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Customer Satisfaction Score (CSAT) – Definition, Importance, and Best Practices

What is a Customer Satisfaction Score (CSAT)?

A customer satisfaction score (CSAT) measures how satisfied customers are with a company’s products and services. It is typically determined through a short survey in which customers are asked to rate their dissatisfaction or satisfaction on a scale of 1 to 5, with higher scores indicating more satisfied customers. CSAT is a cross-industry measure that directly captures customer feedback and is very effective.

CSAT is calculated as:

(Number of satisfied customers / Number of survey responses) * 100

Here, satisfied customer refers to those customers who have identified the best rating, usually 4 or 5 on a 5-point scale. The percentage of CSAT is given only in percentage form; the higher the percentage, the higher the customer satisfaction rate.

The steps to calculate CSAT are:

Customer interactions are what create the overall experience with a brand and make it perfect. Every interaction is an open door to create a lasting positive impression and develop trust in the brand.

Develop a customer survey: For example, customers should be asked questions like: “How satisfied were you with your experience?” Select the rating scale for a positive experience. 1 to 5 scale or 1 to 10 scale.
Collect feedback: Use email/SMS/website pop-up messages/app notifications to collect customer feedback.
Filter feedback: Count the number of respondents who gave high ratings (4 or 5 for a 5-point scale).
Calculation: The number of satisfied customers should be divided by the total number of respondents to get the CSAT percentage.

CSAT vs. Other Customer Satisfaction Metrics

CSAT is often placed along with some other metrics such as customer effort score (CES) and net promoter score (NPS). These three metric, however, serve a different purpose.

CSAT (Customer Satisfaction Score) evaluates short-term satisfaction with a specific interaction or transaction.
NPS (Net Promoter Score) evaluate the long -term customer’s loyalty by asking whether they will recommend the company.
CES (Customer Effort Score) assesses how difficult it would be for a customer to resolve issues or complete a given process.

What is considered a good CSAT score?

Although customer satisfaction score varies from industry to industry, ordinary benchmarks are as follows:

Excellent (above 80%): indicates high levels of customer satisfaction.
Good (70% to 80%): Satisfactory but needs improvement.
Needs attention (below 70%): Indicates some glaring issue(s) that need attention.

Industry benchmarks:

Retail & e-commerce: In retail and e-commerce, an ideal CSAT score would be kept at 80-90% as customer experience counts highly in repeat business.
Healthcare: A CSAT score in the 75-85% range is targeted by healthcare providers where patient satisfaction is crucial for trusting medical services.
SaaS & Tech Services: SaaS & Tech services tend to have CSAT scores around 70-80%: Software usability and support responsiveness place a lot of importance on customer feedback.
Banking and Financial Services: Banking and financial services CSAT is typically between 75-85% which is very important due to the credibility and ease of transaction with customers.
Hospitality and Travel: Hospitality and travel companies achieve a CSAT rating between 80 and 90% because customer experience is everything in this industry.

Factors that affect CSAT scores:

Service quality: Responsive, value-adding knowledge support teams generally achieve a higher CSAT score.
Product quality: Defective and substandard products delivered to customers will surface with lower satisfaction ratings.
Ease of use: Simple and intuitive features of any type of product or service enhance the customer experience.
Pricing and value: The fair value expectations that customers have for the value they receive.
Delivery and fulfilment: Fast, accurate, and reliable delivery positively affects CSAT.
Customer expectations: If an organization fails to meet advertised expectations, CSAT performance decreases.
Survey design: Overly complex surveys can frustrate and lower customer participation rates, which affects CSAT.

Advantages

Simple and fast: It is easy to adopt and understand.
Recommendations: Provides immediate feedback on action-based assessments.
Flexible: Connected to different touchpoints in different situations (after a purchase, after a specific support interaction, etc).
Tool for benchmarking: Serves as a benchmark for most customer satisfaction scenarios over time and against industry standards.

Disadvantages

Short-term: Only looks at satisfaction over time; does not measure long-term loyalty.
Subjective observation: Responses will vary due to an individual’s perspective, thus producing unreliable results.
Low response rate: Survey responses are few, making them more biased.
Lack of context: Lack of a source of reviews, positive or negative.
Cultural differences: Across the world, different satisfaction rating scales apply to different customers and regions.