Product managers constantly pursue ways to improve their product or service and create its best version. To keep a finger on the pulse of customers, they regularly conduct surveys with them. Amongst these surveys, Net Promoter Score (NPS) and Customer Satisfaction (CSAT) are the most famous ones. Even as both NPS and CSAT contain close-ended and open-ended questions to garner customer feedback, they are used for different purposes and at various stages of a product’s journey.
As a product manager, you may need clarification about choosing between NPS and CSAT. While both are essential tools for gathering customer feedback, it’s important to understand the nuances of each one. Product managers are likely to use both surveys, but when to use which survey and how to use the data gathered that’s the question we will attempt to answer in this blog. Let’s first give you a snapshot of what NPS and CSAT are all about:
Net Promoter Score (NPS)
Developed by consulting firm Bain and Company in 2003, NPS has become the industry benchmark to measure customer loyalty. This score indicates if customers are likely to recommend or promote your brand to their friends, family, or colleagues. NPS surveys ask customers to give a rating referral on a scale of 0 to 10. Based on these responses, customers are divided into three categories:
Promoters (9 – 10): These customers are your brand’s advocates and are most likely to recommend and promote it in their inner circle.
Passives (7 – 8): These customers sit on the fence and may move to another brand or service.
Detractors (0 – 6): Be wary of these customers as they are dissatisfied and could spread negativity about your brand.
Calculating your business’ NPS score is quite simple: subtract the percentage of detractors from the percentage of promoters. So if 20% of respondents are detractors, 5% are passives, and 75% are promoters, the NPS would be 75-20 = 55.
Customer Satisfaction Score (CSAT)
Customer Satisfaction Score (CSAT), as the name suggests, measures the customer’s level of satisfaction with a product or service. CSAT surveys measure customer happiness at different touchpoints, such as completing a transaction or before renewing a subscription.
Customers taking a CSAT survey are asked to rate their recent experience on a scale of 1 to 5, in which 1 is Very Unsatisfied, and 5 is Very Satisfied. The CSAT score is simply the average response score, and this is how it can be interpreted:
A high score (4-5) indicates high customer satisfaction.
A neutral score (3) indicates your customers are passive and indifferent, and there could be an issue that prevents them from giving a high score.
A low score (1-2) is a warning sign telling you to take notice of issues and make immediate improvements.
To help you garner qualitative feedback, CSAT surveys also contain open-ended questions. The answers to these questions and your CSAT score will provide valuable consumer insights.
What is the Difference between NPS and CSAT?
It’s evident from their definitions and descriptions that both CSAT and NPS are essential to close the feedback loop. While CSAT measures customer satisfaction with a product or service, NPS is apt to size up the customer’s perception of the organization. CSAT evaluates a customer’s feelings about a recent event – such as a purchase, or a support interaction and is a transactional metric; NPS is more relational as it indicates the customer’s feelings about your brand.
To understand the difference, focus on the operative words ‘satisfaction’ and ‘recommendation’. CSAT respondents express their response in terms of ‘satisfaction’, whereas with NPS, ‘recommendation’ only comes when the customer is genuinely impressed.
NPS Vs. CSAT – How do they stack up?
This blog aims to answer the central question: Should a product manager choose NPS or CSAT? The answer to this question is more complex and is rooted in your business’s requirements and the product’s or service’s life stage. CSAT is apt to measure customer satisfaction in the short term, but if you’re trying to evaluate long-term brand loyalty, NPS is the metric. Let’s help you understand when and how to use each survey:
Purpose- What does the survey measure?
NPS surveys measure brand loyalty and help you diagnose long-term issues that may impact your business. Moreover, an NPS score also helps you size up the competition and predict the long-term growth prospects of your business.
CSAT surveys are more focused and help you gauge customer satisfaction concerning specific areas such as new features, customer support, etc. The dedicated approach of these surveys enables you to identify aspects that are performing well and where you need to improve.
Timing- When should you conduct the survey?
NPS is best suited for the end of the customer’s journey as it measures their overall response to the brand. Regular NPS surveys, preferably around the same time every year, help you to evaluate brand perception and loyalty. You can also conduct NPS after significant events such as a merger with another business, a product/service overhaul, or to evaluate brand perception after a crisis.
Customer feedback can help you evaluate your support team’s performance and detect potential bottlenecks. CSAT surveys are short sprints and should be carried out after an important milestone or touchpoint. For instance, you can conduct a CSAT survey after closing a support ticket, at the start of a trial period, or the end of a purchase.
Simplicity or Specificity?
NPS surveys are typically short and simple and get high completion rates. Even as an NPS score gives you a sense of brand perception and loyalty, they don’t come with specific insights and customer preferences.
CSAT surveys can be designed to cater to specific business needs at different stages of your product journey. More importantly, they help you identify customer issues and problem areas that need improvement.
Strike the right balance
Any product manager who wants to see her product grow and gain acceptance will adopt both, NPS and CSAT surveys. They are, after all, two very effective tools for gathering customer feedback and creating better customer experiences.
As an astute product manager, you shouldn’t choose one survey over another. Instead, use both NPS and CSAT together to get comprehensive customer feedback. Both present a different facet of the customer’s perception and work best when used independent of each other. Remember that NPS and CSAT are most effective when used at the right time. Customer touchpoints and interactions are best suited for CSAT surveys, while events such as business mergers and product updates are a good time to carry out NPS.
The product roadmap will often decide which survey to use, but combining different metrics will give you a complete overview of customer perception. You may need to improvise with multiple metrics to see which fetch you the most insightful customer feedback. Also, remember to analyze qualitative data from open-ended responses to gain deep insights into what the customer wants.