NPS or Net Promoter Score is a metric used in customer experience programs to measure customers’ loyalty to a company. It was developed in 2003 by Bain and Company and is presently used by millions of businesses to track customer experience and loyalty.
Net Promoter Scores are measured using a single question survey to which the users must respond with a number from -100 to +100. A higher NPS score is desirable as it indicates higher customer satisfaction.
One of the most straightforward surveys used to measure customer perception can be summarized in one line below:
How likely are you to recommend product x/ service x/ organization x to a friend or colleague?
Respondents who receive the survey must give a rating between 0 (not at all likely) and 10 (extremely likely). Depending on their responses, customers fall into three categories – Promoters, Passives, and Detractors – to measure the overall Net Promoter Score.
Once you have divided your customers into the above three categories, subtract your percentage of Detractors from Promoters' percentage to get your NPS score. For example, if 20% of your respondents are Detractors, 20% are Passives, and 60% are Promoters – your NPS score would be 60-20, which is 40.
In case you are wondering how often to use NPS surveys, we suggest deploying them quarterly, or at least annually, to understand how customers generally feel about your company.
You can also use transactional NPS surveys, which are sent out after a customer interacts with your company, to understand customer satisfaction at a molecular level.
Here is a list of all that we have further covered in the article:
NPS surveys are quite useful in determining customer satisfaction, but they do have some flaws. For one, the data collected only reflects the views of a small percentage of customers. Besides, the data is also infrequently collected, which means you lack the complete picture.
Another issue with NPS is that it is too linear. For example, 7 or 8 may be an exceptional score for a person, but average for another. NPS ignores the possibility of differences in perception between customers, which can skew the overall results.
Generalization is also an issue, as one ends up reading too much into a rating to derive meaningful insights. To overcome these issues, it is good to use a follow-up question with your NPS survey for better results.
By adding a small comment box with the survey, you give your customers the option to explain why they gave a particular rating in their own words. Such feedback immediately tells you what is right or wrong with your product or service and what needs to be improved.
Here are a few more tips to improve the insights from your NPS score:
It is also possible to use analytics to improve your NPS insights. For example, to solve the issue of small data sets, you can employ predictive analytics to extrapolate the scores of respondents to non-respondents with similar metrics or profile or experience and increase the representativeness of the score.
Analytics can also use information from your CRM, transactional data, as well as data from various surveys and social media sites for better customer segmentation, which is useful for extrapolating the score. Such segmentation is also helpful in identifying the drivers for satisfaction in various groups.
Customers are at the heart of your business. Therefore, when you improve customer satisfaction, you automatically improve your company’s bottom-line through increased loyalty, sales, and revenue. However, you can’t improve what you cannot measure, which is the main reason behind the popularity of NPS scores.
Bain & company that initially invented NPS suggest a five-point customer feedback checklist to help organizations make the most of Net Promoter Score:
In a nutshell, if you close the feedback loop by taking appropriate action and use the insights to build your future roadmap, there are high chances that you will reduce churn, improve customer experience, and increase revenue.
You can also improve your NPS program’s efficacy and drive growth by integrating your NPS data with your CRM software. Such integration will turn your Net Promoter Score into a dynamic indicator of customer satisfaction, offering a complete view of the customer life cycle and happiness at various stages.
Considering that your CRM is already linked to your customer engagement software, you will also empower your service agents with more insights about every customer based on their NPS ratings.
With NPS data linked to your CRM data, you can put names on numbers, making it a breeze to track Promoters, Detractors, and Passives. Such integration also makes it possible to identify the low hanging fruits in the market in terms of upselling and cross-selling opportunities.
CRM functionality also makes the next step easier by allowing you to create follow-up tasks, systematically track their progress, record various customer interactions, and track the Net Promoter Score to see it improve over time.
Net Promoter Score can be used to track customer satisfaction in several aspects. From getting an idea about what the customers think about your organization to analyzing a particular transaction or interaction, NPS can be used to gather feedback at a granular or absolute level, depending on your business goals.
By adding an open-ended question to your NPS survey, you can gain even more insights, directly from the horse’s mouth.
This helps you gauge your product or service efficacy, evaluate which features are working well or not, identify areas of improvement, and confirm whether your customer service is up to the mark or not.
Everybody knows the importance of customers to a business. It is also common knowledge that customer acquisition costs much more than customer retention.
Yet, less than a third of all companies ask their customers for regular feedback, which means they lag behind their customers’ changing needs and expectations.
By including Net Promoter Score into your marketing and customer retention strategies, you can meet both the above objectives. You can gain regular feedback with short NPS surveys and also evaluate what matters to your customers and not.
In case you are wondering how NPS impacts your revenue growth, research by the London School of Economics shows that revenue grows by 1% for every 7% increase in a brand’s Net Promoter Score.
Thus, emphasis on customer satisfaction is a proven way to boost your revenue as happy customers tend to be loyal and also spend more on their favorite brands.
NPS also helps you in customer retention by making it easier to identify Detractors and reach out to them with customized marketing messages to prevent churn.
By tracking NPS as a customer satisfaction metric, you can grow your business at an impressive rate. However, tracking the Net Promoter Score is not enough. You also have to take action on the feedback to improve customer satisfaction.
For example, you may invest in live chat software to ensure your customers receive real-time assistance with minimal wait time.
It is also possible to simplify onboarding with co-browsing technology to improve customer experience and enable customers to use your product correctly, leading to higher satisfaction that turns into a higher score for your business.
Here’s a four-step action plan to grow your business by measuring NPS:
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