4 Meaningful Customer Satisfaction Metrics, Compared
“Most customer satisfaction surveys aren’t very useful,” stated Frederick F. Reichheld in his often-cited article for Harvard Business Review. He explains that “they tend to be long and complicated, yielding low response rates and ambiguous implications that are difficult for operating managers to act on.”
Even worse, customer satisfaction metrics often don’t have much influence on the executive team or company direction. Why? “Because their results don’t correlate tightly with profits or growth,” says Frederick.
But when done correctly, measuring customer satisfaction can provide your company with invaluable information about what your customers think. Using this information to improve your customer experience can have a big impact on whether customers stay loyal.
Below, we outline the four metrics you can use to measure customer satisfaction in a meaningful way, which will get results and keep customers happy.
4 meaningful customer satisfaction metrics
These four metrics measure customer satisfaction in different ways. Read through to the bottom for a comparison of when to use each metric for the best results.
1. Net Promoter Score (NPS)
NPS was developed in 2003 by Frederick Reichheld as a way to predict a customer’s future loyalty.
Customers can be “satisfied” but still end up churning only days later. Instead of asking whether customers are satisfied, NPS surveys ask customers if they would recommend the business, product, or service to a friend or family member.
Being valuable enough to warrant a personal recommendation is a much higher bar to meet than simply satisfying a customer. Reichheld also tested this idea to see if it held true in practice: Are customers who say they’d recommend you more likely to show signs of loyalty in the future?
Overwhelmingly, the question that we now call NPS showed the most direct correlation between high scores and company growth.
NPS is measured through a survey asking customers two questions. The first question is always “How likely are you to recommend {Company} to a friend or family member?” The second question offers customers the chance to clarify their answers or provide other feedback. Potential questions include:
Why did you give the score that you did?
What’s one thing we could do to improve your response by even one point?
What feedback would you like us to hear about?
Customer responses are divided into three buckets: detractors (responses 1-6), passives (7-8), and promoters (9-10).
To calculate your Net Promoter Score, subtract the percentage of customers who are identified as detractors from the percentage who are identified as promoters. This will give you a score between -100 and +100.
Industry leaders like Amazon and Chewy report NPS results in the mid-50s, so anything above 40 can be considered a decent NPS.
Using the qualitative text responses that customers leave, you can dive deeper into how your customers are feeling and take action to improve the customer experience.
2. Customer satisfaction score (CSAT)
Customer satisfaction score (CSAT) is almost always the first metric that businesses use to measure customer happiness. Why? Because it’s very straightforward to understand and most customer support help desks offer it as a standard feature.
CSAT surveys act in two ways: providing a real-time alert when a customer is unhappy with their service and providing data that can point to bigger customer satisfaction trends.
Every company measures CSAT slightly differently, but the purpose remains the same: to ask customers if they were happy with their recent experience. There are three aspects to consider when implementing a CSAT survey:
Question: What do you want to ask customers? This might be some version of “How satisfied are you with the help you received?” or “Did you find everything you were looking for?” There are many different questions you can ask, so you might want to try a few different ones to see which ones get you the most helpful responses.
Rating system: Depending on your help desk or survey software, you might have a few different options for how customers respond to your question. The simplest format to use is a Good/Bad rating, but many teams also offer a neutral option or even a 5-7 point scale.
Format of survey: Surveys can be delivered in a number of different ways, from SMS to email to in-app. Some teams put one-click surveys at the bottom of each email to keep their finger on the pulse of their customers’ feelings. Others only send it after a case is resolved.
After the initial CSAT questions, follow up with a secondary question to gather more information about why the customer was or wasn’t satisfied. This is where the meat and potatoes are — without this information, it’s hard to take action.
To calculate your CSAT score, subtract the percentage of unsatisfied responses from 100% to give you a score between 0-100%. The global average for CSAT scores is 86%, but that can vary wildly by industry. For example, internet retailers average around 80%.
