Understanding the Customer Satisfaction Index and How to Measure It

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customer satisfaction indexYou can take various approaches to measure customer satisfaction levels. Some take a holistic view. Others may focus on a particular aspect, such as customer service or product quality. 

However, calculating a customer satisfaction index for your business allows you to do both. Here’s what you need to know.

What Is the Customer Satisfaction Index? 

Your business’s customer satisfaction index (CSI) uses scores on different aspects of your operation and combines them into an index that allows you to monitor overall customer satisfaction. Quantifying customer feedback on areas of your business – such as product quality, prices, user experience, and the effectiveness of live support –  allows you to calculate the index for your business. 

CSI will also reveal which areas of your operation impact customer satisfaction and, therefore, which you should focus on. Even the largest businesses limit what they can spend on customer experiences. CSI can help you allocate funds toward improving product quality, enhancing user experience, training your teams, or other measures that will provide the most significant return of greater customer satisfaction. 

Why Customer Satisfaction Is Important

Happy customers mean good business. When you create new products or roll out better user experiences that lead to increased customer satisfaction, you also increase your chances of improving retention and growing revenues. 

Ignoring customer satisfaction is a mistake. Your customers have more choices today than in the past. If they are unhappy with your products or services, a quick internet search can reveal any number of other places to do business. 

Moreover, your customers know it. They aren’t content to stay loyal to a company that doesn’t provide the customer experiences they want. PwC research shows that experiences influence buying decisions – and just one bad experience can mean you’ve lost a customer.

Replay that scenario too many times, and you’ll need to increase customer acquisition spending to replace the customers you’re losing. In the final analysis, achieving a high level of customer satisfaction contributes to business growth and helps you operate more profitably. 

What a Customer Satisfaction Index Can Do for Your Business

Businesses that calculate and monitor customer satisfaction scores over time can: 

Predict Loyalty Based on Likes or Dislikes

Whether customers like or dislike your products or services is a significant factor in their satisfaction with your business and brand. Factors such as perceived quality and perceived value fuel those likes or dislikes. 

Understanding how customers feel about the experiences and products you deliver can also provide a glimpse into how loyal your customers will be. Customers are more likely to continue to do business when they like the products, services, and customer experiences it offers. 

Remember that perceived service and product quality aren’t necessarily the result of first-hand experience. Online reviews, word of mouth, and advertising can influence how people feel about your business. Keep all these influences in mind when building your customer satisfaction index. 

Understand Customer Behaviors That Lead to Future Purchases

Ensuring that a customer will make an additional purchase in the future is difficult. Still, you can use customer feedback to understand whether they plan to purchase again and what motivates them. 

One strategy is simply to ask. Customer feedback – such as the information you collect through the customer satisfaction index model – can provide insights into their intentions. 

Another way to understand the likelihood of future purchases is to use customer data to map the customer journey of loyal customers. Ask about their experiences, interactions with your team, and impressions of your products, and then look for things they have in common. You can then use those insights to focus on creating experiences that lead to additional purchases. 

Measure Overall Customer Satisfaction

Knowing how satisfied your customer base is with your business overall is valuable information. While overall satisfaction provides insights into customer loyalty and future purchases, it also gives you an idea of the “brand ambassadors” engaged in word-of-mouth marketing. 

When you provide the experiences that lead to customer success and overall customer satisfaction, your customers will be more likely to recommend your business to colleagues, friends, or family. 

Customer Satisfaction Index vs. Customer Satisfaction Score

A customer satisfaction (CSAT) score may be more familiar to you than the customer satisfaction index, but they’re similar and interrelated. 

Calculating CSAT

Using the CSAT model, you create a survey to determine customer satisfaction in one or more areas of your business. The survey usually asks customers to rate their satisfaction on a scale from 1 to 5. You consider responses of 4 or 5 as representative of satisfied customers. 

You aren’t limited in what you can ask. For example, if you suspect website usability is a weakness, you can focus your survey on that issue. 

After you’ve collected responses, calculate the CSAT by dividing the number of people who respond with 4 or 5 by the total number of respondents and multiply by 100 to get a percentage:

People who respond 4 or 5    x 100 = CSAT score 

_____________________________

All people who responded 

To interpret the score, remember that a score of 66% means about two-thirds of your customer base is satisfied with the service you provide. Also if you don’t have a large enough sample, your CSAT score may only reflect the opinions of your biggest fans or people who are most frustrated with their experiences. 

Request feedback often to develop a clearer view of customer satisfaction and how it varies, especially after you’ve changed products, services, or processes. 

Limitations of CSAT

Although an effective method, CSAT has some drawbacks. You never capture an overall perception of your company and brand if you ask narrow questions. 

CSAT also looks at one specific area without looking at relationships between different elements of your business. However, CSI can help address those limitations. 

Calculating Customer Satisfaction Index

A customer satisfaction index uses survey data to calculate a metric that gives you an idea of how well your business performs. To calculate your customer satisfaction index, focus surveys on specific areas of your business – for example, website user-friendliness, customer support experiences, product value, and service delivery. 

