CSAT & NPS

During the last month, I have been involved in discussions where companies use either of the metrics — Customer Satisfaction (CSAT)/ Net Promoter Score (NPS) to measure customer satisfaction. Our today’s discussion was in context of a SaaS company and I think:

CSAT is a forward predictor of churn and hence, Monthly Recurring Revenue for an Enterprise SaaS company (MRR) and MRR growth — while neither of them can be directly attributed to CSAT. The score in absolute is important but it is equally important to understand the % of extremes as the most satisfied and most dissatisfied are the first ones to respond to the survey.

NPS predicts how “referenceable” the business is. It matters both for Enterprise and SME providers of SaaS. Enterprise SaaS companies can get the users of high NPS companies on calls during critical and high value sales contracts. SME SaaS players can use high NPS providers in their marketing outreach.

The metric chosen to measure customer satisfaction or vitality should be driven by the objective of measurement — Expansion MRR, reduction in churn or higher velocity of acquisition. Of course, a business may choose to do both. I have managed enterprise accounts in past and it was in the DNA of our organisation to complete CSAT surveys. My key takeaways from that are:

• Completion of CSAT/ NPS should be a KRA of customer success.
• Double click the data from both. Enterprise SaaS customers can use the high CSAT scorers for product innovation; SME SaaS customers can use the high NPS customers to get more customers quickly.
• Think of cohorts — by pricing, product usage, tenor with you, even geographies. Analyse it to get insights on pricing, product usage and customer success/ sales efficiency.
• Check for changes of CSAT/ NPS over a period of time. For example, what % of high CSAT users dropped from Highly satisfied to Very satisfied or Satisfied? Was it new feature, new modules, different pricing, consummable?
• Try to do CSAT/ NPS on product that the customer is using than on emails. Email open rates are poor.

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