Businesses have long thrived on the saying “the customer is always right”, but how do you know what the customer thinks of your business? Measuring customer satisfaction can be tricky, how do you know what to ask about? It can seem overwhelming, but it is imperative for the success of your business to truly understand what your customers are looking for. Gathering an understanding of your businesses KPIs will help your team measure the appropriate customer satisfaction score and improve your business goals. 

Why do You Measure Customer Satisfaction?

Customer satisfaction may seem simple since it is literally about keeping customers happy. Isn’t that what all businesses strive for? But it can get complicated quickly, as it is a balancing act of providing an innovative product while also being reliable, communicative and better than the competition.

In order to understand if you are meeting the above criteria, you will need to calculate your customer satisfaction score. Customer satisfaction metrics help business achieve many milestones, such as loyalty, return rate, and new customer pipeline. Without understanding how to satisfy your customers, your business will be short lived. With competition as thick as ever, it will be important for your business to set yourself apart from the crowd, especially when it comes to customer satisfaction. 

Satisfied customers tend to stick with your company. It can cost 5 to 25 times more to acquire new customers than to keep old ones. An easy way to ensure that your business continues to thrive is by satisfying customer’s within their first interactions. 

So how can we retain customers? Measuring customer satisfaction can help you uncover exactly what your clients are happy with, and more importantly, what they may be unhappy with. This helps your team understand what needs to be improved and may also bring problems that the team did not know existed to light. 

6 KPIs for Customer Service

It can be easy to feel paralyzed by all of the data that you can collect on customer satisfaction ratings. Although there are innumerable ways of coming up to measure your customer satisfaction score, there are 6 key KPIs for 2022.

  1. Net Promoter Score (NPS)
  2. Customer Satisfaction (CSAT)
  3. Churn rate
  4. Retention rate
  5. Customer Lifetime Value (CLV)
  6. Customer Effort Score (CES)

Learn more about why these KPIs matter and how brands worldwide have been using them to provide excellent experiences to their customers.

Net Promoter Score (NPS)

NPS is an industry-standard and most widely used CX metric to measure customer satisfaction. Introduced in 2003, NPS has so far, been implemented by global organizations like Apple and Airbnb to measure their CX score.

How does NPS work?

NPS is a short and simple way for measuring customer feedback. With only two questions that refers to a concept and strategy, it provides a crucial insight as to how your customers feel about your brand. NPS is often used to rate a brand, service or product in general.

For instance, here are 2 sets of questions that you can ask on an NPS survey.

  • “On a scale of 0 to 10, how likely are you to recommend our business to a friend or colleague?”
  • “How likely are you to recommend (product name) to a friend or colleague?”

The first question helps you identify your promoters (who score higher on the scale) and your detractors (who score less on the scale). Therefore, the overall score is calculated by

Overall NPS score = % of Detractor – % of Promoters

Likewise, the 2nd question helps you understand what your customers feel about your brand. It’s an open-ended question that helps you identify you improve your customer satisfaction score.

Why use NPS?

  • It’s fast, simple and easy both for customers and companies to work on
  • Follows an open text feedback mechanism that allows to dive deep and see the big picture
  • It’s a widely understood industry-standard metric
  • NPS is also utilized to measure word-of-mouth marketing strategies

Survey’s and feedback for customer satisfaction is a quick and easy to to gather detailed insights that your team can turn into action items.

Customer Satisfaction (CSAT)

CSAT score is measured on a scale from 1 to 5 and is one of the most widely used CX metrics. Used by Google or Facebook for “ratings” CSAT is extremely useful if you want to measure customer satisfaction with one-time interaction. Often asked from a customer after a transaction or after solving a customer support ticket, it prompts a five point scale:

  • Very Unsatisfied
  • Unsatisfied
  • Neutral
  • Satisfied
  • Very Satisfied

This quick and efficient process helps enormously to evaluate the efficiency of the customer service department. CSAT is a great way to see what your customers think about you in the exact moment they are interacting with your brand.

Customer Effort Score (CES)

The third most popular of the list, Customer Effort Score is a transactional metric that involves customer’s input to assesses the simplicity of a single solution. CES questions are averaged on a 5-7 point scale system with a single, straight question. Given below are some examples of CES:

How to measure CES?

CES scores help you in analyzing the complexity of the service. Therefore, to measure it, you need to follow both the average score and the distribution of scores. Analyzing distributions could help you in identifying which of your customers experience effortless service and, more importantly, find those that struggle to during the process.

By pro-actively helping and reaching out to those who are struggling, you can effectively decrease churn. CES is also a good metric for revealing your detraction drivers.

Churn rate

Churn rate reflects how many of your customers have stopped using your products or services. Generally, customer churn rate counts the total number of lost customers or the percentage of lost customers within a defined time period.

Churn Rate = Number of Customers Lost Over Period / Number of Customers at Start of Period

Interpreted as the lost business value, customer churn rate is a critical metric that businesses need to focus on. If your customer churn rate is high, its time you take your customer feedback to heart and work on providing better customer experience especially since acquiring a new customer is 5X times costlier than retaining an existing one.

Retention rate

As the name suggests, customer retention rate reflects how a business retains customers over a specific period of time. The metric is inversely proportional to the churn rate: the higher the retention is, the lower the churn rate would be.

If it doesn’t make you work on your retention strategy just yet, think about this: according to a research by Temkin Group, loyal customers are 5X as likely to repurchase, 5X as likely to forgive, 4X as likely to refer, and 7X as likely to try a new offering.

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) predicts the net profit attributed to the entire future relationship with a customer. CLV can either be calculated as a business value that customer brings during the whole time of the relationship with a company or as a value over a defined period of time. It is usually looked at as an average time the customer spends with the brand.

Calculating your CLV comes in 2 stages

  • Stage 1 includes calculating Lifetime value

Lifetime Value = Average Value of Sale * No. of Transactions * Retention Time Period

  • Stage 2 includes calculating Customer’s Lifetime value

Customer Lifetime Value = Customer Value * Profit Margin


Measuring your customer satisfaction KPs is worth the hard work to reap the benefits of happy customers and a thriving business. Does your team need help with campaign management to align teams for better customer service? Learn about Acqueon’s offerings and how we can simplify your business needs.