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Make no mistake. Customer satisfaction is the key to a thriving business.

Measuring business performance is more than financial, market performance, and operational metrics. Those KPIs matter, but the key to sustainable business growth is customer satisfaction, measured by CSAT (customer satisfaction score) and NPS (net promoter score). Analyzing these metrics offers critical insights into your company’s performance from the customer perspective to drive strategic decisions and product improvements. 

CSAT and NPS business performance metrics are the North Stars of your business. CSAT measures customer satisfaction with a particular interaction or experience with your company. NPS is calculated based on responses to the question of how likely the customer is to recommend your product to someone.

This article will explore the correlation between NPS, CSAT, and other performance indicators, while unlocking new levels of your business, like secret levels in a video game. Analyzing how these scores correlate with broader business outcomes can make all of the difference in achieving competitive advantage and long-term profitability.

Understanding CSAT and NPS

Let's delve into the concepts of CSAT and NPS and explore their measurement methods, scoring systems, methodologies, and common industry benchmarks. 

CSAT

Typically, CSAT is measured using a direct question with answers on a numbered scale, usually 1-5, where one is very dissatisfied and 5 is very satisfied. These surveys should be sent immediately after an interaction or transaction to capture immediate satisfaction levels. 

Your company’s CSAT score is calculated by taking the number of satisfied customers divided by the total number of responses and then multiplying by 100 to get a percentage.

As a benchmark, a good CSAT score might be 70% or higher. Retail and consumer goods generally have higher benchmarks, while industries with less direct interaction might have lower scores, but you should set a goal of between 65% and 80%. 

NPS

NPS is measured by asking, “How likely are you to recommend our company/product/service to others?” The respondent is given a scale from one to 0-10. Zero means “Not at all likely,” and 10 means “Extremely likely.” You can send NPS surveys periodically or immediately after a significant interaction.

Obtaining the NPS score requires categorizing them into:

• Promoters, who gave a score of 9 or 10. These are customers who are loyal and enthusiastic, acting as brand ambassadors by sharing their satisfaction on social media or passing the word among friends and family. 
• Passives, who gave a score of 7 or 8. These folks are satisfied with your service but aren’t happy enough to promote it. 
• Detractors, who gave a score of 0 to 6. These unhappy customers are unlikely to buy from you again and may even discourage others.

The NPS is calculated by subtracting the percentage of distractors from the percentage of promoters. Good NPS scores vary widely by industry, with tech and SaaS companies often aiming for a higher score, but above 0 is considered good, greater than 20 is favorable, above 50 is considered excellent, and above 80 means you’re providing world-class service. 

While measuring CSAT focuses on short-term sentiment regarding specific interactions or transactions, NPS provides insight into long-term loyalty and overall sentiment toward your brand or company. Combining both metrics offers a comprehensive outlook on customer behavior and attitude.

Why customer satisfaction KPIs are important

We might be stating the obvious, but without customers, you have no business, which highlights the importance of keeping them happy. No matter how you see your company, it’s your customers who maintain your brand image and shape perception. Happy customers crow all over social media about the wonders of your brand (insert picture of an Apple fanboi here), but if you fail to satisfy with every encounter, your brand image can take a dive. 

Success comes not just from new business but from repeat business. You instinctively know this, but using CSAT and NPS scores can either validate your opinion or turn it on its head: it’s not how you feel about your company or brand but how your customers feel about it.

These crucial metrics significantly impact business growth and profitability. Retaining customers is more cost-effective than acquiring new ones, leads to a more stable revenue flow, and decreases marketing and sales costs. These customers (identified via NPS) are not just loyal – they are more open to cross-sell and upsell opportunities. These advocates help your marketing budget through word-of-mouth amplification and can have a greater reach than your best efforts. 

Then there’s the negative feedback. It’s not fun to hear, but regularly collecting and analyzing CSAT and NPS data gives you an early warning system for emerging issues before they end up costing you. Proactivity is the key here.

Don’t forget about investor confidence and market valuation: strong CSAT and NPS scores improve perception among investors and stakeholders. 

