In the buyer’s journey, customer experience (CX) has emerged as the primary factor influencing customer decisions.
Companies that excel in delivering exceptional customer experiences generate 5.7 times more revenue compared to competitors who fall behind in this aspect.
Net Promoter Score, or NPS for short, is a crucial metric and a handy tool for assessing customer satisfaction. This method gives us valuable insights into customer loyalty by basically asking, “Would you recommend this business to a friend or acquaintance?”
According to research from the London School of Economics, a mere 7% increase in your NPS score can lead to an average 1% boost in revenue.
So, it’s crystal clear why businesses should pay close attention to improving their NPS scores – it’s a key indicator for measuring your customers’ satisfaction and loyalty.
- What is Net Promoter Score?
- How to Calculate NPS?
- How to Interpret Net Promoter Score?
- What’s a Good NPS Score?
- What’s a Bad NPS Score?
- 7 Steps You Need To Improve Your Net Promoter Score
- Step 1: Connect with Your Customers
- Step 2: Engage with Respondents to Complete the Feedback Loop
- Step 3: Get Your Whole Company on Board with NPS
- Step 4: Create Key Performance Indicators (KPIs) for NPS Drivers, Not Just NPS Itself
- Step 5: Uncover the Factors Influencing Your Net Promoter Score
- Step 6: Connect NPS to Business Value
- Step 7: Shake Things Up and Learn from It
- Use NPS to Drive Growth
If you wish to learn how to pump up your NPS and craft a solid plan for improving your Net Promoter Score, keep reading to uncover the secrets of success!
What is Net Promoter Score?
A net promoter score (NPS) is an approach to assess customer satisfaction with a product by employing a single survey query. Companies have the option to pose this question, which is, “Using a scale from 0 to 10, how inclined are you to endorse [our product or company]?” at different points during the customer’s experience.
Your initial NPS score gives you a sturdy foundation to assess how you’re doing and forecast which steps will have the biggest effect. It’s like a roadmap for doing more of what’s effective and addressing what isn’t, all with the aim of steadily improving your NPS over the long haul.
When you team up NPS with other data measurements, it’s like having a supercharged tool not only for figuring out where you stand today but for envisioning where you can go in the future. It’s your crystal ball for understanding the right moves to make that can have a positive impact on your business and take your customer experience to new heights.
NPS isn’t just a one-trick pony; it’s a Swiss Army knife for boosting the key metrics your business really cares about, here are a few advantages:
- Boosting your revenue
- Trimming those pesky costs
- Dodging potential risks
- Increasing customer lifetime value
- Customer retention
- Making life easier for your customers
How to Calculate NPS?
NPS is figured out by subtracting the percentage of customers rating 6 or lower (called ‘detractors’) from those rating 9 or 10 (known as ‘promoters’).
Net Promoter Score Categories: In the Net Promoter system, customers fall into three groups based on their response to the question: “How likely are you to recommend us?”
- Promoters (rating 9-10) are super loyal and can boost your brand.
- Detractors (rating 0-6) are unlikely to recommend, and they can harm your reputation.
- Passives (rating 7-8) are in the middle, not actively promoting or harming your brand, but they’re worth trying to win over.
How to Interpret Net Promoter Score?
NPS always falls between -100 and 100. Positive scores indicate more promoters than detractors, while negative scores mean the opposite.
NPS Averages Vary: Average NPS varies by industry. In one 2018 study, NPS ranged from 0 (internet and TV service providers) to 39 (auto dealers).
In another, it went from -1 (Internet service providers) to 65 (department/specialty stores). Knowing industry averages helps gauge performance.
What’s a Good NPS Score?
Any score above 0 is considered good because it means more promoters than detractors. Top companies often score 70 or higher.
Not just big players; in 2018, even Netflix, PayPal, Amazon, Google, and Apple scored well.
A Perfect Score: A perfect 100 means every survey respondent would recommend the company. No one has ever achieved this.
What’s a Bad NPS Score?
A score below 0 suggests more detractors than promoters. Industry benchmarks provide context; a -3 may not look so bad if the industry average is -10.
Nevertheless, a negative NPS signals a need for serious improvement, reducing unhappy customers and creating more promoters.
Now, let’s dive into the steps you need to enhance your NPS.
7 Steps You Need To Improve Your Net Promoter Score
No matter how well you think your NPS is, you need to improve it.
Step 1: Connect with Your Customers
The Net Promoter System advises companies to always “connect with customers” to really understand the context and reasons behind their scores. You can do this by chatting with customers directly, sending follow-up emails, and more, to gather extra feedback and steer your efforts towards putting the customer first.
Make sure you’re listening to the right people at the right time.
- Whether you go with a Transactional or Relationship NPS survey (or even both), it’s crucial to target the right individuals at the right moments.
- Be mindful of feedback from customers who are outliers; making changes based on their input might not benefit your most valuable customers.
- Don’t take surveying lightly. Be intentional about who you invite to participate, and resist the urge to send surveys to everyone in your email list.
- Recognize that not all customers are equal when it comes to their importance to your business. Some customers contribute more, whether through current or future opportunities.
- Pay closer attention and listen more frequently to high-value customers to better align your business with their needs, especially in B2B relationships where buying roles play a significant role.
Step 2: Engage with Respondents to Complete the Feedback Loop
Start with baby steps. Whenever you come across a detractor (someone who rates 0-6), take action. Have a manager or team member get in touch with the customer, take their concerns seriously, and do your best to resolve the issue (or if it’s not feasible, explain why). Demonstrating that you care is a great way to mend the relationship!
