How to measure customer satisfaction

Measuring customer satisfaction is capturing customer feedback and analyzing it. This could be sending out an email survey to customers, asking them to score their satisfaction (typically on a scale of 1-3, 1-5 or 1-7), then assessing the results.

A Customer Satisfaction (CSAT) score is often used as a key metric. To calculate this, take the total number of satisfied customers (e.g. those who gave you a score of 4 or above on a scale of 1-5), divide by the total number of participants, then multiply the result by 100 to get the percentage.

But measuring a CSAT score in isolation will give you an unrepresentative read on how satisfied your customers actually are. There are other metrics, mindset shifts, and strategies needed…

Many businesses avoid the ‘isolated measurement’ trap by measuring everything (CSAT, NPS, NES—ABC to XYZ). But focusing only on ‘the numbers’, means you’re not actually investigating the root causes of the issues your customers are experiencing. This can hinder service improvement in the long term and damage brand reputation. It also makes it hard to derive tangible value from the investment you’ve made into measurement.

To measure customer satisfaction effectively it needs to be part of a wider strategy. This starts with establishing why you want to measure customer satisfaction in the first place.

If you don’t have a clearly defined goal (e.g “I want to find out where the bottlenecks on our primary user journeys are”) you’re unlikely to actually use the data you collect, meaning the whole process will eat up your budget for zero benefit. So set a goal, measure towards it and then make it part of a bigger mindset shift…

The next stage is to combine your goal driven measurement of customer satisfaction with a bigger mindset shift that prioritizes customer experience (CX). Better CX means better customer satisfaction—this makes CX a big differentiator.

This means combining metrics such as CSAT score and Net Promoter Score with a CX-led strategy is vital if you want to create customer satisfaction across the whole customer relationship—rather than in one small area of it.

There’s no one-size-fits all approach to customer satisfaction measurement. For example, ‘prescription adherence rate’ was a key customer satisfaction metric for one of our healthcare provider clients —but would mean nothing to our high-flying FinTech clients.

But there are some core metrics that every business should know:

If you want to dive deeper into the metrics above, and explore how to use Customer Health Scores, Churn Rate, and Employee Satisfaction as part of your CSAT strategy, check out our CSAT metrics page—or read on below as we dig into NPS in more detail.

Net Promoter Score® (NPS®) NPS is a great indicator of customer satisfaction. It’s also a great way to capture customer positivity around your product or service so that it can be used to acquire new customers through referrals and word-of-mouth marketing.

As explained above, NPS asks customers how likely they are to recommend your business/product/service to a colleague or friend. Customers are asked to rate this on a scale of 1-10.

Before you can calculate NPS you need to divide your customers into Promoters, Detractors and Passives.

Once you have these persona segments, you can calculate NPS as follows:

Percentage of promoters, minus the percentage of detractors.

(Passives’ are not used in the formula)

For example, if 10% of respondents are detractors, 20% are passives and 70% are promoters, your NPS score would be 70-10 = 60.

Many of the above are bread and butter metrics that businesses are already using, in the next section we look at the metrics that separate the industry frontrunners from the rest of the pack.

CSAT, NPS, and CES are a good starting point (when used as part of a wider strategy) but to make real gains you need to measure these things too: referral rate, employee satisfaction, and resolution times.

Referral Rate

Referral rate adds a new layer to NPS, by measuring how often your existing customers actually bring you new business leads rather than how likely they are to at some point.

If a customer has been with you for a year and is unwilling (or simply hesitant) to recommend you to other clients, something’s wrong. Measuring referral rate lets you see this so you can address it.

Resolution times

Response and resolution times are also a major KPI for measuring customer satisfaction that often gets overlooked. How major?

Employee Satisfaction

Employees with greater job satisfaction provide better customer experiences. Yet it’s rare that employee culture is given the same amount of attention as the customers they serve.

By treating employee satisfaction as a key metric, you can develop strategies on how to improve it. And by keeping employees longer, you’ll access a cascade of other benefits. The more training and experience agents have, the more they drive customer satisfaction. And the longer employees stay, the more ROI on training spend you get. This also means you spend less on talent acquisition and onboarding, leaving more to invest in other customer satisfaction drivers like product/service improvements.

When you measure your employees’ sense of purpose, your CX becomes purposeful—both for harnessing customer loyalty and keeping your bottom line sweet.

1. Average resolution time measures the average time it takes for a customer to get a resolution after they reach out with a query, update request, or issue. The basic calculation is simple: record the amount of time it takes each of your customers to get a resolution, add the results together, then divide the total by the number of customers seeking a resolution. In practice, average resolution time can get tricky. More complex issues take longer to resolve so you’ll need to clearly set your parameters for what constitutes a ‘resolution’. If your process requires a resolution acknowledgement from the customer, how do you handle cases in which they do not respond? The answers will be specific to your organization but we have more information and guidelines on our metrics page.