3. Customer effort score (CES)
Customer effort score is one of the newest methods of measuring customer satisfaction. It asks customers how much effort they had to put in to resolving their issue. The idea is that the harder customers have to work, the less they want to do business with you.
And that idea is backed by research: 94% of customers who report their interactions as “low effort” will repurchase in the future. Additionally, research from HubSpot shows that 81% of customers who report “high effort” interactions would speak negatively about the brand in question.
Where does effort show up in customer service? It’s that feeling of needing to jump through hoops to get help, like chasing down contact information, finding account numbers, and repeating yourself multiple times to multiple people before finally getting the solution you need.
Even if they do get a “satisfactory” experience, they remember all the hard work they had to put in to get it.
Customer effort score is measured through a survey that asks customers how much they agree or disagree with the following statement: “Company made it easy to handle my issue.” Customers then respond on a scale from 1-7, with 1 being “strongly disagree” and 7 being “strongly agree.”
Unlike CSAT and NPS, customer effort score is not calculated by subtracting percentages. Instead, most teams will calculate an average score out of 7. The higher the score, the easier you’re making it for your customers to get help.
But the most insight isn’t gained from looking at the average customer effort score. Instead, more information can be found by looking at the distribution of scores.
If most customers respond with an average score around 5, that’s a great sign that you’re generally making it easy to get help. But if there are a large number of customers responding with 1s or 7s, you’ll need to dig into those groups of customers to see what’s happening.
4. Churn or retention
While happy customers are great, the reason we ultimately measure customer satisfaction is to keep paying customers around. So why not cut straight to the chase and measure how many customers are actually staying around?
Churn is a measure of the number (or dollar value) of customers that stop paying you for your service in a specific time period (usually monthly). As your customers are more satisfied with your company, the more likely they are to stick around.
While other metrics would be considered a leading metric (i.e., improving CES would lead to increased customer loyalty), churn is a lagging metric that shows the result of your hard work.
There are two types of churn to measure: the number of customers who leave, and the revenue lost from them. The formula to calculate them is the same:
# of customers lost during the month ÷ total # of customers at the beginning of the month
There are many other ways to calculate churn that take more context into account, such as upselling, cohorts, and the number of new customers gained that month. If you want to dig into it more, this overview by ProfitWell does a great job of showcasing the various churn formulas.
Which metric should I use?
Each of the metrics above tells you something different about what your customers are thinking. Each metric has its uses, advantages, and disadvantages. The chart below can help you decide which metric(s) you want to use to measure your customers’ satisfaction.
| NPS | CSAT | CES | Churn | |
|---|---|---|---|---|
Use | Use at various touchpoints throughout the customer’s life cycle to understand how they feel about your overall customer experience. | Use after specific interactions to get real time feedback and insight into your customer service delivery. | Use to find opportunities to make your customers’ lives easier and keep them around longer. | Use to measure the business impact of customer happiness and satisfaction. |
Advantage | Simple survey to implement that measures the customer’s overall experience with your company. | Quick and easy to implement and take action on. | More informative than CSAT in understanding the effectiveness of your customer’s service experience. | Directly connects customer actions to the business’ success. |
Disadvantage | Without digging into the results, NPS can become a “vanity metric” that doesn’t result in action. | Not always predictive of customer loyalty, especially when compared to CES and NPS. | Less holistic metric than NPS or Churn, only giving information on a narrow part of the experience. | A lagging metric, which means there are many things that can contribute to churn. Deciding what to act on first can be difficult. |
Measuring customer satisfaction is only the beginning
Measuring customer satisfaction will give you a better understanding of what your customers think about you, but that’s only the beginning of your journey. Once you start with the metrics above, you’ll need to follow through on what customers are asking for.
Read the responses to any surveys you send out. Understand the “why” behind churn and NPS data. Then, make a plan to improve your customer satisfaction — each of the customer satisfaction metrics are only as valuable as the work you put into using them.