How to Measure Customer Satisfaction KPIs: 10 Metrics

Each organization promises an unwavering commitment to customer satisfaction. Still, only a few companies make sincere efforts to gain valuable insights into how satisfied their customers are in the true sense.

Many times, owners assume that the customers are delighted with the products and services of the company as they have been associated with it for a long time. Overshadowed by this assumption, they don’t give heed to measuring customers’ satisfaction levels. If you are one of them, you should be on the alert!

Maybe your customers are buying from you because, at the moment, they don’t have other options to switch. There are high chances of you losing business at some point in the future if a competitor enters the market and better serves your customers than you. So, be conscious before it's too late and make a plan to measure customer satisfaction without delay!

In this article, we have provided a detailed guide on some important KPIs to help you evaluate whether you are a customer-first business. Let’s take a closer look!

What are customer catisfaction KPIs?

Customer Satisfaction KPIs are the metrics businesses of all sizes use to find out the satisfaction levels of the customers with the brand’s products and services. These KPIs are the stepping stones to creating a roadmap to enhance customer experience and convert the customers into brand advocates.

Why measuring customer satisfaction is important?

Here are the reasons why measuring customer satisfaction is important.

1. Finding areas of improvement

Measuring customer satisfaction can help you determine areas in which you are lagging behind and take apt and timely actions to overcome weaknesses. For example, if your customers are not happy with the response time of your support team, you can invest in customer support team training or implement a better response system.

2. Making relevant and timely decisions

Continuous monitoring of customer satisfaction kpis lets you determine the effectiveness of new initiatives, improvements, or changes. You can also make data-driven decisions to improve the overall performance of the business and customers’ interaction with the brand.

3. Retaining customers

These kpis unveil the moments, touchpoints, and interactions that made customers happy. You can strengthen those factors to encourage customers to buy your products and services again and again.

4. Increasing sale

These kpis let you know who your satisfied and loyal customers are. You can increase your sales by finding ways and implementing plans to upsell or cross-sell to these customers. You can also offer discount coupons and other perks to loyal customers to encourage them to spread positive word-of-mouth, which in turn, boosts your sales.

5. Gaining competitive advantage

Customer satisfaction is the key to gaining a competitive edge. These kpis provide valuable insights into customers’ experiences and empower you to take action to enhance them. This way, you can create a strong reputation for your business in the market for its outstanding services and quality.

Essential KPIs to Measure Customer Satisfaction

While researching about how to measure customer satisfaction the other question that comes to mind is what types of metrics measure customer satisfaction

1. Net Promoter Score (NPS)

NPS lets you measure the loyalty level of your customers on a scale of 0-10 based on one easy question -

How willing are you to recommend [Product X/Company Y/Service Z] to a colleague or friend?

This metric provides you an understanding of where you stand with respect to your competitors and helps you create a roadmap to convert customers into brand evangelists.

You can calculate the score using this formula -

Net Promoter Score = % Promoters – % Detractors

The higher the NPS, the higher will be the customer loyalty. Based on responses, you can segment the customers into three categories - Detractors, Passives, and Promoters.

Detractors - They score between 0 and 6 and are less willing to recommend your product or service to others. Retaining such customers is difficult, and there are high chances of them taking away potential customers.

Passives - They score 7 or 8 and are satisfied with your offerings. However, they are not very happy as promoters. They stay neutral, i.e., neither recommend your brand nor ruin its image by spreading negative word-of-mouth. With the right strategies in place, you can convert passives into promoters.

Promoters - The customers who score 9 or 10 come in this category. They are enthusiastic and loyal to your brand and are brand advocates in a true sense. They recommend your offerings to others and persuade them to buy from you.

2. Customer Satisfaction Score (CSAT)

The CSAT score indicates the contentment and satisfaction level of customers with your offerings, company as a whole, or customer support service.