2. First call resolution rate measures the percentage of customer queries, update requests, or issues that your customer service agents are able to resolve during the customer’s first interaction with them. In spite of the name, this doesn’t only refer to actual calls, it covers all channels in which a customer interacts with an agent e.g. live chat, social media, email. To find your first call resolution (FCR) rate, take your total number of cases resolved in first contact over a given period, divide by the number of cases, and times by 100 to get the percentage. It’s a great indicator of how skilled your service teams are. Highly trained and effective service agents, deliver much higher FCR rates. Keeping an eye on this is especially important if you’re outsourcing your customer service department. And, if you want to take your FCR a step further, you can consider moving to a CX-first outsourcing.

A key part of any metric is ensuring that you have the right measurement scale in place. In the next section we explore how to use rating scales to measure CSAT.

Above, we’ve explored some key metrics you need to consider when measuring customer satisfaction (you can also check our page that deep dives into each one). But what about the actual scales you employ when using those metrics?

It’s important to note that the rating can be a number or a statement. For example, you might ask a respondent to rate the satisfaction from 0-10. Or you might ask a respondent the extent to which they agree or disagree with a statement such as “I am satisfied with the service I received”. Such Likert scales (after their creator) give participants options like: strongly agree, agree, somewhat agree, neither agree nor disagree, somewhat disagree, disagree, strongly disagree.

Below, we explore the different rating scales you’ll encounter and what their strengths and weaknesses are.

If you want to get tips on how to craft your own full questionnaire you can check out our dedicated page on that subject too.

Once you have these persona segments, you can calculate NPS as follows:

You’re likely to have seen this scale when measuring CSAT. Remember that the inclusion of a zero score makes this an 11 point scale.

This is also used for customer satisfaction, and again can help you capture more granular feedback.

This scale is commonly used to measure specific customer satisfaction data-points rather than overall customer satisfaction. This can include reactions to the launch of a feature, product, service or brand element. It is particularly useful for capturing detailed answers for Likert scale questionnaires.

One of the most popular rating scales owing to its simplicity—we’ve all been asked to give something a star rating and we know that means 1-5. This familiarity makes it great for boosting participation. It can also be used for more simplified capture of Likert questionnaire data. In which the ‘somewhat’ options are removed.

Also very popular owing to the reduced cognitive strain it puts on survey participants. It’s also the easiest of all the rating scales to incorporate into attractive design templates which boost participation and completion rates. It’s the most commonly used for emoji based scales for this reason.

So that covers the rating scales, but what about the questions which lead to them?

So once you have your ‘why’ in place and your key metrics are tied into a wider measurement strategy and you understand the rating scales—how can you make sure you’re getting the most out of the feedback you’re getting?

There are many different ways to tackle this:

It’s important to juice any customer interaction touch points for all they are worth. To that end, it’s vital that you share this customer feedback regularly with your internal teams to help highlight where the root causes of problems are so they can act on them.

Next we are going to look at where you can seek this feedback.

Measuring customer satisfaction effectively requires using the right channels at the right time to invite customers to submit their feedback. Whenever possible, perform CSAT questionnaires as soon as possible on the channel that was used.

Below we are going to assess some of the key channels you should be using, how effective they are, and when you should use them. This ensures you’re using them to increase the likelihood of getting timely, effective feedback.

Your customers are discussing your brand, your products and your services all the time. So be part of that conversation. It not only gives you a great temperature check on your audience, the positive reviews and negative reviews can give you an unfiltered look at what works and what doesn’t. Be aware, quick, empathic responses to negative reviews are a must. You can also launch surveys using social media via polls.

Your service channels are a treasure trove of CSAT data. By analyzing chatbot transcripts, call recordings, and seeking anecdotal feedback internally you can get a great handle on how satisfied your customers are. This feedback is vital for making your Customer Health Score—more on that here

The bread and butter customer feedback channel. Especially effective for overall opinion of brand feedback. Take care to craft an engaging email template for the survey link, and get a killer subject line which includes personalization—so you don’t end up in the archive.

The humble SMS has proven itself as a big hitter in customer satisfaction—why? Customers hold them in more esteem than emails. According to SmartSurvey, using SMS links to customer satisfaction surveys, IKEA were able to increase customer engagement and boost their NPS by a whopping 45 points.

The key here is to use a variety of channels and A+B test them with the same survey so you can get a read on the channels of choice for your specific market.

Whilst in general the 3-5 days after an event are key, you could also consider delaying some feedback reach outs to ensure you’re also getting informed responses as well as initial reactions.