Customer retention, customer loyalty, customer engagement, phew, these words are all I read about these days. One thing that tends to link all these factors together is Net Promoter Score or NPS. Ask any customer support expert, and they’ll go on about how good NPS is and how companies are adopting it and using it to their advantage. But for a beginner like you and me, how does NPS benefit us?. I would like to explain how NPS surveys can be beneficial to you and your business in this article.
Net Promoter Score
Before we start off with how NPS can help you, let us just refresh what we already know about this system. Created in 2003 by Fred Reichheld, Bain & Co. in collaboration with Satmetrix, NPS is a metric to measure customer loyalty. It does so by asking the customers one simple question: “How likely are you to recommend this product or service to a friend or a colleague?” Customers can rate you on a scale of 0-10.
Based on how they rate you, the customers are divided into three categories:
- Promoters: Those who rate you 9-10
- Passives: Those who rate you 7-8
- Detractors: Those who rate you 0-6
Your NPS is then calculated as the difference between the percentages of promoters and detractors.
This is a gist of NPS in short. So how can NPS be advantageous to your business? Let us look into that:
Helps Reduce Churn Rate
NPS is great when it comes to identifying problematic areas. Take a look at the past responses of customers who left or thought of leaving to identify problematic areas in your sales process. Think of NPS as an opportunity to start a conversation with the customer rather than just a number in your sales process.
Use it to learn all the issues faced by your customers, be it regarding the product or the service. By focusing on identifying the problems faced by customers, you not only smoothen the process for future customers but also increase your chances of retaining your old customers.
Helps Refine Product Development
Every artist loves their creation. You look at any art work and chances are you may or may not like it. You ask the person who spent their time creating it, and they’ll tell you how much they love it. The same applies in the industry too; as a product developer you love what you create, and this could lead you to overlook some things due to personal bias. NPS provides you with feedback from your users, allowing you to see it from their perspective.
It also provides you with suggestions about features that the customers would want, whether it is possible to implement them or not is something you would have to decide. People appreciate it if their feedback is implemented, so you can create an event calendar to show them that their voice is heard.
Increase Customer Loyalty and Engagement
Before saying anything about this, I’m just going to list down some stats by leading organizations:
- After having a positive experience with a company, 77% of customers would recommend it to a friend.
- It is anywhere from 5 to 25 times more expensive to acquire a new customer than it is to keep a current one. Need I really say more? The more your customers engage with you, the more loyal they are. You can also add loyalty rewards programmes to your sales process to boost recurring sales and brand loyalty.
Build Meaningful Relationships
Set aside the whole focus on profit margins and ROI for a second. In this hyper competitive age, your relationships with your customers matter as much as their purchases. NPS is a single question solution that can lay the foundation for a strong relationship with them. It grants you access to their insights as to what sets you apart from your competitors. Get into a discussion with your customers and gain insights that would normally be unavailable to you.
This will also help you create more brand advocates. Word-of-mouth is one marketing avenue for which you don’t have to spend any money; you just reap the rewards of it. Don’t leave this channel untouched, personalize the communication you have with your customers and be their trusted associate, not their sales person.
“You are your worst enemy” – every inspirational movie ever made drills this into you. I disagree with this slightly, “you are your strongest competitor”. Evaluate your NPS scores over time and set a benchmark for yourself. Then, spend the next year or quarter trying to beat that score. If you can’t, that means you’ve dropped the ball and you need to evaluate your sales process. If you do, you have another target to beat.
As I’ve mentioned in my previous article, NPS success is not determined by the metric itself, but by the process. Don’t make NPS just about sending out surveys and collecting data, use it to make yourself better.