately improve customer retention.
The Disadvantages of CSAT in Retail
Given that CSAT is often taken at the end of an interaction with customer service, it doesn’t necessarily reflect how good a job the agents are doing.
Imagine a customer is asking to get a fill refund on an item that is just out of warranty. Naturally an agent is likely to follow policy and politely inform the customer about the warranty policy. At the end of a conversation where a customer does not get what they want, are they likely to be ‘satisfied’?
Similarly a customer who has had to make a lot of effort to get to an outcome may be satisfied with the outcome but not the process. A low score there may be misinterpreted.
The point is that simplicity is great on one level, but without deeper analysis, the simplicity of CSAT can be its downfall.
The Advantages of NPS in Retail
Like CSAT, NPS is a very simple measurement. But unlike CSAT, NPS is generally a mark of the whole customer experience including the brand, the product and everything else that comes into play there.
As such, NPS tends to be considered a better measurement of customer loyalty and customer retention. For example, it’s possible for a “Promoter” to have recently had an unsatisfactory customer service experience, but still be such a fan of the brand that they’ll come back time and again.
Also, like CSAT, it’s a quick measurement to get from a customer. Customers just have to answer one question and so it can be easily gathered through email or anything else.
The Disadvantages of NPS in Retail
But again, the problem with NPS is that the score can encompass a whole range of factors and so it can be hard to pull it apart to work out how to improve things.
Someone rating your brand as 10 is almost certainly happy with every extent of your business that they’ve interacted with, but what about someone who rates it a 5? They could be annoyed with product quality, price, how long their item took to arrive, or any other part of the customer experience. Without qualitative data to support the number, it can be difficult to spot opportunities for improvement.
So… CSAT vs. NPS – which wins?
There isn’t really a winner when it comes to CSAT vs. NPS. It depends on your role in the business and what you are looking to achieve. But there is nothing stopping you measuring both.
When we spoke to Ines Castro from On, is a leader in the Happiness Delivery team, she pointed out that the metric depended on who you were in the business. Here’s what she had to say:
Of course, these are not the only two measurements that a CX or CS professional has at their disposal. But as ever it depends on what you are trying to achieve.
- Average Handle Time – this measurement of how long a customer service agent spends talking to a customer helps you to understand how many tickets your team can get through in a day. Reducing this means that your agents are more productive, and it means that customers get dealt with faster. That is a win-win! However trying hard to reduce this may mean that agents are not giving customers the due care they deserve.
- Customer Effort Score – this asks customers to rate how easy it was to find what they were looking for. This is a helpful measure to see if you have information clearly displayed on the site, and how simple the customer service process is. If a customer has to jump through a lot of hoops to get to an answer then this will ultimately result in a low score.
- Contact per order ratio – this is taking the number of times customers contact you divided by the number of total orders you have. So a score of 25% suggests that for every 4 orders you have, one customer has had to contact you. To reduce this you either need to offer more self-service solutions, or get to the root of why customers are getting in contact.
- Cost per ticket – if you are cost-conscious then working out how much you are spending for every ticket can be helpful. But it is worth comparing it to your average order value. For example, if you sell high-end furniture with an AOV of £1,000 or more, a cost per ticket of £5 seems pretty acceptable. If on the other hand, you sell second hand books, that £5 cost per ticket will be eating into your margin quite substantially.
A Balanced Approach?
No one said you have to pick just one. Why not get comprehensive insights by using both? Now there’s some food for thought…
Best Practices for Implementing CSAT and NPS Surveys
To get the most from your CSAT and NPS surveys, you need to design them carefully. It’s not just about asking questions, it’s also about analyzing survey responses effectively.
Designing Effective CSAT Survey Templates
The best way to gather qualitative data on customer sentiment is by using a simple question: “How satisfied are you with our service?” This direct approach helps measure customer satisfaction metrics accurately. But remember, no one size fits all in the world of CSAT surveys. You’ll need to tailor yours based on specific business areas or aspects of the customer journey that you want feedback on.
Crafting Actionable NPS Surveys
An effective NPS survey goes beyond a single multiple-choice question. Incorporate an open-ended follow-up question such as “Why did you give us this score?” This gives customers room to express their feelings freely, providing valuable insights into what’s working well or needs improvement in your service interactions.
Customer Effort Score surveys, which ask customers how easy it was to accomplish a task (on a scale of 1-5), can be another powerful tool when combined with your CSAT and NPS efforts.