If any two metrics have long baffled brands, then NPS and CSAT are the usual suspects.
Mostly, due to lack of context and the timing behind these surveys.
Leading to flawed data and misplaced priorities.
In case you too are guilty of doing this, read on as we explore NPS and CSAT beyond their definitions
NPS vs CSAT: What are they?
Net Promoter Score or NPS is a metric measuring long-term loyalty and satisfaction by asking customers to rate based on a scale of 0 to 10. The respondents are divided into groups based on their scores, starting with Detractors(0-6), Passives(7-8), and Promoters (9-10).
Here’s a breakdown of the respondents:
- Detractors(0-6): Respondents aren’t satisfied with your product and are going to resort to negative word of mouth
- Passives(7-8): These are folks who are neither happy nor unhappy and won’t be loyalists or critics. Highly likely to shift their allegiance to other brands
- Promoters(9-10): Loyalists who have had positive experiences and are likely to recommend your brand to others
Customer Satisfaction Score or CSAT is a yardstick to measure the overall satisfaction of customers with a brand. It is measured on a scale of 1-5. Each of the 5 options indicate different responses starting with:
- Very Dissatisfied (1)
- Dissatisfied (2)
- Neutral (3)
- Satisfied (4)
- Very Satisfied (5)
Of these, respondents who mark either 4 or 5 are your most satisfied customers.
NPS vs CSAT: What’s the difference?
NPS and CSAT are allies but serve different purposes. Here’s how the two are different:
NPS
Net Promoter Score determines the loyalty of your customers and the likelihood of recommending your brand to others. Consider it the pulse of your brand. It keeps the long-term health of your brand in perfect condition thanks to loyal customers.
NPS is a macro indicator thanks to its ability to drive business outcomes, starting with:
- Customer journey mapping: It can help you identify bottlenecks in each stage of the customer journey and work on fixing them, for instance, improving the claims process for an insurance app
- Optimize key drivers: Recognize all key drivers having a large impact and work on improving them via increased budgetary support or other resources
- Improve operational efficiency: You get to identify underperforming areas and take action. If you’re a gaming app, you might focus on improving the gaming experience to increase the user time on the app
- Doubles the shareholder value: Firms having a high NPS make it to the FREDSI portfolio—which contains a list of companies having a high NPS that generated a 26% return after a decade by swapping low NPS ones with high NPS
CSAT
CSAT is a metric measuring the level of customer satisfaction after every interaction. It's a micrometric that keeps your day-to-day brand health in one piece. In other words, it's the vein of the brand that needs to be monitored before things spiral out of control.
As we mentioned earlier, CSAT is a micro indicator that has its influence on business outcomes, mainly:
- Churn rate: Firms with a high CSAT score of 80% or more throughout had a churn rate of less than 7% while those with low CSAT scores(<70%) had an average churn rate of 20%
- Increase in profits: As much as a 5% increase in retention rate can lead to an increase in incremental profits by 25-95%(Bain & Co.)
- Reduced support costs: In a Zendesk study surveying 100 SaaS brands, companies with high satisfaction scores had a 12% lower support ticket on average
- Increment in repurchase rates: Interestingly, the recurring purchase rate of highly satisfied customers is 3 to 10x higher than somewhat satisfied customers
NPS vs CSAT: How to calculate?
When it comes to NPS, subtract the percentage of Detractors from the percentage of Promoters. You might want to note—the Net Promoter Score is expressed as a percentage.
Here’s an example:
NPS = Total percentage of Promoters — Total Percentage of Detractors
NPS = 75% — 25%
NPS = 50%
While NPS is calculated using a 11-point scale, there are brands using a 5-point scale.
However, we recommend using a 11-point scale over a 5 and 10-point scale. Here’s why:
- Using a 5-point scale reduces both the detractors and promoters
- Since it occupies less space, it is ideal for mobile surveys
- On the other hand, using a 10-point scale removes 0 and reduces the detractors without a parallel increase in promoters
- It provides granular data on key aspects that make it easier to measure—the only drawback is you can’t differentiate between dissatisfied or extremely dissatisfied
- Since the 11-point NPS is the standard, you can benchmark against your industry
CSAT
CSAT is a bit different since it's always measured on a 5-point scale. Out of all the respondents, count the 4 and 5’s and divide them by the total responses.
CSAT = No. of satisfied customers (4 & 5)/Total no. of customers*100
For instance, out of 200 customers, 70 answered 4 while 50 answered 5, the CSAT in this case would be
CSAT= (70 + 50)/200*100
CSAT = 60%
You might want to consider these while calculating your CSAT score:
- Distorted data: You will have to ensure that there’s a clear balance between extremely positive and negative reviews; A handful of 2-3s could help balance it out.
Note: For both NPS and CSAT, we recommend having at least 200 respondents as the sample level to achieve a 90% confidence level.
NPS vs CSAT: When to use?
Starting with NPS
- Use NPS when you want to convince investors and other stakeholders—it’s easier to understand
- When you want more insights after a Product Market Fit Survey—ask them will they recommend their product to others
- Use Net Promoter Score right after an increased product usage—from 7 to 30 days to gather enough insights while they are still active
- Try Net Promoter Score to identify your high-value customers—analyze their purchase history before sending them referral emails
- Target DAUs who have spent at least more than the average session duration on your app—ask them how willing are they to recommend the app to others
Over to CSAT
- CSAT survey questions serve best during the onboarding process—ask questions about creating accounts and completing the process
- Use CSAT after 30 minutes of using a new product feature
- Ping CSAT questions right after a user becomes familiar with the community
- Prompt CSAT questions after a customer support interaction—for best results, wait until the issue is completely resolved
Can you combine CSAT and NPS?
Without a doubt!
Combining NPS and CSAT can be done using a scatter plot where we combine the respective data into 4 segments.
This will help you determine the relationship between NPS and CSAT variables.
Based on the CSAT(transactional) and NPS(relational) data, you’ll have four segments, namely:
- Satisfied Transactional + Promoter Relational (Champions)
- Passive Transactional + Promoter Relational (Well-wishers)
- Satisfied Transactional + Detractor Relational (Unpredictables)
- Dissatisfied Transactional + Detractor Relational (Defectors)
You’ll now find it easier to identify the patterns between the two:
- Champions are your High NPS and High CSAT respondents who don’t have to be engaged since they already have a high LTV and low CAC
- They are delighted and loyal customers who have an amazing referral rate
- Well-wishers are your high CSAT and low NPS respondents—satisfied customers with minor bad experiences in an otherwise smooth user journey
- Unpredictables include your low CSAT and high NPS customers who love your product but have frequent complaints but have no choice hence stick to this alternative
- Finally, you have your low NPS and low CSAT customers have a high risk of churn—ask them what went wrong, note their patterns, and analyze attributes that led to this
Which one should you use?
If you’re just entering the market, use CSAT during your beta testing to help you achieve MVP. Ask users about their experience of using a new product and its problem-solving capabilities.
You might want to use CSAT surveys if you want to determine the Minimum Marketable Product(MMP).
When you achieve the PMF, use NPS surveys to find how many users are willing to recommend your product to others.
Summing up
CSAT works best when you trying to achieve a product market fit. The feedback from early adopters is critical in the primitive stage of product development. This determines your GTM strategies.
NPS is beneficial when you want to assess the loyalty of your customers. Survey customers every 3-6 months when you want to achieve growth and retention.
