“On a scale of 0 – 10, how likely are you to recommend our business to a friend or colleague?”
As a customer, you might have answered this question at least once. It is simple, quick, and does not require much effort. In the customer experience landscape, it means more than that.
Your customers’ willingness to recommend you is the ultimate certificate of your customer-centric culture. Measuring how likely your customers are to recommend you tells you how your customers perceive you and where you stand in the competitive landscape.
There are several tried and tested methods to measure this, with Net Promoter Score (NPS) being the widely used one. Let’s take a closer look at NPS and how to use it to improve customer experience.
- What is Net Promoter Score?
- How to Calculate Net Promoter Score?
- What is a Good Net Promoter Score?
- How to Leverage NPS for better Customer Experience?
Net Promoter Score is a measure of customer satisfaction based on how willing customers are to recommend your brand. There are many metrics that will give you in-depth insights into customer experience. Detailed, lengthy surveys can give you an accurate estimate of how certain areas influenced customer experience. NPS, however, is a consolidated measure of customers’ overall experience with a business rather than the most recent one.
Thus, the Net Promoter Score is essentially a tool that approaches customer experience in a sum total manner, indicating retargeting and potential business growth opportunities. NPS survey is simple, quick, and hence one of the most popular customer service metrics used today.
Net Promoter Score is recorded as a number on a scale of 0 to 10, based on a question that measures your customers’ likelihood to recommend your business. The respondents are categorized into different groups as follows based on their selection.
|Gave a score of 0 – 6||Gave a score of 7 or 8||Gave a score of 9 or 10|
|Unhappy customers||Indifferent customers||Happy customers|
|May not buy from you again, can discourage your potential future customers||May neither encourage nor discourage people to buy from you, are not included in NPS calculation||Are likely to buy from you again, may even spread a positive message about your business|
NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters. Passives make no difference in NPS. By now it is evident that Net Promoter Score is neither an average nor a percentage evaluation of customer satisfaction. The scoring index ranges from -100 to 100, and your NPS denotes your business’s net chance of being recommended by a typical customer. Passive customers are neutral about your business, and may even be leaning towards your competitors, so they have no impact on your Net Promoter Score for now. Simply put,
Net Promoter Score = % Promoters – % Detractors
In a survey of 100 customers, if 50 rates you a 9 or 10, 40 rates you a 7 or 8, and 10 rates you from 0 – 6, your company’s NPS is 40.
To use NPS as a guide for improving your customer service, you need to know where you currently stand. The average NPS score differs from industry to industry. A global SurveyMonkey case study of over 150,000 organizations’ NPS reveals the average score to be +32. The education industry holds an average NPS of 71 whereas, for healthcare, it is 27. So to use NPS to improve your customer relationships, it is crucial that you are benchmarking your scores with standards that apply to your industry.
Generally, any score above 0 means you have more happy customers than unhappy customers. It means you are headed in the right direction, with a variation on how far you need to go to achieve greater customer loyalty and hence customer retention. A score from 0 – 30 indicates that your customers are mostly satisfied with your service but there might be issues you need to address in certain areas. A score above 30 could mean your customer service is doing really well. With the right nudge, you can turn unhappy customers into happy customers. Anything above 70 means your customers are finding your service exceptional. They are your greatest source of referrals.
You have your Net Promoter Score. What next?
Net Promoter Score is widely used by businesses to measure customer service effectiveness. It helps you gauge customer satisfaction, and understand how you compare to your competitors. Based on that, you will get a clear idea of what the standard industry benchmark is and what to work towards. The ultimate question is, how to leverage your NPS score to improve your customer experience and drive customer satisfaction? Let’s take a look:
Customers took some time to give you feedback. This includes those who gave completely negative feedback, which could only mean they still haven’t left or are looking for options. As we know, NPS is just a number. The power of NPS lies in the communication that follows. Every feedback is an opportunity to communicate with your customers.
Device different follow-up methodologies to address your survey respondents based on the satisfaction meter. Your Promoters will tell you what made them like your service so you can do more of it. Promoters are not just returning customers, they are your brand advocates. Detractors, on the other hand, are a clear indication that something went wrong. You run the risk of losing them, or worse, may face negative word of mouth and increased customer churn. Ask what made them dissatisfied with you and what you can do to reverse the experience. This will help you gain insights into things you never knew your business needed.
Net Promoter Score is a good predictor of referrals and organic growth rates. But it is pretty basic. NPS data tells you if your customers are satisfied enough to recommend your business. It does not tell you why, nor is it designed to do so. You can make use of the intuitive automation tools present today to add a follow-up question that probes into the key drivers behind your customers’ answers. An open-ended, simple question that asks them the reason behind their answer could yield useful insights for your business.
When it comes to NPS, one size doesn’t fit all. For instance, B2C companies most benefit from Transactional NPS (survey prompted after a specific customer touchpoint for immediate insight) than Relationship NPS (survey prompted at set intervals for sum-total insight). B2C companies have a lot more business transactions with customers than B2B companies. It makes sense for a B2C e-commerce brand to trigger a survey every time customers place an order. But it won’t be beneficial to a B2B brand offering technical services to survey their customers after every customer call. While it depends on the use case, you can follow the best practices that are widely applicable in your industry. Choose what works for your business.
This also applies to the channel used for NPS surveys. There are plenty of channels you can conduct your survey on — email, SMS, in-app, social media, website, and even phone calls. There is no formula for choosing the right channel. Start surveying. Track which channel gets you the most survey responses, and at what time. Thus, the best way is to execute, evaluate, and repeat the one that worked.
It is generally not advisable to overdo surveys. When a survey is as simple as a single question, you might be tempted to use it for just about anything. Survey fatigue is a real thing, where customers become indifferent and tired of being surveyed too often. It may even dilute your improvement efforts and purpose. Surveying smartly and only at the right times will give you the results that matter. In the case of Net Promoter System, the right time is only when the customer has had enough meaningful interactions with your brand so as to recommend you.
Once you get the schedule right, you can take a campaign approach to NPS. The campaign could be to collect real-time feedback for a recently fixed customer service issue, for a redesigned product user interface, or even for a certain touchpoint you specifically want to assess. It helps you bring customer voice to the frontline and incorporate it into your business growth strategy.
NPS has immense potential that transcends customer experience. A customer’s experience with a brand does not just refer to a sales call or a service inquiry. Your product influences customer behavior more than these aspects can ever do. You can use NPS to align your product’s features to generate the desired result. For instance, if a customer says the mobile app user experience could be improved, you can add more intuitive features to your app. If they feel your sign-up forms are intrusive, include phone numbers at later sign-up stages. While the quantitative aspect of your NPS results may not give you such pinpointed feedback, you can use its qualitative features like open-ended questions, write-in forms, etc.
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Net Promoter, Net Promoter Score, NPS, and the NPS-related emoticons are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.