Calculate a percentage of customer satisfaction for each area, then find their average. This is your CSI. 

% satisfaction for each area = CSI

____________________________

Number of areas

One of the benefits of using the customer satisfaction index model is that it gives you a quantifiable way to see how adjusting one process or changing one element of your business can impact overall satisfaction. If you revamp your website to make it more usable, and the CSAT specific to website usability goes up, that result increases your CSI average. 

The CSI also reminds you that different parts of your business aren’t siloed. At the same time that you enhance your website, another area might also need improvements. You can see the impact of specific elements of your business while maintaining a big-picture view. 

What Is a Good Customer Satisfaction Score?

After you’ve done the math, you may wonder how your score or index stacks up to your competitors. Researchers have found that CSAT scores and customer satisfaction indices will vary by industry. 

Refer to Industry Benchmarks

Zendesk has a tool that allows you to enter your industry and see customer satisfaction benchmarks, such as:

  • Corporate services, 95%
  • Financial services, 90%
  • Retail and wholesale distribution, 88%
  • Technology, 94%

Benchmarks can provide a goal, but it’s important to find your baseline and then calculate your score periodically to ensure your business is improving or maintaining good scores. 

What Is the Difference Between CSI, CSAT, and NPS?

Another popular customer satisfaction rating tool is Net Promoter Score® (NPS). Unlike CSAT or CSI, NPS asks just one question: “How likely are you to recommend us to a friend, colleague, or family member?” 

Researchers have found that the answer to this one question, expressed in a rating from 1 to 10, is an effective way to track customer satisfaction. 

To calculate NPS, businesses ask the question, then track responses. 

  • Customers who respond 9 or 10 are considered “promoters.”
  • Customers who respond with a 6 or lower are considered “detractors.” 
  • Respondents who respond with a 7 or 8 are considered “passive” and are ignored during score calculations. 

To find your score, subtract the percentage of detractors from the percentage of promoters among all people taking the survey. 

% of Promoters – % of Detractors = NPS

______________________________________

Total number of respondents 

Interpreting this score is a little different from CSI or CSAT. A business could have a -100 score if all respondents are detractors. On the other hand, a company could have a +100 score if only its most enthusiastic supporters responded. 

Like other surveys, it’s vital to base the study on a representative sample and an adequate volume of responses to understand the portion of your customer base that are highly satisfied customers. You can also compare your NPS to others in your industry against NPS benchmarks.

How Can I Measure Customer Satisfaction Through Customer Service KPIs? 

Another approach is to track satisfaction through customer service key performance indicators (KPIs). Like customer satisfaction index metrics, customer service KPIs show how well your team performs in a particular area and how it trends over time. 

Customer service KPIs include: 

  • First response time
  • Customer retention rate
  • Tickets per customer 
  • Average resolution time 

Understanding the relationship between these metrics and customer satisfaction gives you another way to gauge how well your team provides experiences that lead to happy customers. 

Use All Tools Available 

The best approach for most businesses is not to limit customer satisfaction studies only to NPS, CSAT, KPIs, or customer satisfaction index scores. You can benefit from insights from each method and use them to improve the products and services you provide continually. 

First Steps Toward Measuring Customer Satisfaction

Before you launch a survey and establish processes for calculating your scores, you need to step back and decide what you want to learn. Do you want to see if your employees provide service that makes customers happy? Do you want to give information to your product teams on product quality and value? Do you want to begin with an overall perception of your company? 

It’s all possible if you choose the right type of customer satisfaction score model. 

You also need to research the best way to format the survey, including A/B testing, to see how to get the most participation and meaningful results. 

Another factor to consider is what should trigger the survey. Will you ask the question after a customer makes a payment, interacts with your customer support team, or uses your product? 

Capturing information as soon as possible after an engagement will provide the most accurate results, because the customer  answers immediately. At the same time, the experience (and their feelings about it) is fresh in their minds. 

Improve on Your Past Customer Satisfaction Score

If you’ve calculated CSAT or CSI and the number isn’t where you need it to be, there are ways to improve customer satisfaction scores. 

Map the Customer Journey

Put yourself in your customers’ shoes and identify each touchpoint. Collect data about those interactions; if you find gaps or weaknesses, correct them. 

Look at the Competition

If you can’t identify weaknesses, look at external factors that might impact your scores. You may be doing everything pretty well, but your competition may be doing it better. 

Respond to Feedback

If your business receives negative feedback, responding quickly and empathetically to customer complaints can help change the customer’s opinion. Assign people to this task who are trained in issue resolution and de-escalation. 

How to Create a Good Customer Satisfaction Survey

When you collect customer data and calculate customer survey scores, you want the time and effort you invest in paying off with information that will help you drive customer satisfaction. 

These tips can help you get the most customer feedback survey ROI.