The customer satisfaction survey is conducted either after the complete product experience or after every interaction of the customer with the brand. In the survey, customers are asked to rate their experience with the brand/company/product/service on a scale of 1 to 5. However, the responses of 4 (satisfied) and 5 (very satisfied) are considered for the purpose of calculation.

Here’s the formula to calculate the CSAT -

Customer Satisfaction Score = Number of 4, 5 responses/total number of responses

This score helps you identify the negative and positive moments while brand-customer interaction, create strategies to bridge the gaps in customer experience, and reduce the churn rate.

3. Customer Effort Score (CES)

This metric measures how effortless it is for a customer to interact with your brand/company. It indicates the measures customers put in to exchange/refund their products, get a problem/issue resolved by your customer support team, get a request fulfilled, browse online products, etc.

You can calculate the score using this formula -

CES = Sum of all scores/total number of respondents

You can use this KPI to measure the effectiveness of interaction that led to a subscription or purchase. You can also use it to measure the efficiency of your customer experience team in providing a delightful experience to customers. Based on the outcomes, you can make out whether you need to invest in training the customer support team, employ more staff or callback systems to reduce wait times, or provide multiple channels to customers for feedback/contact. This KPI is a useful tool to reduce customer churn rate.

4. Voice of the Customer (VoC)

Voice of the Customer (VoC) lets you gauge how effectively your business and offerings are meeting customers’ expectations, wants, and needs. In other words, VoC helps you identify the gap between the expectations and actual experiences of customers. It also helps you create strategies accordingly to retain customers and transform them into brand ambassadors.

You can capture VoC by connecting and engaging with your customers at every interaction and touchpoint of their journey. For this purpose, you can use various methods, such as live chat, emails, focus groups, customer interviews, online customer surveys, etc.

5. Customer Service Satisfaction (CSS)

This metric gives you an idea of how satisfied your customers are with post-purchase services. Using this KPI, you can measure the effectiveness of specific touchpoints or interactions that customers have with your post-sales team, but you can’t measure the effectiveness of your business as a whole. The CSS survey won’t give you correct results in the case of multi-channel interactions.

The formula to calculate Customer Service Satisfaction Score-

CSS = Sum of all ratings/total number of respondents

Based on the CSS score, you can evaluate the performance of your customer support agents and reward or train them accordingly.

6. Customer Churn Rate (CCR)

The churn rate pinpoints the number of subscribers who don’t renew a subscription or cancel it. It also indicates the percentage of customers who have not used your service or purchased your product over a given period.

CCR = Number of users at the beginning - the number of users at the end of the period/Number of users at the beginning

A churn/attrition rate of more than 10% is considered alarming for any business, and it reflects that your marketing efforts are focused on acquiring customers and not on retaining them. It also indicates that you need to invest in customer success programs for improving customer experience.

7. First Contact Resolution (FCR)

Measuring this KPI is important to get insights into how efficiently and effectively your customer support team is resolving customers’ issues and queries in a single interaction or the first attempt (chat, phone call, email).

Here’s the formula to calculate this KPI -

FCR = Number of tickets resolved in one-touch/total number of tickets received * 100

FCR = Total issues resolved - Total issues reopened/total number of tickets received * 100

This metric is particularly useful for call centers and customer support agents to identify issues/hindrances that prevent them from providing prompt solutions to customers on first contact. The issues could be Internet or email outage, specific hardware or software requisitions, etc.

8. First Response Time (FRT)

First Response Time measures the time your customer support representative takes to respond to the issue/queries the customer first raises/submits.

The First Response Time can be filtered by time zone, team, and agent. Different customer service channels, such as SMS, live chat, inbound email, voice calls, etc., have different FRTs expectations.

The formula for calculating FRT -

Average FRT = Sum of first response times/Number of tickets raised

You must aim to keep the FRT as low as possible. It can be done by using the fastest messaging platforms or channels, building a comprehensive knowledge base, and focusing your representatives on a single channel instead of multi-channels and training them well.