This effective approach yields immediate enhancements in NPS and boosts overall customer satisfaction.
Commonly referred to as Service Recovery, ensuring you follow up with all respondents, especially those with low scores, yields several significant advantages:
Swift Problem Resolution: Although it involves addressing issues on a case-by-case basis, it promptly resolves individual customer problems, preventing the escalation of complaints to your customer service center, higher management, or, in the worst-case scenario, external regulatory bodies.
Transforming Detractors into Promoters: Through timely responses and, whenever feasible, resolving customer concerns, you often witness a shift in sentiment from customers who initially highlighted shortcomings to become enthusiastic advocates for your brand.
A comparative analysis of NPS survey respondents reveals that organizations actively engaged in closing the feedback loop converted three times as many Detractors into Promoters compared to those that did not. Additionally, this approach led to a 50% reduction in the number of Detractors.
Importantly, this process also serves as a valuable source of insights into how you can enhance your NPS score by carefully listening to customers who’ve had negative experiences.
Step 3: Get Your Whole Company on Board with NPS
Make sure that every big shot in your company gets that your ultimate mission is to win over as many enthusiastic supporters as you can, and encourage them to spread this vision all over the organization. Carry out engaging get-togethers that reinforce everyone’s dedication to delivering a stellar customer experience.
Don’t keep Net Promoter Score a mystery. Share what it is, how you’re keeping tabs on it, and how it can play a part in your company’s annual performance evaluations.
Instead of solely focusing on dollars and cents, think about incentivizing your teams based on NPS ratings and feedback.
Moving further, the detailed comments you get from NPS surveys can pinpoint spots where your staff and departments can step up their game.
When it makes sense, use this feedback as a roadmap to train your employees in delivering a better customer experience.
Thus, harness NPS feedback to coach your team.
Step 4: Create Key Performance Indicators (KPIs) for NPS Drivers, Not Just NPS Itself
Rather than making Net Promoter Score the primary KPI, use your analysis to establish KPIs for the critical NPS factors you’ve identified.
Clearly define staff actions by setting explicit KPIs related to specific areas, such as First Call Resolution or Responsiveness, making it easier for employees to understand how to improve NPS.
Avoid asking staff to directly improve the NPS score, as this may lead to biased data collection. Instead, set KPIs that drive the desired behaviors without influencing scores artificially.
Improving NPS is an ongoing effort, not a short-term project. Companies that consistently enhance their Net Promoter Score examine every response with a focus on identifying root causes.
For negative feedback, don’t just address the immediate issue; strive to find the underlying root cause and fix it to prevent future problems.
While it may seem like a slow process, addressing numerous small issues can lead to substantial improvements over time. To succeed, involve individuals who intimately understand the processes or problems rather than relying solely on head office or consultants.
Step 5: Uncover the Factors Influencing Your Net Promoter Score
While digging into your NPS feedback, you might start to spot trends when you compare what promoters and detractors are saying. It could be that one department seems to have a lot more unhappy folks, while another is scoring sky-high.
When you hit this point, it’s time for a deep dive – a real detective mission. You’ll want to figure out if it’s the department itself, the products they handle, or maybe something entirely different that’s causing those not-so-great scores.
Once you’ve cracked that case, you’re ready for the final step: taking action.
- To boost your NPS, it’s essential to identify the specific factors that impact your Net Promoter Score. While these factors vary for each business, a well-structured survey allows customers to highlight what’s affecting their score.
- A comprehensive NPS survey should include the classic NPS question (“On a scale from 0 to 10, how likely would you be to recommend our company to a friend or colleague?”) and a mechanism for customers to provide qualitative feedback on what’s working well and what needs improvement.
Step 6: Connect NPS to Business Value
Your ‘Root Cause’ analysis may uncover both minor and major improvements. In some cases, substantial investments may be required, necessitating a business case and senior management or board approval.
To gain approval for these changes, demonstrate how they will add value to the business, whether in terms of revenue, cost savings, or other metrics.
Use creative data analysis techniques, such as comparing revenue between Promoters and Detractors or estimating increased revenue from converting Detractors to Promoters through customer retention.
Linking NPS data to business value can make your CFO a strong advocate for NPS initiatives.
Step 7: Shake Things Up and Learn from It
Now, you’re not going to tear down your entire website or redo your entire product just because a few folks weren’t thrilled.
But if the detractor feedback is waving a big red flag about a deeper issue, it’s time to roll up your sleeves and make some adjustments to your products, policies, or the way you talk to your customers – wherever it makes sense.
After you’ve made these changes, keep your eyes on the prize by tracking NPS and comparing the scores and feedback from before and after the switch-up. If you see things getting better, awesome!
You’ve just earned yourself some more fans. But if things don’t improve, don’t sweat it. Take that fresh batch of data and get back to the drawing board, ready to give it another shot.
Use NPS to Drive Growth
After you’ve analyzed NPS data and identified numerous satisfied promoters, don’t halt your efforts. Initiate conversations with these contented customers and explore the possibility of involving them in a referral program.
This approach can not only help in maintaining their satisfaction but also lead to acquiring more customers along the way.
Please note that “Net Promoter,” “Net Promoter System,” “Net Promoter Score,” “NPS,” and the associated emoticons are registered trademarks owned by Bain & Company, Inc., Fred Reichheld, and Satmetrix Systems, Inc.
As evident, the NPS score holds significant importance. Conducting regular check-ins with your customer base to understand their level of loyalty towards your product serves as an effective method to provide your team with valuable business insights.
This, in turn, can enhance long-term customer relationships and boost your company’s revenue.