  • Keep surveys short: Long surveys tend to turn people off and decrease the response rate. If you decide to conduct a longer survey, consider offering an incentive to complete it. 
  • Stay on point: Only ask critical questions to make analysis easier. 
  • Reach the right audience: Survey people with first-hand experience. For example, if you want to gauge satisfaction with customer service, survey people who have interacted with that team rather than poll your entire customer base. 
  • Make answering easy: Your customers will be more likely to participate – and have a better “survey experience” – if you allow them to simply click a box or choose an icon or emoji. Also, make sure surveys are mobile-friendly if you ask customers to take them on their own devices.

Using Customer Satisfaction Surveys to Gauge Success and Take Action 

Before conducting surveys, consider how you will analyze results, review, and use data. The insights are only valuable to your business if you take the time to view the voice of the customer as you make decisions about your business. 

Use Customer Satisfaction Data to Optimize Experiences

If data from customer satisfaction surveys points to a shortcoming in your processes, products, or services, you can use that information to make changes. 

A low CSAT score or falling customer satisfaction index may not be enough to pinpoint the specific issue, so additional data collection and research are usually required. 

Another customer satisfaction tool you can use is the customer effort score (CES). This metric requires collecting information similarly to the CSAT, but it focuses on how difficult it is to do business with your company or to complete certain tasks. 

If you learn lots of customers find some element of your business difficult, make adjustments to make it easier for your customers.

Realize the Customer Journey Is Different for Everyone 

Mapping the customer journey and assessing how each touchpoint impacts customer satisfaction can be an effective strategy. However, remember that not every customer takes the same path or has the same quality of experience. 

Software as a Service (SaaS) companies, for example, may find that most of their customers can easily navigate screens in an app. But some may require additional help using the same views. Likewise, a financial institution may find that customers who speak English as a second language have difficulty using certain services. 

Learn all you can about your customers, both “average” and people outside of that demographic, and enhance experiences for everyone. 

Train Your Employees on How to Improve Customer Experiences

Once you have a roadmap for increasing customer satisfaction, share that information with your team. Where possible, take a proactive approach to enhance experiences, laying the groundwork and automating processes for consistently good engagement. Technology, such as customer service chatbots, can enable faster responses, consistent customer support, and a self-service option that your customers may prefer. 

Also, train employees on the best ways to provide service and support, answer questions, and even welcome customers. Effective employee coaching can result in higher customer satisfaction and, in the end, increased customer loyalty and business growth. 

Identify Customers’ Satisfaction Drivers

Although experience is a primary driver of customer satisfaction, don’t overlook the role that product performance, accessibility, price, and other elements of your business play. 

Remember to survey customers on these issues and how they impact customer satisfaction. Also, pay attention to how different segments of your audience feel about how your business handles each of these areas. 

How Can I Consistently Maintain a Good CSAT Score?

You’ve worked hard to determine the best way to survey your customers, calculate your customer satisfaction index, analyze that data, and optimize your business processes. So, how do you keep customer satisfaction measurements high? 

Incorporate these processes into your management strategy to maintain visibility into customer sentiment and business performance. 

Monitor Customer Satisfaction Metrics

Each metric you use, from the customer satisfaction index to NPS and CES, must be updated periodically to monitor trends. If you don’t have the resources and time to keep up with this task, consider automating the process with survey solutions and analytics. 

Decrease First Response Time

No one likes to wait. You can improve satisfaction with customer service by decreasing the time it takes for a customer to connect with your business. An intelligent chatbot can keep waits short, enable self-service, and help customers find the information they need more quickly. 

Quality Conversations

When customers need help or have a complex problem to solve, they need a member of your team to give them their undivided attention. However, busy customer service teams may feel pressure to end calls quickly. Intelligent AI chatbots can add value here, fielding conversations, prioritizing issues, and collecting information for hand-offs to agents, so support interactions are smoother and more efficient.

Automation and Processes 

Always look for ways to optimize processes. Continuous improvement is key to operating efficiently and profitably. 

However, it’s also a way to let your customers know you respect their time. Take every opportunity to streamline operations and survey customers to gauge their satisfaction with your new processes. 

Meet Your Customers’ Expectations

Satisfaction often stems from experiences matching up with what people expect. Use industry analyst reports, trend data, and survey results to understand what your customers demand and meet them. 

Re-Training

Consumer expectations and behaviors change, so the way you operate must respond. Educate your team on how your industry is evolving and how they need to adapt to keep the customer satisfaction index high. 

Communicate Your Goals

Share your plans for increasing customer satisfaction with your team and your customers. Communicating your goals can help build excitement and show your customers you have their best interests in mind – something that can contribute to a more positive brand image and greater satisfaction. 

How Do Your Customers Feel About Your Business?

The customer satisfaction index will give you an effective method to gauge sentiment toward your business, the perceived value you deliver, and areas of your business that positively or negatively impact those impressions. 

To learn more about how to enhance experiences and boost customer satisfaction with intelligent technology, contact us.