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How brands can improve their Net Promoter Score to improve customer retention

How to optimise your net promoter score to increase customer retention

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In 2018, Temkin Group published the report ‘Customer Experience Matters’, which shares, “Customers who had an excellent experience with a brand are 3.5 times more likely to recommend the product or service to family and friends than if they have a negative experience.

The Trust Advertising report published by Neilsen in 2013 confirms, “Customers are 4 times more likely to buy a product when it is recommended by a friend.”

Word-of-mouth or referral marketing is a crucial marketing strategy which all businesses should be working on in 2019. Measuring a brand’s NPS is one of the best ways to gauge just how much consumers are willing to recommend that brand.

What is NPS?

Net Promoter Score (NPS) is a survey method which measures the willingness of customers to refer or recommend a brand to others. It uses an index ranging from -100 to 100 and is a good way to measure customer satisfaction and loyalty.

The original creator of this metric, Bain and Co., have researched about the relationship between Net Promoter Score and a brand's growth. They shared that NPS accounts for 20% - 60% of a brand's organic growth rate.
The original creator of this metric, Bain and Co., have researched about the relationship between Net Promoter Score and a brand’s growth. They shared that NPS accounts for 20% – 60% of a brand’s organic growth rate.
Source: Medallia

How is NPS calculated?

NPS is calculated by surveying customers with just a single question. The customers are asked to rate on a scale of 0 – 10 (11-point scale) the likelihood that they would recommend the brand to a colleague or friend.

On a scale of 0 to 10, how likely are you to refer this product to a friend?

Once the answers are collected, brands can categorise the answers into three groups:

Detractors

Detractors are those who scored the brand at 6 or lower. They are not happy with the product or the service and are unlikely to buy again. Additionally, these customers have the potential to damage the brand’s reputation through negative feedback.

Passives

Passives are customers who scored the brand 7 or 8. These customers are somewhat satisfied but could still switch to a competitor. It is unlikely that they will spread negative feedback – but will also probably not recommend the brand.

Promoters

Promoters are those who answered 9 or 10. These customers are happy with the products and services that the brand offered and are likely to become repeat buyers. These are usually loyal customers who will happily recommend the brand to family and friends.

Calculating the Net Promoter Score

To determine the Net Promoter Score, the percentage of detractors is subtracted from the percentage of promoters. By regularly evaluating customer satisfaction through surveys, NPS results can help brands to identify issues and optimise service standards in order to improve customer loyalty.

Source: Temkin Group

Why do brands need Net Promoter Score?

It sets a quantifiable goal

Improving customer loyalty, experience and satisfaction can be tracked through Net Promoter Score. Brands can benchmark customer satisfaction using a metric that is easy to understand. The results can be added into reports which then allow businesses to align their goals around it.

NPS turns a quality that is vague into a measurable number. It gives brands insight into how customers feel about the business and why they feel that way.

Since knowing the ‘what’ is important in understanding the ‘whys’, NPS allows brands to collect important feedback from customers.

More data on customer behaviour

Net Promoter Score is a great source of information about customer behaviour. Some of the most important data that can be collected from NPS surveys are:

  • Willingness to repeat purchase.
  • Likelihood to recommend.
  • Probability of rebooking.
  • Likelihood of trying new products.

In a 2017 Economics of NPS report by the Temkin Group, it’s stated that, “Promoters are 4 times more likely to buy again from a brand, 5 times more likely to forgive a brand for mistakes and, 7 times more likely to try new offers from the brand.”

Brands can also use the results from the survey (detractor, passive, promoter) to build customer personas. These personas can be utilised in performing customer segmentation as well as creating targeted messaging for each group.

Help provide data on customer feelings during times of change

Most businesses experience evolution and change at some point, whether its revamping the website, launching a new product or even a new acquisition. The Net Promoter Score can act as an excellent source of data. It can help brands know how customers feel about these changes.

Helps close the customer feedback loop

A customer feedback loop is the process of improving products and services based on the feedback that customers give. A closed customer feedback loop is when brands follow up with the customers and show them how their inputs have changed business decisions. Through NPS, feedback can be actioned on. The most beneficial feedback comes from the detractors as they often have detailed, tangible reasons for giving the brand a low score.

Image of Net Promoter Score results showing promoters, passives, and detractors
Source: Netigatehttp://www.netigate.net

Best practices for Net Promoter Score surveys

Measure often

Brands should find the right cadence when it comes to surveying customers. The number of surveys sent out to customers will have a huge impact on NPS scores. Remember, measuring often is crucial since scores can change depending on the buyer experience. However, be aware that over-measuring can be detrimental to the brand’s NPS strategy. Consider doing a quarterly survey to ensure consistency and a more natural evolution in the scores.

Pick the right timing

Choosing the right time to send out an NPS survey can make a huge difference on a brands’ score. Sending it out too soon can mean that customers did not have enough time to enjoy the product. Sending it out too late means the customer may not remember it. Brands need to find the perfect time within the buyer journey to send the NPS survey. This can be based on customer behaviour triggers such as frequency or time of purchase.

Consider cultural differences

Businesses should consider cultural differences since these can affect the NPS survey. Results can vary greatly even if scores from other markets show the same type of financial performance. Additionally, some cultures may score brands 7 which could represent the same sentiment as a 9 or higher. Understanding the audience is crucial when interpreting the NPS survey scale.

Tools for NPS survey

  •   CloudCherry – Cloudcherry offers Omni-Channel and real-time customer experience analytics. It also allows Feedback Management & Sentiment Mapping which can help brands track, measure & improve customer experience.
Cloudcherry NPS dashboard for brands that want to survey their customers
  •     ProProfs Survey Maker – ProProfs Survey Maker features an easy to use survey tool which can gather customer feedback, evaluate efficiency, develop market data and more.
Proprofs NPS tool features easy to use dashboard where brands can send out surveys
  •     YesInsights – Allows brands to meet customer expectations and deliver what is required with the help of automatic customer review software. Brands can create one question NPS surveys and send mass email surveys using its customer feedback tools.
Yesinsights allows brands effectively monitor their NPS through an easy to use tool.

Tips to Improve Net Promoter Score

Immediate action

Once the survey results arrive, brands must immediately take action to resolve questions and comments from customers. Responding to each customer is the primary step towards improving NPS.

Analyse the Trends

Zoom out and look at the entirety of the responses. Some customers may feel that the subject is not worth responding to. Others may feel that repeating the same issue as other customers won’t result in a change. Don’t miss out on valuable information by looking only at individual NPS. When analysing NPS, consider segmenting the type of customers that the brand has, as, this is the best way to understand customer sentiment.

Confirm brand goals

Once the big picture has been analysed, brands should check their goals and see if these are aligning with the customer’s needs. Instead of filling up a blank canvas with customer feedback, use the information from the NPS to see if the existing goals of the company are headed in the right direction.

Rally the brand around NPS

Each leader in an organisation should understand the kind of goal that the company wants to achieve through NPS. In short, leaders and team members should all share one vision of achieving better NPS survey results.

By improving the NPS, not only will the sales increase but brands can gain customer loyalty as well. Take note; NPS should not be improved just to gain high numbers, instead, use it identify opportunities to ensure that a great customer experience is offered to every single customer.

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