9. Abandonment Rate

This metric depicts how satisfied your customers are with their interaction with your brand/company. It refers to the percentage of customers who hung up/abandoned/disconnected a call before speaking to the customer support representative. You must keep track of both successful and unsuccessful interactions to calculate the abandonment rate accurately.

Abandonment Rate = Total calls received in a particular period - number of calls handled successfully/total calls received in a particular period * 100

In the case of an e-commerce business, this KPI indicates the percentage of customers who abandoned the shopping cart before making a purchase. A high abandonment rate signifies that your customers are experiencing issues in the checkout process, and you must take quick measures to improve it.

10. Customer reviews

Customer reviews tell you whether your customers are satisfied with your offerings or not. These reviews have the power to influence the perceptions and purchase decisions of prospective customers.

Happy and delighted customers are more likely to give positive reviews and ratings to your products or services and recommend them to others. You can encourage them to share their feedback by offering them special discount coupons or other perks.

How to measure customer satisfaction

Measuring customer satisfaction is crucial for businesses to understand how well they meet customer expectations and identify improvement areas. Key Performance Indicators (KPIs) provide measurable metrics that can be used to track customer satisfaction.

Here are some steps to help you measure customer satisfaction KPIs effectively:

1. Define your customer satisfaction goals

Clearly outline what aspects of customer satisfaction you want to measure and why. For example, you might focus on overall satisfaction, product/service quality, response time, or customer loyalty.

2. Select appropriate metrics

Choose the KPIs that align with your goals. Some common customer satisfaction metrics include Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), Customer Effort Score (CES), and churn rate. NPS measures customer loyalty, CSAT assesses satisfaction with a specific interaction, CES evaluates the ease of doing business, and churn rate indicates customer retention.

3. Determine data collection methods

Decide how you will collect data for each KPI. This can include surveys, feedback forms, customer interviews, social media listening, or analyzing customer support interactions. Consider quantitative data (rating scales, numerical scores) and qualitative data (open-ended feedback) to gain deeper insights.

4. Set a baseline

Establish a starting point to measure your progress. This baseline can be derived from previous customer satisfaction data or industry benchmarks. It will help you track improvements and identify areas of concern.

5. Implement data collection process

Deploy your chosen methods to collect customer feedback. Surveys and feedback forms can be distributed through email, website pop-ups, or in-person interactions. Ensure the process is user-friendly and convenient for customers to encourage participation.

6. Analyze and interpret data

Once you have gathered data, analyze it to derive meaningful insights. Calculate your KPIs based on the collected information. Look for patterns, trends, and outliers to identify areas that require attention. Segment the data by different customer demographics, product lines, or service types to gain deeper insights.

7. Track progress and make improvements

Regularly monitor your KPIs over time to track changes in customer satisfaction levels. Compare the data with your baseline and assess the impact of any changes or improvements you have implemented. Use the insights gained to make data-driven decisions and implement strategies to enhance customer satisfaction.

8. Communicate results and take action

Share the findings with relevant stakeholders within your organization. Discuss the insights and collaborate on action plans to address any identified issues. Continuously communicate progress, improvements, and future goals to build a customer-centric culture.

The bottom line

Remember, your business or brand is not how you perceive it; it’s what your customers feel and think about it. Finding a customer takes several months to a year, but it takes a few moments to lose one. We bet you would not want to lose one because of your failure to find out and bridge gaps in customer perception and satisfaction.

So, make measuring customer satisfaction from time to time a priority of your organization, not an afterthought. Also, communicate these KPIs to your team members through PowerPoint presentations to keep them aligned and directed towards the goal.

In a nutshell, integrate customer satisfaction metrics that are relevant to your business objectives and goals, take appropriate and timely actions based on insights, and don’t leave any stone unturned in making your customers feel how valuable they are to you. And you are all set to propel in this competitive era!