{"id":27279,"date":"2023-02-15T15:35:27","date_gmt":"2023-02-15T15:35:27","guid":{"rendered":"https:\/\/www.intercom.com\/blog\/?p=27279"},"modified":"2024-10-22T17:59:12","modified_gmt":"2024-10-22T16:59:12","slug":"what-is-customer-satisfaction","status":"publish","type":"post","link":"https:\/\/www.intercom.com\/blog\/what-is-customer-satisfaction\/","title":{"rendered":"What is customer satisfaction (CSAT)?"},"content":{"rendered":"

Customer satisfaction is one of the most important considerations for any business. After all, a healthy business relies on happy customers \u2013\u00a0and if your customers aren’t happy, they probably won\u2019t stick around.<\/span><\/p>\n

Customer satisfaction ratings are a crucial metric for understanding how well you\u2019re meeting your customers\u2019 needs. By measuring customer satisfaction using some key performance indicators, you can track how happy your customers are with your business, product or service, and the experience you\u2019re offering \u2013 and quickly identify where and how you can make improvements.<\/span><\/p>\n

In this article, we\u2019ll cover everything you need to know about customer satisfaction: what it is, why it matters, how to measure it, and what it looks like in action.<\/span><\/p>\n

Find out how Intercom can boost your customer satisfaction metrics<\/a><\/p>\n

What does customer satisfaction mean?<\/span><\/h2>\n

Customer satisfaction (CSAT) is a measurement that reveals how happy your customers are with your business: from your product or service to the experience you provide throughout the customer journey. In this way, customer satisfaction is intrinsically linked to <\/span>customer experience<\/span><\/a> (because better experiences = happier customers).<\/span><\/p>\n

\u201cCustomer satisfaction (CSAT) is a measurement that reveals how happy your customers are with your business: from your product or service to the experience you provide throughout the customer journey\u201d<\/p><\/blockquote>\n

Because customer happiness should be at the center of every business, customer satisfaction is an important metric to monitor. Low customer satisfaction ratings can lead to churn and revenue loss, while high customer satisfaction ratings are linked to retention, loyalty, improved customer acquisition, and increased profits.<\/span><\/p>\n

There are lots of ways to measure customer satisfaction. Many businesses use a customer satisfaction (or CSAT) score, which they gather using a customer satisfaction survey or via other voice of the customer research.<\/span><\/p>\n

What is a customer satisfaction survey?<\/span><\/h3>\n

A customer satisfaction survey is a questionnaire that you send to customers to understand how happy they are with your product, service, or other element of your business. The responses to this survey can help you to understand your customers\u2019 needs and identify ways to optimize the customer experience.<\/span><\/p>\n

\u201c\u200b\u200bNowadays, however, many businesses are turning to in-app surveys to help them capture customer feedback in the moment\u201d<\/p><\/blockquote>\n

There are many ways to run a customer satisfaction survey and measure your CSAT score. Surveys can vary from in-depth to lightweight: from asking customers to rate an interaction from 0-10, <\/span>sending them direct feedback questions<\/span><\/a>, or even letting them choose the emoji that best represents their experience.<\/span><\/p>\n

In addition to using different methodologies, customer satisfaction surveys can also take a number of different formats across multiple channels. In the past, these customer satisfaction surveys were often emailed to the customer after a transaction or interaction. Nowadays, however, many businesses are turning to <\/span>in-app surveys<\/span><\/a> to help them capture customer feedback in the moment. Unlike email surveys, which are sent at a later time \u2013 by which customers may have forgotten the experience entirely \u2013 in-app surveys allow you to get feedback while things are still fresh in the customer\u2019s mind. (More on that later.)<\/span><\/p>\n

The importance of customer satisfaction<\/span><\/h2>\n

From product design to marketing to sales to <\/span>customer support<\/span><\/a> \u2013 there\u2019s no team in your business that shouldn\u2019t be focused on customer satisfaction. Moments that grow customer satisfaction can (and should!) happen at every touchpoint of a customer\u2019s journey: from how easy it is to navigate your website, to how much they enjoy using your product, to how quickly they can get in touch with customer service to resolve an issue, it all contributes to a customer’s impression of you.<\/span><\/p>\n

If you\u2019re not measuring customer satisfaction across all of these different touchpoints, however, you\u2019re missing out on vital opportunities to understand \u2013 and improve \u2013 your business\u2019s performance. Here are three benefits of a high customer satisfaction rating that highlight why it\u2019s such an important metric to track.<\/span><\/p>\n

1. Reduce churn and improve retention<\/span><\/h3>\n

Poor experiences can negatively impact customer satisfaction in ways that are hard \u2013 and costly \u2013 for your business to recover from. More than 60%<\/a> of<\/span> customers say they would walk away from a brand they love after just <\/span>one <\/span><\/i>bad experience.<\/span><\/p>\n

\u201cBy analyzing customer satisfaction scores and spotting areas that need improvement, you can optimize the customer experience to fix problems before <\/i>customers leave\u201d<\/p><\/blockquote>\n

Clearly, low customer satisfaction is directly linked to churn. And churn has an outsized financial impact: in fact, <\/span>Bain & Company suggests<\/span><\/a> that increasing customer retention rates by just 5% can increase profits by between 25% and 95%.<\/span><\/p>\n