Business Metrics Correlation: Use CSAT and NPS With Other Business Performance Metrics

Correlating CSAT and NPS with business performance metrics not only helps in evaluating current performance but also sets the stage for actionable strategies that boost overall business health through:

Revenue growth

High NPS and CSAT scores indicate your customers are both satisfied and likely to recommend your company to others. This leads to organic word-of-mouth growth.

Let’s look at Airbnb. In 2013, the company wanted to see how NPS could add value, not just to their feedback process but to establish if there is a link between repeat bookings and NPS.

Feedback from 600,000 guests found that two-thirds of their feedback came from promoters, who Airbnb found were more likely to book another say and refer someone else. They also found that while some guests might have given a low CSAT score on a particular stay, they were still promoters. This points out the need to go beyond CSAT – both provide valuable insights, and a low CSAT score doesn’t necessarily translate to a low NPS score.

Customer retention rates

Analyze current retention metrics to identify trends and areas for improvement. Correlate satisfaction scores with customer retention data to assess how satisfaction impacts loyalty. Then use customer feedback to refine your products and services. 

Consider implementing loyalty programs and personalizing customer interactions to boost retention.

Operational efficiency

Satisfied customers help streamline operations by reducing the need for service recovery and minimizing resource allocation to customer complaints, which increases process efficiency. This in turn leads to higher retention rates and generates positive word-of-mouth, which enhances your company’s reputation and reduces marketing costs.

How do you know it’s working? Use these metrics:

• Is there a decrease in customer complaint rates?
• Do you find a reduction in churn rates?
• Are there improvements in NPS?
• Is there a boost in customer lifetime value (CLV)?
• Is there a high first contact resolution (FCR) rate?

These indicators help in assessing the impact of customer satisfaction on overall operational efficiency.

Use NPS and CSAT for strategic, data-driven decision-making

NPS and CSAT metrics can significantly enhance strategic decision-making.  CEOs and managers can leverage them for data-driven insights to ensure every strategic decision fosters both customer loyalty and business growth.

• NPS and CSAT metrics can significantly enhance strategic decision-making. Leverage them for data-driven insights to ensure every strategic decision fosters both customer loyalty and business growth.
• High NPS and CSAT scores often correlate with repeat business and positive word-of-mouth, which are crucial for sustainable growth. Low scores signal areas where a company must improve to meet customer expectations. These metrics offer executives a high-level view of customer sentiment, highlighting whether the company’s strategic moves align with customer expectations, and serve as competitive benchmarks, offering insights into where your company stands.
• Implement tools and systems that capture real-time feedback post-interaction, which can be immediately analyzed and addressed, and follow up with customers who gave low scores to understand their grievances and to show them that their feedback leads to real change.

• Introduce a policy of continuous feedback and regular review cycles, and don’t forget to offer regular training sessions for employees based on feedback data.

Make NPS and CSAT scores a part of key performance indicators for the business. This integration ensures that departments across the company aim for better customer-centric goals. Use these insights to drive decisions, from product development to customer service policies.

Ensure that every strategy implemented aims for higher satisfaction and customer loyalty. CEOs and managers must envision a future where customer satisfaction is not merely a department but a core part of the business ethos. 

Drive business growth with customer satisfaction

Traditional financial and operational metrics are crucial, but they aren’t enough for sustainable growth. Customer satisfaction metrics are vital. These metrics provide valuable insights into customer perspectives, essential for strategic decision-making and product improvement.

It’s like a high score in a video game or a sports match, except everyone wins as long as the metrics are high enough. You want the players and the audience to have high satisfaction rates, and performance indicators, which spreads your company’s success.

Linking CSAT and NPS with other performance indicators offers a comprehensive view of true business health and customer behavior, as seen in Airbnb's positive correlation between NPS and repeat bookings.

High satisfaction and recommendation rates translate into operational efficiency, higher retention rates, and enhanced strategic decision-making. They also reduce acquisition costs and foster a strong market reputation. It’s essential to combine CSAT and NPS with traditional KPIs to get a deeper understanding of customer satisfaction and loyalty, which in turn drives better business decisions and sustainable growth.

If you’re a CEO or manager who wants to improve your brand reputation, customer service scores, and more, book a demo with Crewhu. Crewhu helps collect customer feedback with CSAT, NPS, and custom surveys to improve processes, coach employees, and grow your business.