NPS vs. CSAT: Which Metric is Better for Customer Success?
In this article, we understand the NPS and CSAT at a deeper level, how are they different and how can we use NPS and CSAT to improve our business.
CUSTOMER SUCCESS ROLES AND RESPONSIBILITIESCUSTOMER SUCCESS STRATEGIES AND TACTICS
In today’s competitive landscape, where customer experience can make or break a business, understanding how your customers feel about your product or service is paramount. Two of the most commonly used metrics in customer success are Net Promoter Score (NPS) and Customer Satisfaction Score (CSAT). But which one should you focus on? Is one superior to the other, or do they serve different purposes?
➤ Understanding NPS and CSAT
Net Promoter Score (NPS): NPS is a customer loyalty metric that asks a simple question: "On a scale of 0 to 10, how likely are you to recommend our product/service to a friend or colleague?" Customers who respond with a 9 or 10 are considered "Promoters," 7 or 8 are "Passives," and 0 to 6 are "Detractors." The NPS score is calculated by subtracting the percentage of Detractors from the percentage of Promoters.
Customer Satisfaction Score (CSAT): CSAT measures how satisfied customers are with a specific interaction, product, or service. It typically involves a direct question like, "How would you rate your overall satisfaction with the service you received?" Customers can respond on a scale from 1 (very dissatisfied) to 5 (very satisfied), and the CSAT score is the percentage of customers who respond with 4 or 5.
➤ NPS vs. CSAT: The Battle of Metrics
Both NPS and CSAT provide valuable insights into customer sentiment, but they serve different purposes and have distinct strengths. Let’s break down the key differences:
1. Scope of Measurement:
NPS focuses on the overall relationship between the customer and your brand. It reflects long-term loyalty and willingness to advocate for your product or service. NPS answers the big question: "How much do customers love us?"
CSAT, on the other hand, is more granular. It measures customer satisfaction at a specific point in time or after a particular interaction. CSAT is more about understanding the immediate impact of customer interactions and solving pain points. It answers the question: "How satisfied are customers right now?"
2. Predictive Power:
NPS is often hailed as a predictor of future business growth. High NPS scores are generally correlated with positive word-of-mouth, customer retention, and even revenue growth. Companies with high NPS scores typically enjoy more organic growth through referrals and repeat business.
CSAT is less predictive of future behavior but is invaluable for diagnosing issues in real-time. A low CSAT score after a customer support interaction, for example, can highlight an immediate problem that needs to be addressed, but it may not necessarily indicate whether the customer will stick around long-term.
3. Emotional vs. Transactional Insight:
NPS captures the emotional connection a customer has with your brand. It’s a broader, more holistic measure that can uncover deeper insights into customer loyalty and advocacy.
CSAT is more transactional. It’s about how satisfied customers are with specific interactions. While it’s less about emotional attachment, it provides a clear picture of operational performance and customer experience at the micro-level.
4. Simplicity vs. Specificity:
NPS is simple to calculate and communicate across the organization. It’s a single number that can rally teams around customer-centric goals. However, its simplicity can be a double-edged sword—it doesn’t provide much detail on why customers feel the way they do.
CSAT is more specific and can be tailored to different parts of the customer journey. You can measure CSAT after a product delivery, a customer service call, or a website interaction. This specificity allows for more targeted improvements, but it can be harder to communicate a unified CSAT score across the entire organization.
➤ Common Mistakes to Avoid
While NPS and CSAT are powerful tools, there are common pitfalls that can undermine their effectiveness. Here’s what to watch out for:
1. Over-Relying on One Metric:
The Mistake: Some organizations rely too heavily on either NPS or CSAT, neglecting the other. This can lead to an incomplete picture of customer sentiment.
What can you do: Use both metrics in tandem. NPS gives you a broad view of customer loyalty, while CSAT provides specific insights into individual interactions. Together, they offer a more comprehensive understanding of your customers.
2. Ignoring Qualitative Feedback:
The Mistake: Focusing solely on the numerical score without considering the open-ended feedback that often accompanies NPS and CSAT surveys.
What can you do: Pay attention to the qualitative comments. They can reveal the reasons behind the scores, providing actionable insights that numbers alone can’t offer. Encourage customers to elaborate on their ratings and analyze this feedback for recurring themes and issues.
