One of the keys to building a thriving SaaS company is retaining as many customers as possible.
A business has to deliver a quality experience that increases brand loyalty and customer satisfaction to achieve this goal. NPS and CSAT are two essential metrics that Customer Success managers rely on to measure the impact of their customer experience (CX) strategies. This article explores the differences between the two and how best to use them.
Why Tracking Customer Satisfaction Matters
Regularly gathering real-time customer feedback is imperative for SaaS companies to remain competitive. By building and tracking customer health scores using metrics like NPS and CSAT, companies stay attuned to customer happiness.
CX data allows Customer Success Managers to quickly identify problems that need fixing and lean into what's working well. Studies show that by focusing on the quality of the customer experience, a savvy company can capture 3.4 times greater revenue than its competitors.
NPS vs. CSAT: What Are They and What Do They Measure?
NPS and CSAT are two of the most common metrics Customer Success teams use to build customer health scores and measure customer experiences.
What Is NPS?
The net promoter score, otherwise known as NPS, measures customer loyalty and can predict long-term business growth. Simply put, NPS asks the customer how likely they are to recommend a product or service on a scale of 0 to 10. The percentage of Detractors — those who respond with 0 to 6 — is subtracted from the percentage of Promoters or those who respond with 9 or 10. The resulting number is the NPS score.
What Is a CSAT Score?
The customer satisfaction score or CSAT measures customers' satisfaction with a specific feature, service, product, or other aspects of a business.
Usually, a five-point scale is used to measure CSAT: very unsatisfied, unsatisfied, neutral, satisfied, and very satisfied. Each of these responses is assigned a value between 1 and 5. A CSAT score is the result of dividing the number of 4 and 5 responses by the number of total responses.
NPS and CSAT are both valuable indicators of how a brand is doing according to its customers. While both metrics result from simple, close-ended survey questions and one open-ended question, each focuses on a different facet of customer happiness.
NPS provides brands with broader, high-level insights, whereas CSAT allows a brand to analyze specific customer engagements on a more granular level. NPS reflects a customer's overall satisfaction with a SaaS company, and degree of brand loyalty. CSAT in comparison, is more specific and reflects short-term happiness after a company interaction.
When and How Should You Use NPS and CSAT?
For SaaS companies and Customer Success managers to get the most out of NPS and CSAT, it's essential to use these surveys in scenarios where they are likely to return the most value.
While NPS is a simple, proven metric for measuring customer loyalty, it's not robust enough to provide in-depth insights about precisely where someone needs help in their customer journey. CSAT is better suited for the task of gathering deeper, actionable metrics that a company can use to address problems and improve customer service.
The best timing for when to present surveys differs between these two metrics as well. NPS is best used after a customer transaction, orat the end of the buying journey. The simplicity of the survey makes it easy to deploy and increases the odds that it will receive a response. By sending NPS surveys regularly, brands can track customer happiness and loyalty over time.
CSAT, on the other hand, is more versatile. CSAT can be used after any customer interaction, though it tends to have a lower response rate because it requires more effort on the customer's part. CSAT is most effective in situations where customer engagement is likely to be higher, like after closing a customer support ticket or at the end of a free trial period.
For Best Results, Use Both NPS and CSAT
On their own, neither of these measurements can represent the entirety of what a customer thinks about a brand. However, companies will inevitably see optimal results when they're used together in Customer Success strategies.
The combination of NPS and CSAT results in a more comprehensive overview of how a SaaS company is perceived by its customers, and CSAT results can indicate in real-time the interactions that are driving NPS scores.
Both NPS and CSAT are crucial metrics that provide invaluable customer insights for successful SaaS companies. By tracking and measuring overall customer loyalty and customer satisfaction within key business areas, these metrics empower brands to stay competitive and reduce customer churn.
While both measurements reflect customer happiness, they do so from different perspectives, and it's the combination of the two that provide companies with the information necessary to address issues and retain the maximum number of customers.
Vitally's NPS add-on is NPS rebuilt for Customer Success, helping you show NPS surveys to specific accounts, analyze NPS scores across business, and set up alerts for businesses with dissatisfied account owners or low scores. Get started with a free, personalized demo today!