CSAT measures short-term satisfaction with specific interactions, whereas NPS focuses on long-term customer loyalty based on recommendation likelihood.
Businesses get the actionable data for immediate fixes from CSAT. But for the detailed view of long-term customer sentiment, you need to implement NPS at the right touchpoints.
Keep on reading to have a detailed insight into CSAT vs NPS and the actual scope for utilizing all these crucial business metrics to ensure growth.
What is CSAT?
CSAT mainly stands for Customer Satisfaction Score, the most commonly used metric to track the satisfaction of customers of a company with a specific product or service. The metric calculates the statistical level of the percentage. Of it, 100% refers to customers who are highly satisfied, whereas 0% indicates complete dissatisfaction.
To measure the CSAT, businesses collect the most valuable insight from customer feedback. Some of the CSAT models refer to asking specific questions to customers to verify their satisfaction level. This would be—
- How well did our product/service meet your expectations?
- How easy was it to find the information you needed?
- Did our product/service solve the problem you were facing?
Businesses set the rating scale to verify the queries within Very Likely / Likely / Neutral / Unlikely / Very Unlikely. For instance, they use various customer service platforms that come with built-in CSAT question templates.
What is NPS?
NPS or Net Promoter Score is an essential CS metric used to measure customer loyalty and satisfaction based on their eagerness to recommend a product, service, or company to others. Businesses use this key indicator to track the customer experience throughout their journey and find areas for key improvement.
For instance, customers are asked a very simple question:
“On a scale of 0 to 10, how likely are you to recommend the company/product/service to a friend or colleague?”
The responses from the customers are categorized into three different groups. Such as—
- Promoters (9-10): Customers are highly satisfied, ready to recommend, and, at the best part, can become long-term brand advocates for driving growth.
- Passives (7-8): Customers are satisfied with your product or service, but not interested enough to recommend you to others. They won’t bad-mouth your brand, but are at risk of switching to competitors.
- Detractors (0-6): Customers are highly dissatisfied with your service and are not likely to recommend the company. At severe levels, they may post bad reviews that can cause harm to the brand image.
CSAT vs NPS: Key Differences
- CSAT helps businesses measure satisfaction with a specific transaction or interaction, like after a product purchase or customer service experience. Conversely, NPS finds out the overall customer loyalty and brand sentiment to know whether they will recommend the company to others.
- CSAT helps to get immediate feedback from the customer base and apply that to make adjustments to a particular customer touchpoint to implement strategies. Whereas NPS provides the detailed overviews on the entire customer journey experience, where transactional CSAT score might lack.
- CSAT uses a short rating scale for the measurement, such as 1-5 stars or a 1-7 scale. On the contrary, NPS is set with an 11-point scale, which is 0-10, to get a broader view of customer loyalty.
- CSAT is more versatile to learn about the customer perspective on different question bases, whereas NPS is limited to a single question type.
- CSAT is great to pinpoint areas of interest, whereas NPS helps you measure your business as a whole.
- CSAT provides quantitative data on customer preferences, while NPS offers qualitative data on customer loyalty.
3 Major Differences Between CSAT vs NPS
1. Formula & Example
CSAT and NPS are measured using different formulas.
For the CSAT, here is the needed format:
CSAT = (Number of Satisfied Customers/Total Number of Responses)*100
For instance, the number of satisfied customers refers to the customers who give a positive rating. Typically, it is within the satisfaction rate of 4 or 5 on a scale of 1–5, or 8 to 10 on a 1–10 scale.
Now to calculate the NPS, here is the needed formula:
NPS=%Promoters−%Detractors
The customers who respond to the survey with a score of 9 or 10 on a scale of 0 to 10 are the promoters. Besides those who rate the company between 0 and 6.
Example
- CSAT
Hilton Hotels is the hospitality industry. After the guest checks out of the hotel, the company sends a customer satisfaction survey to collect feedback on the guest’s experience throughout the day. A total of 3 guests responded that day, two of whom gave the rating between 4–5, and another one 2.
So, CSAT = (2/3)*100%
Or, 66.67%, indicating the positive sign that most guests were satisfied with their stay.
- NPS
Uber is a renowned company providing Ride-Hailing services. After completing a ride with Uber, the company constantly sends a survey with a question about how likely they are to recommend Uber to others.
On the scale of 0 to 10, up to 3 customers gave scores between 6–9, whereas one gave the score rating 10 out of 10, while the last one provided only 4. So in the promoter category, there are 2 customers, and the detractors have two.
NPS = (5/2 × 100) − (5/2 × 100)
Or, 40% − 40% = 0
The NPS score of 0 means Uber has an equal share of Promoters and Detractors.
2. Purpose & Use Cases
CSAT is the ideal business metric that is implemented after completing a customer service interaction with the brand to measure how much they find it helpful for their purpose. Some other use cases include where you can set the NPS:
- After a purchase experience
- Following the use of a particular feature
- After onboarding a new customer
- After resolving a customer support ticket
- Post product delivery
- After attending a webinar or event
- Following a free trial period
On the contrary, the NPS is used to measure the overall customer loyalty and the long-term relationship with the brand. Here are some useful ways in which NPS helps your business growth:
- Tracking overall customer sentiment
- Predicting future growth or churn
- Improving customer retention strategies
- Guiding marketing and referral campaigns
- Finding out the early signs of dissatisfaction
3. Ownership and Responsibility
CSAT is mostly used by the customer support and product teams to find the specific scopes to improve the customer experience. The teams use this metric as a diagnostic tool for understanding the customer reactions upon specific touchpoints.
For example, low CSAT after a support interaction tells you that he service team needs to improve response times.
On the contrary, marketing and leadership teams utilize the NPS to evaluate overall brand health and customer advocacy. NPS serves as a predictive tool and gives insights into the future growth of the company.
High NPS scores mean customers are likely to continue purchasing and recommending the brand, whereas low scoring recommends that your business might face quick churn.
Best Practices for Using CSAT and NPS
To have the best outcome of a thorough evaluation of CSAT and NPS for your business, here are some expert practices that can guide you precisely:
- Set the CSAT surveys after an interaction completion and get the immediate feedback.
- Your CSAT questions should be short and concise, and better to go with a single question such as “How satisfied were you with this experience?”
- Instead of overlooking the situation, implement the CSAT and NPS surveys to pinpoint exact problem areas. That would be long wait times, unhelpful customer service, and product defects.
- Must include an open-ended follow-up question after the main NPS query. You can ask, “What is the primary reason for your score?”
- The best is that if you can combine the CSAT with CES (Customer Effort Score), to can get a detailed overview of the customer experience.
Common Mistakes to Avoid
These are the most common mistakes businesses make while implementing CSAT and NPS:
- Sending too many surveys at once often results in survey fatigue and reduces the response time, affecting the ability to get real feedback.
- Businesses often fail to follow up with customers who provide their feedback, especially negative feedback. It often leads to missed opportunities and areas for improvement to retain them.
- Another common mistake businesses make is offering leading or biased questions, such as “How great was your experience with our excellent customer support?”. It just results in misleading data and leaves it without any real value.
- Lack of segmentation in CSAT and NPS means failing to analyze feedback by customer groups, such as customer behavior or demographics.
Final Thoughts
The business market providing customer-centric service or products is highly competitive now, as most of them are continually struggling to improve their customer experience. CSAT and NPS implementation is no longer optional – it is essential now!
These powerful metrics provide valuable data on how satisfied and loyal your customer base is satisfied and loyal to your brand. With the right utilization, you can define the key areas for improvement, adjust your strategy, and enhance the satisfaction level in no time.
