Customer Satisfaction

Learn everything about customer satisfaction — definition, benefits, and optimization strategies, plus a simple way to measure CSAT of each case.

Despina Singh
November 16, 2021
7 min read

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What is customer satisfaction?

Customer satisfaction or CSAT is a customer service metric used to gauge the extent to which a customer is happy when they interact with your company.

When companies evaluate CSAT objectively, they can find answers to many questions such as:

  • How does a customer feel when they interact with the company?

  • How is the company handling customer complaints?

  • How satisfied is a customer with a specific product/service/support?

  • What are the customer expectations from the company – perceived product value, perceived product quality, etc.?

Why is measuring customer satisfaction important?

Customer satisfaction measurement helps to identify unhappy customers and establish why they are unhappy. Likewise, it also identifies satisfied customers that can be nurtured into brand advocates. For any business, customer loyalty is invaluable as it generates repeat sales, referrals, and goodwill. When customers advocate for your business, they help attract new leads and customers, increasing their overall customer lifetime value.

Measuring customer satisfaction can go a long way in improving your customer experience, yielding many more satisfied customers in the process.

There are many other reasons why businesses measure customer satisfaction, namely:

Customer dissatisfaction is costly

Customer dissatisfaction leads to both direct and indirect costs to the company.

Direct cost: Generally, most of the dissatisfied customers churn easily and almost never return for repeat purchase or referrals. Unhappy customers tend to head over to the business’ competitors.

Indirect cost: These are costs linked to the rise in complaints to customer service – loss of employee productivity due to low morale, utilities, etc. Over $338.5 billion per year is lost globally due to bad customer service experiences.

Customer retention is easier than customer acquisition

It takes considerable marketing and prospecting efforts to gain a new customer. Customer acquisition marketing can cost five times more than customer retention.

Customer dissatisfaction harms your brand reputation

Dissatisfied customers tend to vent about their bad experiences on social media and review sites. Poor reviews and word-of-mouth can drive away prospective customers, investors, and talent from your company.

Each month, about 50% of internet users post online reviews. One unhappy customer will share their experience with 9-15 people, and around 13% with more than 20 people. Negative reviews can harm your company’s reputation and revenue in a big way.

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What are customer satisfaction surveys?

A customer satisfaction survey is a study based on the customer's perception and expectation of performance from a service or a product. These surveys provide an opportunity to poll customers and allow them to evaluate each statement that your company has concerning the service they provide.

There are some additional benefits of a customer satisfaction survey. It helps you to:

  • Determine inactive leads: a lead does not receive a questionnaire until his or her purchase is complete

  • Engage your customers: asking customers about their level of satisfaction helps to gather insights on what you can do better

  • Nurture your leads: asking customers to reveal where your weak points are can turn potential customers into clients

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How to measure customer satisfaction?

There are three key steps to measure CSAT:

  1. Set clear goals

    In order to put your customer satisfaction data to good use, you need to set clear goals for your support strategy. These goals will guide your strategy and actions and will help your business achieve great results. For example, using these insights, you may identify gaps in your process that you need to address.

  2. Formulate a plan

    Build a plan that can translate into actions, based on the customer feedback you gather. For example, based on the collected data, you can improve your website UX, develop customer support systems, streamline processes, create a knowledge base, etc.

  3. Select your customer satisfaction metrics

    Charting a customer support success strategy is essential for your company. Depending on your goals, you can select one, some, or all of the below customer satisfaction metrics:

Customer Satisfaction Score (CSAT score)

Customer satisfaction score is used to quantify whether your product, service, or experience meets your clients’ expectations. Customers are asked to assess their level of satisfaction on a scale from 1 to an agreed maximum, typically 5 or 10. For example:

On a 5-point scale from “very unsatisfied” to “very satisfied,” how would you rate your experience about the quality of the product delivery?

Other survey questions to assess customer satisfaction can be about:

  • The quality of overall customer experience

  • Product usage challenges

You may allow respondents to use emojis instead of numbers to fill out the surveys. They tend to be more engaging than plain text.

Net Promoter Score (NPS)

Net Promoter Score is a metric to quantify the likelihood that a customer will promote or recommend your service, product, or brand. One key question asked in Net Promoter surveys is:

On a scale of 0 to 10, 0 being “not likely at all” and 10 being “extremely likely,” how likely is it that you would recommend … (e.g., product, service, or brand) to your friends or colleagues?

Based on survey scores, you can classify respondents as:

  • 9-10 – Promoters: These are loyal customers who will continue to be associated with you and will recommend your brand to their friends.

  • 7-8 – Passives: These are somewhat satisfied customers who may or may not recommend your brand, likely to move to your competitors.

  • 0-6 – Detractors: These are unhappy customers who are the least likely to recommend your company. They are likely to share negative experience online and damage your brand reputation.

