CSAT is by far one of the most recognizable metrics when it comes to measuring customer experience, and one that companies have seemed to use forever. But have they really? Because of its importance, the CSAT score seems to have been around since the beginning of time—why wouldn’t you want to know how satisfied someone is with what you’ve provided?
Oddly enough, CSAT is an 80s baby, which makes it pretty cool, if you ask me (no bias!).
CSAT, of course, stands for customer satisfaction score. (I know what you’re thinking. Why doesn’t it have an “s” on the end to cover score? Mostly because we just say the score part! 😉) Let’s dive into CSAT and understand what it really means and where it comes from.
A bit of history!
Customer satisfaction is by its nature a bit abstract, as the actual state of satisfaction changes for each customer, and it can even vary further based on specific services, products, or aspects of interactions between customers and companies. It can even vary depending on physical, psychological, or cultural differences for each person.
The basis of the CSAT was grounded in work by Leonard Berry and team in 1986 to measure customer expectation of performance with their perceived experience of said performance. That “gap” is qualitative in nature, and was further added to the “confirmation/disconfirmation” theory to understanding if something works or not to create the CSAT.
The customer is confirming or disconfirming if a product/service was good or not, and then rating the level of satisfaction based on their expectation and perception of what they received. As humans, we do this naturally, and this is the development of the CSAT score for companies to then understand their customer experiences and attached the measurement using a Likert Scale—often called a rating scale.
Qualitative measurement for quantitative results
Despite the question itself measuring a qualitative response from customers, the data it provides to companies is quantitative, usually on a scale of 1-5 (though some can go up to 10 or even 100!). For example, a company having a 4.7 CSAT score from their customers would indicate a relatively high level of customer satisfaction, on average.
CSAT becomes a valued Key Performance Indicator (KPI) for companies to use, and a high CSAT suggests to many that the company is also good at providing good customer experiences. It is indicative of good CX, but it’s also just one of the many KPIs used to measure experience.
The American Customer Satisfaction Index (ACSI) is a national indicator of the quality of services or products through the lens of experience of customers, and currently tracks CSAT for more than 400 of the largest corporations in the US.
Here’s what you’d typically see as a customer:
How would you rate your overall experience with [product]?
- Very Unsatisfied
- Very Satisfied
Something so small, and yet it carries a big punch! What all does this index, and the CSAT score by extension, impact?
- Sales growth
- Corporate profitability
- Customer Retention
- Stock returns
- Gross margins
- Shareholder value (Tobin’s Q)
- Lower sales costs
- Lower customer acquisition costs
- Cashflows (both stability and size)
- Reverse law of diminishing returns with high index or score
Just to name a few …
Within the business sector, there aren’t many metrics used in customer experience or service that have the same level of business relevance. The CSAT isn’t just good for your customers, it’s also an important measurement that has a direct impact on your business strategy! Understanding how truly powerful this metric is can create new opportunities for growth in your organization. No wonder the CSAT score has grown in such great popularity in the last few decades.
(Perhaps because it started in my birth year? Just a personal opinion, of course. 😉)
Now is the best time to get feedback from your customers with powerful analytics to drive action. Don’t know where to start? We’re here to support your efforts!