Net promoter score

Net Promoter Score (NPS) is one of the most effective and easy-to-use tools for gauging customer loyalty. It provides insights into brand perception, growth potential, and buyer personas. Your business can use the feedback gathered in NPS surveys to better the customer experience and boost your brand image.

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Introduction

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.


What is Net Promoter Score?

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 a scale of 0-10, how likely are you to recommend our product/company to a friend or colleague?

On the Net Promoter Score scale, a customer may either be a detractor, passive or promoter.

  • Detractor (0-6) – detractors are not a fan of your business. They would avoid recommending your company to others, are unlikely to buy again, and may even actively discourage new customers away from your business.
  • Passive (7-8) – passives are neutral customers. While they wouldn’t recommend your brand to others, they probably won’t damage it with negative word-of-mouth and it might be possible to win them over into being a promoter.
  • Promoter (9-10) – promoters are your brand advocates. They are highly likely to buy from you again, recommend your products and services to others, and try new products when they become available.
Net Promoter Score

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.


How do you calculate Net Promoter Score?

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.


Transactional vs Relational NPS

There are two types of NPS surveys that you can conduct.

Transactional NPS

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

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.


What are the benefits of Net Promoter Score?

Net Promoter Score has a number of benefits.

It’s simple and easy to implement

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.

Helps you segment your customers

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.

Identifies your brand advocates

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.

It provides a broad overview

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.


What is a good NPS score?

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.

Net Promoter Score

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.


What is a bad NPS score?

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.


How to improve NPS scores

Deliver outstanding customer service

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.

Net Promoter Score

Offer high quality products and service

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.

Create a culture of customer-centricity

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.

Learn from your detractors

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.


How to run NPS surveys

1. Website survey

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.

2. Email survey

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.

3. In product surveys

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.


Final remarks

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.

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