3. Survey Fatigue:
The Mistake: Bombarding customers with too many surveys can lead to low response rates and skewed data, as customers may become frustrated or disengaged.
What can you do: Be strategic about when and how often you send surveys. Align your NPS and CSAT surveys with key milestones in the customer journey, and avoid asking for feedback too frequently. Make surveys concise and easy to complete to encourage higher response rates.
4. Misinterpreting Scores:
The Mistake: Misunderstanding what the scores represent or failing to segment the data can lead to incorrect conclusions. For instance, a low NPS might not indicate overall dissatisfaction but rather issues within a specific customer segment.
What can you do: Segment your data by customer type, product line, or other relevant criteria to gain deeper insights. This allows you to understand which groups of customers are driving your scores and tailor your strategies accordingly.
5. Failing to Close the Loop:
The Mistake: Collecting feedback but not acting on it is a missed opportunity. Customers who take the time to provide feedback expect their concerns to be addressed.
What can you do: Implement a process to "close the loop" with customers. When a customer gives a low score, follow up to understand their concerns and let them know what actions you’re taking. This not only improves customer satisfaction but also demonstrates that you value their input.
6. Comparing NPS Across Different Industries:
The Mistake: Benchmarking your NPS against companies in different industries can be misleading. NPS scores can vary widely between industries due to different customer expectations and market conditions.
What can you do: Compare your NPS against companies within your own industry for more accurate benchmarking. Alternatively, focus on tracking your NPS over time to gauge your own progress rather than solely relying on external benchmarks.
➤ When to Use NPS
NPS is best used as a long-term metric to gauge overall customer loyalty and brand strength. It’s particularly useful for:
Benchmarking: NPS allows you to compare your performance against industry standards or competitors. It provides a high-level view of where your brand stands in the market.
Strategic Decision-Making: Use NPS to inform long-term strategies, such as product development, marketing, and customer engagement. High NPS scores can validate your approach, while low scores indicate the need for a strategic pivot.
Identifying Promoters: NPS helps you identify your most loyal customers—those who are likely to be brand advocates. These Promoters can be leveraged for testimonials, case studies, or referral programs.
➤ When to Use CSAT
CSAT is most effective when you need immediate feedback on specific interactions or aspects of your service. It’s ideal for:
Service Improvement: Use CSAT to measure satisfaction after key interactions, such as customer support calls or after a product purchase. This can help you identify pain points and areas for immediate improvement.
Operational Performance: CSAT scores can reflect the effectiveness of your customer service teams, processes, and tools. Low CSAT scores in specific areas can indicate operational inefficiencies that need to be addressed.
Customer Retention: Monitoring CSAT can help you catch dissatisfied customers before they churn. By addressing issues quickly, you can turn a potentially negative experience into a positive one.
➤ The Power of Using NPS and CSAT Together
While NPS and CSAT are often pitted against each other, the real power lies in using them together. Here’s how:
Layered Insights: Use NPS for a broad view of customer loyalty and brand health, and CSAT for granular insights into specific customer interactions. Together, they provide a 360-degree view of customer sentiment.
Balanced Scorecard: NPS gives you the big picture, while CSAT helps you understand the details. By combining both, you can create a balanced scorecard that guides both strategic and operational decisions.
Actionable Feedback: NPS tells you whether customers are happy, but CSAT tells you why. This combination allows you to take targeted actions that improve both immediate customer satisfaction and long-term loyalty.
Our Personal Opinion
NPS and CSAT are not competitors—they are complementary tools that, when used together, provide a comprehensive understanding of your customers. NPS is your go-to metric for measuring overall loyalty and predicting future growth, while CSAT offers actionable insights into specific interactions and operational performance.
For customer success professionals, the key is not to choose one over the other but to leverage both metrics to create a customer-centric strategy that drives satisfaction, loyalty, and ultimately, business success. By understanding the unique strengths of NPS and CSAT, you can ensure that your customers not only stay satisfied in the short term but also remain loyal advocates for your brand in the long run.
So, the next time someone asks you, "NPS or CSAT?"—you can confidently say, "Both, because together, they’re unbeatable!"
Learned something useful? Wanna Learn more?
Subscribe to our Weekly Newsletter. It's Free!!
