Customer satisfaction

Customer satisfaction (often abbreviated as CSAT) is a term frequently used in marketing. It is a

measure of how products and services supplied by a company meet or
surpass customer expectation. Customer satisfaction is defined as "the number of customers, or
percentage of total customers, whose reported experience with a firm, its products, or its services
(ratings) exceeds specified satisfaction goals."[1] Customers play an important role and are essential
in keeping a product or service relevant; it is, therefore, in the best interest of the business to ensure
customer satisfaction and build customer loyalty.

The Marketing Accountability Standards Board (MASB) endorses the definitions, purposes, and
measures that appear in Marketing Metrics as part of its ongoing Common Language in Marketing
Project.[2] In a survey of nearly 200 senior marketing managers, 71 percent responded that they
found a customer satisfaction metric very useful in managing and monitoring their
businesses.[1] Customer satisfaction is viewed as a key performance indicator within business and is
often part of a Balanced Scorecard. In a competitive marketplace where businesses compete for
customers, customer satisfaction is seen as a major differentiator and increasingly has become an
important element of business strategy.[3]

MEASURE CUSTOMER SATISFACTION

1. Customer Satisfaction Score (CSAT)

The customer satisfaction score is, as its name implies, a measurement of

how satisfied customers are with your offerings and service. It’s a tool to
measure how a customer feels at the moment. The customer satisfaction
score is the most common method used to gauge consumer sentiment.

You can calculate CSAT using a scale of 1-3 to 1-10 and anything in between.
When collecting responses, ask consumers how satisfied they are with your
offering or service – with one being highly unsatisfied and the top number of
the scale being highly satisfied. Calculate the customer satisfaction score by
adding the sum of all responses and dividing it by the number of all
respondents.

2. Customer Effort Score (CES)

CES is an indicator of customer loyalty. The customer effort score works the
same way as the CSAT score. However, employees will ask customers about
the ease of their experience when collecting data for this metric. The
experience could relate to making a purchase, finding out information or
resolving an issue.

The customer effort calculation is still a measure of customer satisfaction, but

it focuses specifically on customer convenience. The reason for monitoring
your organisation’s CES is that, ideally, the easier it is for customers to
interact with your brand, the more they will enjoy their experience. By making
it easy to do business with your organisation, you can maintain customer
satisfaction and loyalty.

3. Net Promoter Score (NPS)

Net Promoter Score is a way of monitoring how likely consumers are to

recommend your offering to a friend or co-worker. It’s a way of measuring
customer satisfaction and loyalty as well as overall satisfaction – rather than
how a customer feels about your offering solely in the moment.

You can use the responses from your CSAT for this metric – categorising 0-6
responses as detractors, 7-8 responses as passes and 9-10 responses as
promoters. Calculate your organisation’s whole number NPS by subtracting
the percentage of detractors from the percentage of promoters (or use
our NPS calculator to do the leg work for you).

4. Customer Retention Rate

The customer retention rate is your organisation’s ability to retain paying

buyers. It costs 5 to 25 times more to procure a new customer than it does to
retain an existing buyer. Resultantly, this is a critical customer satisfaction
metric.

Calculate the customer retention rate weekly, monthly or annually, depending

on your organisation’s sales volume. The customer retention rate formula is:

((CE-CN) /CS)) x 100

CE is the number of new customers at the end of a cycle. CN is the total
number of new customers acquired during the cycle, and CS is the number of
customers at the beginning of the cycle.

5. SERVQUAL

This metric is a combined measurement of service and quality. SERVQUAL is

one of the most widely used methods for evaluating the personal elements of
customer service quality. Collect data for SERVQUAL by soliciting a scaled
response on RATER qualities:

 Reliability
 Assurance
 Tangibles
 Empathy
 Responsiveness

SERVQUAL monitoring will help you differentiate the quality of service that
your organization delivers from the quality that your customers expect.

6. Churn rate

Churn rate is a measurement of how many customers you lose during a cycle.
If your organisation has a churn rate higher than 5% to 7%, you must identify
and correct the issue.

This measurement is another metric where sales volume informs

measurement cycles. For example, organisations with a large customer base
may want to review their churn rate every month, while smaller organisations
may re-examine this metric annually or semi-annually.

The churn rate formula is:

((The number of customers at the start of a cycle) minus (the number of

customers at the end of a period) divided by (the number of customers at the
end of the cycle.))