Customers who are going to make a purchase come for her with personal ideas about price and quality, and also wait for a certain level of service. The success of the company, the growth of its financial and non-financial indicators just depend on how it manages to adjust and meet the expectations of the client.
What evaluates CSI?
The Customer Satisfaction Index (abbreviated as CSI), or translated into Russian, is the “customer satisfaction index”. It is an assessment of customer satisfaction after his interaction with the company. In other words, with the help of CSI you can find out how successful the experience of a client visiting a company was.
CSI customer satisfaction index allows you to evaluate the following indicators:
- how satisfied the client is with a particular process, service or product of a company;
- how satisfied the customer is with the overall interaction with the company;
- how satisfied the client is with the interaction with a competitor.
A client who has a high satisfaction rate from interacting with the company will definitely return again, make a purchase again, and also recommend the company to his environment.
Experts consider the customer satisfaction index as the most used non-financial indicator. CEOs of most companies see CSI as the most reliable non-financial indicator of future financial performance. In other words, the higher the client’s CSI level in the present, the more loyal he will be to the company in the future, which means he will again make purchases at the company.
The CSI customer satisfaction index calculation helps managers to answer one of the most important questions: how loyal are its customers to the company? After all, studies have shown that retaining the current customer is much cheaper for the company than attracting a new one.
Information Collection Method for Calculating CSI
In order to collect complete information, it is necessary to use both quantitative and qualitative methods.
Actively applied polls. For example, in most companies you can see special buttons with positive and negative ratings. After interacting with the company, customers are invited to make their choice. Surveys are also used to find out overall customer satisfaction from using a company’s product or service. For this, the client needs to give a rating from 1 to 5, where a rating of 1 indicates complete dissatisfaction, and a rating of 5 indicates complete satisfaction.
Special focus groups in which the company's clients participate can also be used. A focus group can show a better picture of customer loyalty.
CSI Customer Satisfaction Index Formula
An example of calculating the CSI is the equation below.
CSI = sum Wj (Pij - Eij), in which:
- k - shows the number of analyzed attributes;
- Wj - shows the weight factor of the attribute;
- Pij is the created perception of the stimulus i with respect to the attribute j;
- Eij is the expected level for attribute j, which is the norm of stimulus I.
American Customer Satisfaction Index
ACSI, or the American Customer Satisfaction Index, shows a rating that is based on an analysis of the desires and expectations of the consumer, how he perceives price and quality. Thanks to this index, companies can measure customer satisfaction not only on an ongoing basis, but also on a quarterly basis. The data source will be various customer surveys.
It is worth remembering that large annual surveys, as well as studies using the focus group, are quite expensive events. Most often, companies resort to short surveys, as they also show the necessary information about customer satisfaction, but are relatively inexpensive.
NPS Consumer Satisfaction Index
The Net Promoter Score, or NPS Customer Satisfaction Index, stands for “net promoter index”. This index was first used since 2003, when it was proposed by F. Reicheld in one business magazine. In his opinion, the readiness to tell and recommend the organization to friends is most connected with the actual customer loyalty. This willingness is the only indicator of customer loyalty.
NPS Index Calculation
The methodology for changing loyalty is based on two questions that are asked by current customers. Former and potential customers are not considered. The first question reads: “What is the likelihood of your recommendation of the company to your family and friends?” The rating is in the range from 0 to 10, where a value of 0 determines the client’s complete unwillingness to recommend the company, and a value of 10 determines his 100% desire to make a recommendation.
Depending on the answer, the client is ranked in one of the groups:
- Customers Promoters. Those who rated 9 or 10. The most loyal customers to the company. The company can expect their recommendations.
- Neutral Clients. These are recipients who rated the company with a score of 7 or 8. Such customers are rated as “passive”, they may, as they recommend the company to friends, and not do so.
- Critical Clients. They give the company a rating from 0 to 6. Such clients are unhappy with the interaction with the company, it is unlikely that they should be expected to recommend. Rather, the opposite.
Customer satisfaction index is calculated by subtracting the percentage of “promoters” and “critics”. The index shows the level of customer loyalty. The index value can vary from -100 if all the clients surveyed were in the “critics” group, to +100 if the situation is the opposite.
CSAT Customer Satisfaction Index
Customer Satisfaction Score is an average measure of customer satisfaction. Using this index, the client has the opportunity to evaluate the experience of his interaction with the company. For example, some action, including communication with the support service, obtaining additional information or returning the purchased goods can be evaluated by the buyer on a certain scale.
The indicator is measured by conducting a survey among buyers. This can be an automated questionnaire, which sounds after the manager’s telephone conversation with the buyer or is sent via SMS or email. The company, sending the survey, asks the consumer to rate the level of satisfaction with experience. The scale often ranges from 1 to 5, where a value of 1 indicates that the customer is completely dissatisfied with the service, and a value of 5 indicates that the customer is fully satisfied. The final CSAT customer satisfaction index score is displayed as% of customers who rated 5.
CES and SCI indices
Customer Effort Score allows you to analyze the level of customer effort that he needs to make to solve his problem when interacting with the organization. The lower this indicator, which means that the client makes less effort when interacting with the company, the higher the likelihood of his loyalty to this company.
The Secure Customer Index shows the level of reliability and customer confidence. It is most associated with the profitability of the company, which takes up its market share, as well as the number of regular customers. If the SCI value is less than the value of 0.7, then these clients belong to the “risky” group, with a value from 0.9 to 1.0 clients belong to the safe group, in other words the most loyal. Values between 0.7 and 0.9 identify customers as neutral.
Remarks
Analyzing customer satisfaction, it is also worth paying attention to some comments. Satisfying the needs of customers to increase the index of customer satisfaction, you need to pay attention to the cost of achieving high index performance.
Today's fast-growing markets do not guarantee that with high levels of satisfaction index, the company will achieve financial results in the future. Clients can appreciate the company's product or service, but make a purchase at a competing company, since its product seemed to the client more profitable or attractive.
The company needs to analyze the customer satisfaction index using various methods. A large survey conducted once a year may not be enough to complete the picture of determining consumer loyalty.
Index Values A Company Must Strive For
By analyzing the customer satisfaction index, companies can also analyze the percentage of customer churn. It should not exceed 5%.
The final calculation using the NPS customer satisfaction index formula should not be lower than 50. This value is positive for the company. CSAT should aim at 80%.
The reliability of the company, the range and cost of products, the ability to take advantage of various lending and installment programs can affect customer satisfaction. Also, the customer’s opinion is affected by the availability of documentary evidence of the safety of the company's goods. An important parameter is the client’s opinion about the service in the company: quickly or long, friendly or not. All small factors add up to one single opinion, which just allows us to analyze consumer satisfaction indices.