Ask any business owner and they’ll tell you how crucial customer loyalty or satisfaction is to their business effectiveness.
Some may even develop business operations around their customers — an end-user-centric approach that fosters even better business-customer relationships.
However, measuring the impact of such operations is an entirely different (and challenging) task. You see, the more metrics you involve in business performance measurement, the more overwhelming the process becomes.
Despite the complexity, businesses should aim to measure the right metrics to measure or predict market success precisely. And none can do a better job than metrics like Net Promoter Score (NPS) and Customer Satisfaction Score (CSAT).
Which of the two metrics should you use? In this complete guide to CSAT vs. NPS, we answer the crucial “WHAT, HOW, WHEN, and WHY.”
Let’s get started!
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What is NPS (Net Promoter Score)?
NPS stands for Net Promoter Score. It is a widely popular growth indicator that allows businesses to measure customer loyalty by asking specific questions (NPS Survey).
The question or survey gives companies an idea of how likely customers will recommend their brand, products, or services to others.
Net Promoter Score surveys tend to generate responses against questions like — “On a scale of 0-10, how likely are you to recommend our product/service/company to a friend or colleague?”
What is CSAT (Customer Satisfaction Score)?
CSAT stands for Customer Satisfaction Score. As the name implies, it is a CX metric that specifically measures customer satisfaction levels.
CSAT or customer satisfaction measurement surveys contain questions that help measure how happy or satisfied customers are with a certain aspect of your products or services.
In other words, you can use CSAT surveys to optimize almost any customer touchpoint.
Customer Satisfaction Score surveys tend to generate responses against questions like — “How would you rate your overall satisfaction with the service you received?”
How is NPS calculated?
The NPS survey question, as shared earlier, will generate a wide range of responses, which can be segregated and put into categories like promoters, passives, and detractors. Let’s learn about these categories —
These are customers that leave a score of 9 or 10. Such customers are very happy with their experience and will refer your brand to others.
These are customers that leave a score of 7 or 8. Such customers are neither happy nor completely cross with the experience they had with your brand, and might not refer you to others.
These are customers that leave a score of 0 to 6. Such customers had a terrible time with your brand and are likely to leave negative public feedback unless you address their concerns in time.
Once you have the responses, you can calculate the NPS score using the formula —
(Percentage of Promoters) – (Percentage of Detractors) = NPS Score
How is CSAT calculated?
The responses to the CSAT survey question shared earlier can be scaled from 1 to 10 or 1 to 5, as per a company’s preference. To calculate CSAT, you will first have to calculate the percentage of customers that left the highest feedback ( 9 and 10, or 4 and 5).
These two scores correspond to the customer being “satisfied” and “very satisfied.”
Once you have the responses and calculate the percentages, you can get the Customer Satisfaction Scores or measure customer satisfaction using the formula —
(Total number of Top 2 Responses) / (Total number of responses) * 100 = Percentage of satisfied customers.
If you talk about CSAT in terms of NPS, you are using the above formula to find the percentage of “promoters.”
When should you measure NPS?
You cannot use NPS surveys anywhere you want. The most ideal way of using NPS surveys is triggering them at the absolute end of a transaction.
Once the transaction is complete, the NPS surveys will help know if the customers would recommend your brand to others. But why should you measure NPS at the very last?
Well, a customer should have the freedom to glide through the customer journey before landing on a conclusion and determining his loyalty.
Net Promoter Score should be measured frequently as it helps reflect on your entire brand and provides adequate insights for effective course correction.
Make sure you invest in NPS reports (as discussed in earlier posts) to track NPS records and track its improvement over time.
When should you measure CSAT?
Like NPS, Customer Satisfaction surveys are also sent at the end of an interaction. However, these interactions can be conversational or transactional and can happen within the customer journey.
Conversational (customer service) interactions like one with a customer support rep can be followed with a CSAT survey to measure the rep’s performance.
Customer Satisfaction surveys can also help determine customer satisfaction by using them to evaluate the overall experience of buying a product. The surveys can be triggered when the product is delivered to the customer.
Again, companies should be measuring CSAT as long as they exist. The responses to CSAT surveys should be recorded to seek patterns and take real action for business continuity.
Tip: If you’re interested in measuring CSAT then it’s definitely worth looking into Customer Effort Score (CES) to get an all-round view of your customers experience.
Why should you use NPS? (Advantages)
The Net Promoter Score comes with a list of advantages as it allows companies to rely on just one metric to capture the effectiveness of their customer experience and loyalty strategies.
NPS surveys are extremely easy to use.
The formula we shared earlier is quite simple too. It’s amazing how such simplicity provides companies with an effective bird’s eye view of their customer experience and extends insights to reduce customer churn.
Creating the NPS surveys is effortless. We have a wide range of NPS survey tools available on the market and some of them are even free to use.
The tools even help provide in-depth insights into customer loyalty and retention. In other words, NPS surveys put companies in the fastest route to growth.
Why should you NOT use NPS? (Limitations)
NPS surveys certainly provide a granular analysis of your CX strategies and challenges, and even provide actionable insights to resolve specific issues.
But the survey itself doesn’t solve any problems. The question asked in Net Promoter Score surveys is generally considered a “Complete Question.”
But its effectiveness relies on the quality of your follow-ups. To use NPS as a growth driver, companies will have to manually address the detractors and passives. Otherwise, NPS surveys function just as a research tool.
Why should you use CSAT? (Advantages)
CSAT allows marketers and business owners to double down on specific touchpoints of a customer journey. Since it can couple with almost all customer actions, CSAT surveys turn out to be an excellent tool to close the loop with customers.
Whenever a customer takes an action, let’s say the customer makes a purchase, the action can trigger a CSAT survey encouraging the customer to share how they felt about that specific process.
Since you receive honest customer feedback scores, you can use the opportunity to respond by taking solid action. In other words, CSAT allows marketers to decipher customers’ concerns and use them to develop better business-customer relationships.
Why should you NOT use CSAT? (Limitations)
We have found that CSAT works well when it’s used to collect and analyze individual responses. However, it fails to analyze the overall aspect of customer satisfaction.
With CSAT surveys, you can figure out the impact of your customer experience strategies, but it will never help you predict customer loyalty or repeat business.
In other words, CSAT isn’t a very effective tool to connect CX with your company’s bottom line.
Nevertheless, CSAT is one of the most useful customer satisfaction metrics if you know what you want to evaluate in a customer journey through surveys.
Which one should you use? NPS or CSAT?
The primary difference between NPS and CSAT surveys is the timeframe for customer feedback collection. Net Promoter Score is generally used to track and evaluate long-term customer loyalty and satisfaction.
CSAT, however, makes it easier to measure the short-term impact of a touchpoint on customer satisfaction.
Since CSAT evaluates only a short-term impact, it doesn’t have an impact as huge as that of NPS on a brand’s profitability and ability to dominate the market.
This is because customer satisfaction surveys are designed specifically to solicit immediate customer feedback and constantly track (and comply with) market CSAT standards.
In other words, NPS and CSAT are two complementary metrics that help address the macro and micro aspects of running business operations that ensure superior customer experience.
Net Promoter Score and Customer Satisfaction Score measure distinct aspects of a customer journey. While CSAT provides insights into specific actions and features, NPS helps improve the consumer’s perception of your brand.
However, businesses should use them together as they complement each other and help generate more processable data at key stages of the journey.
Indeed, NPS and CSAT measure distinct cases at any given touchpoint.
But, the collective feedback will only bolster your product and customer service development strategies — making it easier to boost user-friendliness while improving the company’s customer retention.