If you’re in the business world, chances are you’ve heard of CSAT, NPS, and CES. But what are they? And, more importantly, which of those is best for your company?
Table of Contents
- Customer Satisfaction Score (CSAT)
- Net Promoter Score (NPS)
- Customer Effort Score (CES)
- Key Performance Indicator (KPI)
Customer Satisfaction Score (CSAT)
What is CSAT?
A Customer Satisfaction Score (CSAT) is a measure of how satisfied a customer is with a product or service.
How is CSAT Calculated?
It can also be expressed by simply asking your customers to rate their level of satisfaction from 1 to 5. (1 being very unsatisfied, 5 being very satisfied). Then, take the average of all the ratings to get your CSAT score.
How Can Using CSAT Be Beneficial?
Using CSAT will allow any business to assess products/services to create a plan to improve customer satisfaction.
CSAT scores are frequently used to assess the efficacy of service level agreements (SLAs). An SLA is a contract between a service provider and a customer that specifies the level of service that the customer can expect. It typically includes performance goals, response times, and remedies for poor performance.
If the CSAT falls below the agreed-upon threshold in a SLA, the provider may face financial penalties or lose the contract entirely. This creates an incentive for the provider to maintain high levels of customer satisfaction.
Net Promoter Score (NPS)
What is NPS?
The Net Promoter Score (NPS) is a customer loyalty metric developed by Fred Reichheld, Bain & Company.
How is NPS Calculated?
Given that it is simple to understand and apply, the Net Promoter Score has grown in popularity. It can be measured on a scale from 0-10, with 10 being the best score.
Another way to measure NPS is by using the following calculation
% of promoters-% of detractors.
Net Promoter Score (NPS) surveys are used to measure customer loyalty and satisfaction. The survey asks customers a series of questions about their interactions with a company, including how likely they are to recommend the company to others.
The Net Promoter Score is typically calculated every quarter, though some companies calculate it more frequently. Net Promoter Score data can be used to track customer satisfaction over time and to compare satisfaction levels across products or services.
How Can Using NPS be Beneficial?
Large enterprises that have adopted the Net Promoter Score include Amazon, Apple, Intuit, and Microsoft. The Net Promoter Score has been shown to benefit companies by helping them to track customer satisfaction and identify areas where they need to make improvements. It can also help companies to identify loyal customers and potential advocates who can promote their products or services.
The implementation of the Net Promoter Score can be costly for companies, particularly if they need to purchase software or hire external consultants to help them with data collection and analysis. However, there are a number of software programs that are available for free or at a low cost.
Customer Effort Score (CES)
What is CES?
Customer Effort Score (CES) is a metric that helps companies measure how much effort a customer has to expend in order to get what they want from the company.
How CES is Calculated?
There are a number of systems available for measuring CES, including the Effort-Conversation-Satisfaction (ECS) Model developed by David Kreps at Stanford Graduate School of Business.
The metric is usually measured through surveys, which customers are asked to complete after interacting with the company
How can Using CES Be Beneficial?
The goal of using CES is to help businesses identify and reduce areas where customers are expending too much effort. This can help companies improve customer satisfaction, loyalty, and even revenue.
CES has been shown to be a valuable tool for businesses of all sizes. In a study of over 1,000 businesses, researchers found that those with a high CES score (indicating that customers had to expend little effort) had a 4% higher revenue growth rate than those with a low CES score.
Large enterprises that have adopted CES include Delta Airlines, Comcast, and Marriott International. All three companies have seen positive results from using the metric.
Delta Airlines found that reducing customer effort resulted in increased customer satisfaction and revenue.
While Customer Effort Score (CES) is not without its detractors—some argue that it doesn’t take into account other important factors such as quality of service or product—the evidence suggests that it is an important metric for businesses looking to improve their customer relationships.
Key Performance Indicator (KPI)
A key performance indicator (KPI) is a metric that organisations use to evaluate and monitor their progress toward specific goals. KPIs are useful in many industries, but they are especially useful in business, where they can be used to measure everything from sales to customer satisfaction.
There are a variety of different types of KPIs, but some of the most common ones include measures of revenue, profit, customer acquisition, and customer retention. Businesses often use KPIs to track their progress over time, as well as compare their performance against that of their competitors.
If you’re looking to start using KPIs in your business, there are a few things you need to keep in mind. First, ensure that your KPIs are in line with your company’s overall strategy. Second, you need to make sure that your KPIs are actually telling you something useful. Finally, you need to make sure that you’re using the right tools to track your KPIs.
If you’re not sure where to start when it comes to setting up KPIs for your business, there are a number of online resources available that can help. The Small Business Administration has a helpful guide on how to set up and track KPIs, and there are also a number of other resources available online.
So which one is right for you? Well, it depends on what you want to measure. If you want to measure customer satisfaction, go with CSAT. If you want to measure customer likelihood to promote your product or service, go with NPS. And if you want to measure customer effort scores, go with CES. All three are valid metrics that can give you valuable insights into how well your business is doing. So choose wisely!