Customer Effort Score (CES)

Customer Effort Score is used to quantify the effort a customer has to put into a specific interaction with your company. Customers are asked how much effort they exerted to accomplish what they set out.

One key question asked in a Customer Effort Score survey is:

On a scale of 0 to 10, 0 being “strongly disagree” and 10 being “strongly agree,” to what extent do you agree or disagree that the company makes it easy for you to handle/resolve your issue?

The survey questions can be modified according to specific situations and company standards.

First Response Time (FRT)

First Response Time is used to quantify how quickly a customer received a response from the company to their first query. Different channels such as live chat, social media, and email have varying benchmarks for acceptable FRTs.

First Contact Resolution Rate (FCR)

First Contact Resolution rate quantifies the percentage of issues that are resolved satisfactorily in the first customer interaction. You could ask the customer if their issue was resolved satisfactorily with a follow-up immediately after the initial contact. FCR is an indicator of a positive experience for most customers.

Average Handling Time (AHT)

Average Handling Time is used to quantify the average length of time spent by the customer per contact. Additionally, it should be a frank and objective assessment of how much time and patience a company is asking of its customers. When calculating AHT, ensure that you include the time spent by customers on hold.

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How to improve your CSAT metrics

Measuring customer satisfaction is the first step toward a better customer experience. Once you pick your customers satisfaction metrics, use the gathered data to:

  • Minimize direct and indirect costs related to customer dissatisfaction

  • Acquire a better understanding of customer expectations and needs

  • Boost your company’s brand reputation

  • Enhance the effectiveness of your steps for contact improvement

  • Identify problem areas

  • Analyze and evaluate customer relationships

  • Source ideas for new strategies and development

It is important that you take action when you have the metrics’ results. There are ways to ensure your next steps are deliberate and informed against the ever-changing customer expectations. Here are a few examples of how to use customer satisfaction metrics to create an improved customer experience:

How to improve CSAT scores

Apart from being a powerful metric to gauge customer happiness, the benefits of using CSAT surveys include enabling you to benchmark your results against competitors. Low CSAT scores may imply that you need to upgrade your Voice of Customer program, resolve pain points in the customer journey map, ask additional questions other than “How satisfied are you on the scale of…,” empower/train your team, etc.

You can also use AI-powered software to predict the happiness level of your customers. AI helps analyze customer messages for sentiment, intent, and intensity, and thereby helps predict CSAT in real-time.

How to improve NPS

Like CSAT scores, you can use NPS to benchmark your performance. Generally, asking customers if they would consider recommending and promoting your business often leads to them being prompted to do so.

If a long-term track of NPS shows a decline over a predefined period, companies can trace their steps back to the changes or updates that were made in this duration that may have affected customer loyalty. Like the CSAT score, if your NPS is good, you can leverage it as a key differentiator.

How to improve CES

If your CES is dissatisfactory, you can take proactive steps to decrease the level of effort a customer has to exert by providing self-service options such as FAQs, knowledge base, community discussion forums, AI chatbots, etc.

How to improve FRT

Even if the first reply by your company to the customer doesn’t resolve the issue, FRT is essential because customers expect quick responses and dislike being kept waiting for a reply. To improve FRT, you can train or empower your agents to provide as clear instructions as possible, help agents stay focused, embrace conversational channels, prevent agent burnout, etc.

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How to improve FCR

If you are experiencing low FCR, you can improve your knowledge base, minimize circle time, minimize customer effort, etc.

How to improve AHT

AHT can indicate where additional agent training may be needed. ​​High AHT could be a sign that you need to automate FAQs, record and review phone calls, implement IVR, analyze your workflow, make sure your employees know the product, improve your website, etc.

Leverage Sprinklr’s AI-powered solutions to increase CSAT by 200+% in less than a year

Measuring customer satisfaction by traditional means and algorithms is insufficient especially when your customer base is scattered. As the world’s only unified customer experience management platform (Unified-CXM), Sprinklr is purpose-built to collect and collate customer feedback from 30+ touchpoints in a single dashboard. Sprinklr then harnesses the power of AI for an accurate analysis of customer feedback and satisfaction, by features such as:

  • Predictive CSAT scores that are measured by an advanced AI engine, based on intent, sentiment, emotion, intensity, and time of reply

  • AI-moderated community forums to find answers from other customers who have experienced similar issues

  • Unified Agent Desktop to provide agents with a 360-degree view of a customer’s case history across all channels in one window for rapid case resolution

  • AI-powered insights to learn why your customers contact you and resolve recurring issues at scale

  • AI-powered agent quality scores to facilitate regular agent audits so supervisors can identify areas for agent improvement and formulate training, and pick agents who can serve as models to others

  • Customer service surveys that trigger automatically after an interaction and are analyzed to identify issues and improve CSAT

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