What is CSAT: A Complete Guide for 2024

Customer satisfaction has been dear to brands, small and big, the only problem—measuring it right. While CSAT emerges right at the top thanks to 80% of brands using it to measure customer satisfaction, there’s a bit of apprehension with the legacy metric, mostly due to lack of know-how.

That’s why we crafted this full-fledged guide on CSAT that contains what’s a good score, how to improve it, and more.

What is CSAT?

CSAT or Customer satisfaction score measures how happy customers are with your product or service on a five-point scale. Let’s say you are selling insurance and want to know how satisfied your customers are. Start by popping this question.

How satisfied are you with our website's navigation?

Your customers now have 5 options namely

Extremely dissatisfied (1)
Dissatisfied (2)
Neutral (3)
Satisfied (4)
Extremely Satisfied (5)

You’ll have a high satisfaction rate if your customers rate you either 4 or 5. It's important to remember that CSAT is a short-term metric that measures customer satisfaction.

Nevertheless, it has its benefits. Studies reveal that a healthy CSAT score in the long term means:

Increase in revenue—a mere 1% increase in customer satisfaction can increase revenue by 5%
An Uptick in stock value—brands that go to great lengths in ensuring customer satisfaction see a 12% uptick in stock value

How to calculate CSAT?

For a CSAT question, based on a scale of 1-5, you’ll have to count customers who gave you 4 and 5 and divide it by 100

CSAT = No. of customers who marked 4 and 5/Total no. of responses*100

In case, you have 75 customers who rated 4 or 5 on the CSAT amongst 150 customers who responded, your CSAT score is 50%.

What is a good CSAT score?

The internet might say 75 to 85%, but to tell you the truth, a good CSAT score has a lot to do with your industry. Meaning, that if your industry has historically seen high (> 75%) customer satisfaction rates, a score of 75% is not good enough.

If you’re either a cable provider, internet service provider, health insurance, or one of those businesses where customers leaving scathing reviews is as common as dirt, you unfortunately will have a low CSAT score. That’s why it's highly unlikely that you’ll ever cross 75.

Your CSAT score is likely to turn out to be high or low based on how easy or tough it is to access your product. Don’t forget long support call waiting times that make the customer wait forever.

Another trigger for low scores is multiple phone calls with no resolution meaning nose-diving CSAT scores.

You surely can’t rule out frequent price increases and the lack of appreciation—it doesn’t have to be an expensive gift, a heartfelt email conveys gratitude better.

To sum it all up, a good CSAT score is the one that points you in the right direction. It must bring about a change in the business outcomes. When this happens, CSAT doesn’t become your vanity metric.

CSAT benchmarks

The best yardstick to measure your CSAT scores is to benchmark it against the industry averages. Let’s take a look at the ACSI report.

1. Specialty Retail Stores: 77

2. Life Insurance: 78

3. Internet Travel Services: 74

4. Internet Retail: 78

5. Hotels: 73

6. Full-Service Restaurants: 79

7. Financial Advisors: 77

8. Credit Unions: 77

9. Consumer Shipping: 76

10. Computer Software: 76

11. Cell Phones: 79

12. Breweries: 81

13. Banks: 78

14. Automobiles and Light Vehicles: 78

15. Apparel: 79

Designing high-converting CSAT survey questions

Poorly designed questions lead to unsatisfactory outcomes such as low response rates and survey fatigue.

Fortunately, you can do something about it by following these best practices. Starting with:

1. Using the cause and effect principle to make it actionable

Using a cause-and-effect principle leaves no room for ambiguity. It specifies the context and helps you decode the reason behind a specific answer.

For instance, How has our service quality impacted your overall satisfaction with our company? emphasizes the cause(service quality) and the effect(overall satisfaction).

Here’s a tip.

Focus on one thing at a time—Begin with a Yes/No question and then move to ask the effect addressing the question.

2. Keeping your questions short (14-20 words)

Keeping your questions within 14-20 words ensures that the response rate is high. Mainly due to the decreasing human attention span which is 8.25 seconds as we speak.

Moreover, lengthy questions cause a cognitive overload—the human brain cannot process multiple things at once, inflicting more strain.

