When it comes to customer retention, companies want to know one thing: how loyal is the customer to my brand?
Loyalty is a predicting factor of whether the customer will continue to buy your products and recommend your brand to others. It’s important to measure loyalty so your business can locate a benchmark for how they’re doing and look for ways to improve.
One simple way to measure loyalty is the Net Promoter Score (NPS). In fact, two thirds of companies are already using Net Promoter Score, so you’ll be in good company.
Net Promoter Score was first created in 2003 by Bain and Company. It’s a customer experience metric now used by millions of businesses to measure customer loyalty and enthusiasm for a brand. It’s conducted using one simple question:
On the Net Promoter Score scale, a customer may either be a detractor, passive or promoter.
There are all sorts of survey software available that will enable you to create a beautiful NPS survey for your business. Top choices include Churn360, Nicereply and SurveyMonkey.
NPS is easy to calculate. You find your Net Promoter Score by subtracting the percentage of detractors from the percentage of promoters.
For example, if 25% of your customers are detractors, 25% are passives and 50% are promoters, your NPS would be 50-25 = 25.
Your score will always be between -100 and 100. The higher the score, the better.
There are two types of NPS surveys that you can conduct.
Transactional NPS surveys are sent out after a customer has a specific interaction with your company, such as after a support conversation or when they’ve just bought a product. It measures their sentiment towards that particular transaction rather than for your company as a whole.
Relational NPS surveys are sent out regularly and are not tied to a specific interaction. They are used to survey your customers (for example, annually) and get an idea of what they think of your company as a whole. It can be used to check on the strength of your customer relationships and provide a standard that your business can improve upon.
Using a combination of these two survey types is the best way to deploy NPS.
Net Promoter Score has a number of benefits.
From the viewpoint of the customer, there’s nothing easier than the simple one-question survey that makes up the NPS. Customers are much more likely to complete short surveys that don’t take up too much of their valuable time. They don’t have to think too hard to answer your one question or spend time typing an answer. They just rate your business on a scale of 0 to 10.
The advantage of the NPS survey is that your customers are segmented into three groups: detractors, passives and promoters. You can use these segments to predict future behavior and take action based on their score. For example, if someone is a detractor, you can follow up with them to find out why they gave such a low score and potentially fix the problem.
When someone gives you a good NPS rating, you can rest assured that they will want to promote your products or services to others. You can use this as an opportunity to ask them for further help like a testimonial, or asking them if they wouldn’t mind reviewing your company online. You may also like to reward these customers for their loyalty by offering them a discount or an exclusive product.
Some types of surveys like CSAT or CES only measure a customer’s last interaction with your brand and how they feel about a particular experience. In contrast to NPS, they don’t look at the customer’s entire relationship and can only provide short-term data that might not reflect the true picture of the customer’s perception of your brand. NPS captures your customer’s feelings towards your business in its entirety.
A good NPS depends on your industry average. Of course, the perfect Net Promoter Score would be 100, which would mean that 100% of your customers are promoters, but this is not something any business has ever achieved.
An NPS of 30 might be good for the automobile sector but bad for the hospitality industry. You could say that any score above 0 would be good for your company because it indicates that your company has more promoters than detractors.
If a company scores below 0 then this is bad news because it means you have more detractors than promoters. However, if your score is -10 but your industry average is -20, then suddenly your score doesn’t seem so bad. You need to strike a fine balance between trying to achieve an objectively good score and benchmarking yourself against others in the industry.
If a company has a negative NPS, then they need to take steps to address the situation and try to turn more of their detractors into promoters. It’s important to take a look into why your customers are so unhappy and identify areas where the business could improve.
When you deliver the type of customer service that makes customers rave and want to tell their friends about you, your NPS is very likely to go up. You helpfully and efficiently solve their problems for them, turning what could be a bad experience into a good one. Make sure to empower your service reps to offer the kind of service that customers very rarely expect.
When you give your customers value for money, they naturally want to tell their friends about you. High quality products and services differentiate you from your competitors and keep your customers coming back for more.
Everyone in your company should be focused on your customers. It doesn’t matter if they are in a customer-facing role or not – the customer should be at the heart of everything that you do. Reward your employees for customer-centric behavior and ensure that it is emphasized from the top of your company downwards.
Our most unhappy customers are the greatest source of learning. Make sure you follow up with your detractors to find out why they gave you such a low score and discover how you could do better. The insights that detractors share will enable your company to improve its Net Promoter Score for all of your customers in the long-term.
A crucial time to gather your customer’s feedback is while they are still on your website. You can set an NPS survey to trigger when a customer exits your website to find out how they feel about the service you have offered, or after they have completed a payment. It’s best practice to follow up with at least one additional question to the NPS survey, such as “what can we do to improve your rating” if they are a detractor or passive.
Instead of asking customers to fill out a survey on your website you can email them a survey after they have completed an important interaction with your company, such as talking to your support team or buying a product. The negative aspect of sending out a customer survey through email is that there is a time lag between sending out the survey and receiving your customer’s response.
When customers are actively using your application is a great time to send out an NPS survey. NPS surveys can gauge how your customers are feeling when using your products and offer real-time feedback about how your products are meeting customer needs. In product surveys tell you how customers are using your products and identify areas where you could improve.
A crucial time to gather your customer’s feedback is while they are still on your website. You can set an NPS survey to trigger when a customer exits your website to find out how they feel about the service you have offered, or after they have completed a payment. It’s best practice to follow up with at least one additional question to the NPS survey, such as “what can we do to improve your rating” if they are a detractor or passive.
Instead of asking customers to fill out a survey on your website you can email them a survey after they have completed an important interaction with your company, such as talking to your support team or buying a product. The negative aspect of sending out a customer survey through email is that there is a time lag between sending out the survey and receiving your customer’s response.