But how do you keep customers from churning and encourage them to stay? To boost customer retention, you need to boost customer satisfaction. By analyzing customer satisfaction scores and spotting areas that need improvement, you can optimize the customer experience to fix problems <\/span>before <\/span><\/i>customers leave \u2013 and before it starts to impact your bottom line.\u00a0<\/span><\/p>\n

2. Boost loyalty for long-term success<\/span><\/h3>\n

Better customer experiences drive business outcomes that go above and beyond improved retention. <\/span>The XM Institute has found<\/span><\/a> that positive customer experiences are intrinsically linked to customer loyalty. They discovered that improved customer experience leads to additional purchases and more recommendations, as well as increased trust. In turn, this can help customers to forgive a company if there <\/span>is<\/span><\/i> a bad experience, thereby reducing the chance of future churn.<\/span><\/p>\n

What\u2019s more, the same study explored the effects of what it calls the \u201cthree elements of a customer\u2019s experience\u201d \u2013\u00a0success, effort, and emotion \u2013\u00a0on loyalty behaviors. It found that improving emotion has the biggest benefit, leading to an improvement in key loyalty behaviors such as purchasing more, recommending, forgiving, and trusting.<\/span><\/p>\n

And the best way to create positive emotions? By creating a tailored, personalized customer experience that satisfies customers.\u00a0<\/span><\/p>\n

3. Increase revenue and bottom-line growth<\/span><\/h3>\n

With all of these factors in mind, it\u2019s not surprising that customer satisfaction is one of the key indicators of business success.\u00a0<\/span><\/p>\n

\u201cOf companies who say they deliver \u2018significantly above average\u2019 experiences, 89% report better revenue growth than competitors in the previous year\u201d<\/p><\/blockquote>\n

One study found<\/span><\/a> that of companies who say they deliver \u201csignificantly above average\u201d experiences \u2013\u00a0in other words, the kind of experiences that drive customer satisfaction \u2013 89% report better revenue growth than competitors in the previous year, while nine in 10 report better profitability than competitors in the same period.<\/span><\/p>\n

Not only that, but companies at the top of their industries in key customer satisfaction rankings (like Net Promoter Score) for three or more years <\/span>grow revenues 2.5 times as fast as their industry peers<\/span><\/a> and deliver two to five times the shareholder returns.<\/span><\/p>\n

Key metrics for measuring customer satisfaction<\/span><\/h2>\n

For anyone still asking \u201cIs customer satisfaction important?\u201d, it\u2019s clear that the answer is a resounding yes. So how can you start to measure, track, and ultimately improve customer satisfaction?<\/span><\/p>\n

There are lots of customer satisfaction metrics out there. Some have become industry standards, such as CSAT and Net Promoter Score. Others may be less widely tracked as part of a customer satisfaction program, but are nonetheless useful indicators of customer happiness.<\/span><\/p>\n

Here are four key customer satisfaction metrics to consider.<\/span><\/p>\n

CSAT score<\/span><\/h3>\n

CSAT is the classic customer satisfaction score. It\u2019s usually calculated by sending a survey to the customer asking them how satisfied they are with the service they received. For example, these surveys are <\/span>often used in customer service<\/span><\/a> to help support teams understand if they successfully resolved a customer\u2019s issue.<\/span><\/p>\n

\u201cCSAT is a valuable metric to measure because it gives a snapshot of customer sentiment, and you can use it at various moments of the customer journey\u201d<\/p><\/blockquote>\n

There are many ways of calculating CSAT, but the usual approach asks customers to rate their satisfaction experience on a scale from \u201cvery unsatisfied\u201d to \u201cvery satisfied\u2019. The number of satisfied customers is divided by the number of total responses, and this figure is multiplied by 100 to give the percentage of satisfied customers or CSAT.<\/span><\/p>\n

CSAT is a valuable metric to measure because it gives a snapshot of customer sentiment, and you can use it at various moments of the customer journey, from onboarding to support. However, it\u2019s important to note that when it comes to understanding your support team\u2019s performance, CSAT only gives you half the picture. As <\/span>Martin K\u00f5iva, CEO of Klaus, points out<\/span><\/a>, sometimes customers leave negative ratings for issues unrelated to how well your support team handled the issue or the level of customer service they received: \u201cNot all issues can be solved immediately and some of your users\u2019 requests can never be solved by your team at all.\u201d\u00a0<\/span><\/p>\n

So while CSAT is a useful indicator of customer satisfaction overall, when it comes to team performance, it\u2019s important to <\/span>incorporate other metrics<\/span><\/a> to help you get a clear overview.<\/span><\/p>\n

Net Promoter Score (NPS)<\/span><\/h3>\n

Net Promoter Score<\/a> (commonly known as simply NPS) is a simple survey consisting of one basic question: on a scale of zero to 10, how likely are you to recommend this brand to someone else?<\/span><\/p>\n

Many companies use the Net Promoter Score metric, which makes it easier to compare your score to industry benchmarks and understand how you\u2019re stacking up against the competition. However, it can also hide complexity: what\u2019s considered a \u201cgood\u201d NPS can vary a lot by industry, and it can be hard to pinpoint why users gave the ratings they did without following up for more information.<\/span><\/p>\n

\u201cOn a scale of zero to 10, how likely are you to recommend this brand to someone else?\u201d<\/p><\/blockquote>\n

Based on the responses to your NPS survey, you can classify customers into three groups:\u00a0<\/span><\/p>\n