3. Sticking to a 5-point scale (3 is too short and 7-10 is confusing)

While the commonly used scale is a 5-point scale, a sizable number of brands use a 7-10. We recommend using the 5-point scale because it is short and isn’t overwhelming. Since it's commonly used, familiarity breeds trust.

On the other hand, a 7-point scale can offer better granular insights since it provides more options. It has an advantage since users can evaluate options rationally. Particularly due to the options and the time it provides. Something that isn’t possible on a 5-point scale.

But there’s a catch—the difference between the two isn’t much. Moreover, a 7-point scale has more data points which makes it difficult to analyze patterns due to high variability. Not to mention, multiple data points mean errors in analyzing data.

Finally, the 10-point scale too has its criticisms. For one, it doesn’t have a neutral or middle value making it tough for them to give a neutral opinion, forcing them to give a positive or negative response.

Having trouble with survey questions? Try our free AI survey assistant to help you save time.

What is the difference between CSAT and NPS?

To put it straight, CSAT and NPS are metrics that are brothers-in-arms. Both complement each other.

Here’s how the two compare:

CSAT measures the level of contentment after using a product, interaction, or service— “How would you rate your experience?” or “Which feature did you like using?” are apt examples
NPS measures the likelihood of customers recommending it to their friends—it uncovers the reasons for improvement and the small wins that led to a high score
CSAT questions can be asked after every action unlike NPS which is done at the end of every quarter or bi-annually
CSAT scores mostly follow a 1-5 to 1-7 scale while NPS has a 11-point scale that’s constant
CSAT has varying score calculations while NPS has detractors(0-6), Passives(7-8), and (9-10) — this constant no matter what

Pros and Cons of CSAT

Pros

CSAT is simple—neither requires a high degree of knowledge nor effort to answer
Easy to analyze—CSAT is easy to implement and the data can be used to work on areas of improvement
Easy to recall—since CSAT is shown after a few minutes of interaction, users can answer without losing context
CSAT has its uses across multiple touchpoints—from onboarding to making an in-app purchase or raising a ticket
Since CSAT consists of a set of 3 making it easily memorable—it’s easy for the brain to retain the information

Cons

CSAT doesn’t go beyond the first tier of what and why—it doesn’t explain what customers like or don’t like which can only be solved by asking follow-up questions
CSAT accuracy highly varies by channel—in-app scores score are more accurate because of the timing and the context whereas email CSAT surveys are less accurate
Your CSAT survey results are subject to a geographical bias—users from different countries tend to give different scores
For instance, people from Denmark, having an individualistic culture give either 1 or 10 while Italians may give mixed scores (This means that even if the industries are the same, the region has a major factor)

Does a high CSAT score mean revenue?

Most certainly!

A HBR study reveals that organizations that worked on improving customer satisfaction saw a 140% increase in recurring purchases by satisfied customers.

While a high CSAT score does lead to more revenue, it's only possible by taking tough measures.

These include but are not limited to:

Having a system in place to resolve support tickets—analyzing previous ticket data to identify patterns and solve similar problems
Train agents to use a unified customer support interface and do skill-based routing—let the best agents handle the job
Include qualitative questions where needed—helps in uncovering deeper insights
Poor framing of qualitative questions too can affect the response rates—for instance, Were you satisfied with the timeliness of our response? is unclear as to what response are we talking about
Frame qualitative questions with a context—How would you rate your overall satisfaction with our customer service team's response to your recent support inquiry? Instead of How would you rate your overall satisfaction with our service?
Make sure your sample size is 200 or more for higher statistical significance
Maintain consistency—Stick to a 5-point or a 7-point scale for better benchmarking
Finally, focus on building a culture where improving customer experience is the norm

Get your hands on Implementing a CSAT Survey Strategy: A Guide for Product Leaders

Bottomline

Like most things, CSAT doesn’t have immediate effects but it’s a diagnostic tool that can identify the problems that could lead to long-term profits. It can help you give a sense of purpose to resolve issues that could affect the overall sentiment of the brand.

In the end, CSAT is a means to an end, not the end itself.