Part-1 : Net Promoter Score (NPS) - Everything You Need to Know Before Getting Started

RAVI BILOCHI | 2020-01-10 09:30:00+00:00

Welcome everybody to the very first edition of the Net Promoter Score (NPS) series. In this blog, we’ll be seeing what exactly is Net Promoter Score (NPS) and how does it really help in measuring customer experience for heightened business growth!

Before heading further, if you haven’t checked out our earlier blog on Customer Feedback Forms, Templates and Survey Samples then do check it out and give a read! It’s all about customer feedbacks, the importance of customer feedback forms, their usefulness and some handy templates too! 

Now, let us get back to what we are gonna learn and understand today.

What is Net Promoter Score or NPS? 

Net Promoter Score or NPS is a proven core metric to measure customer experience with your business and giving you detailed insights about what your customers perceive about your brand. This not only helps in the growth of the business but also mainstays for your Customer Experience Management (CEM) Program, a collection of processes that helps in tracking, analyzing and organizing every customer interaction with the brand/business throughout the customer’s lifecycle.  

It is an index ranging from -100 to 100 depicting the willingness of the customer in referring your brand/business to others and also their loyalty to the brand. It is an obvious fact that if someone would like your product and/or service, then they, of course, would share it amongst their peer groups. This is where a positive word of mouth by your customers plays an important role. Moreover, in an era where there is a list of huge social media platforms, it is not that people out there would believe you as a brand, instead, they would believe those who have encountered your service or bought your product and give honest reviews.  

How to calculate Net Promoter Score (NPS)?

It is fairly easy to calculate Net Promoter Score on the basis of a single question, on a scale of 11 points i.e. 0-10 as to how likely they are to recommend your products and/or services to their friends, family members or colleagues i.e. “On a scale of 0-10, how likely are you to recommend our products and/or services to your friends, family or colleagues?”. This one question can be a complete game-changer when it comes to increasing sales or enhancing brand value.

Source: https://www.wootric

Based on the rating, customers are categorized into the following three categories:

1. Detractors: They give a score of 6 or lower. They are not particularly thrilled about your product and/or service and thus most willingly, would not be the ones who would be buying from your brand. Thus, they can potentially damage your reputation with negative word of mouth.

2. Passives: They give a score of 7 or 8. They are somewhat satisfied with your product and/or service but chances are that if given the opportunity, they might switch to other brands. So they won’t be the ones promoting you.

3. Promoters:They give a score of 9 or 10 and are your loyal customers who are your biggest assets in terms of spreading the positive and enthusiastic word of mouth. They love your brand and are repeat buyers. These are those who will not only help increase your customer retention score but will also bring in new customers.

Source: https://www.netigate.net

NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. Let’s get into some calculus part,

NPS = (P-D) / (D+N+P) x 100

Where, P = Number of promoters

             D = Number of detractors

             N = Number of passives

For example, if P = 500, D = 100 and N = 400

Then NPS = 50.

A higher value of Net Promoter Score indicates flourishing and healthy business while a lower score, in contrast, proves poor business tactics. It can be used to motivate employees and improve the quality of products and/or services. Studies have shown that the median Net Promoter Score is just 16.

How will Net Promoter Score help you with your business? 

Nowadays, large companies indulge in using NPS as a core number in defining the popularity of their business/brand, loyalty of their customers, the level of retention of customers and how likely they are to promote their brand/business in their peer groups.

It is termed as one of the simplest as well as easy to interpret and study tools, which can be used by all employees. It is like seeing how one category of customers helps a business grow while the other one just pulls the brand off the market’s shelf. Moreover, it is easy to retain a promoter and keep them happy and satisfied, but difficult to convert a detractor into a promoter. Having a detractor onboard costs companies a lot in terms of resources, time and money.

Net Promoter Score not only helps in distinguishing between the two categories of customers but also lets you know the level of attachment customers have with your brand and/or business. It is one of the simplistic tools used nowadays and is thus adopted widely. The groups aren’t scientific, but they give you some information to work upon. Comparing your current NPS with the earlier one, you can start working on your marketing campaigns.

The coolest thing about the Net Promoter Score is that you get to understand customer satisfaction trends and in which direction it is going, owing to which you can either work more on the on-going things or try something different.

Just imagine a situation:

Your business is going really well with huge customers pouring in and seeking your services, using your products and re0-buying them, thus increasing your brand value.

But all of a sudden everything comes to a standstill when you seek a sharp decline in your sales and customer base. Though you are putting in the same effort, adopting the same old tactics for customer satisfaction and retention, none seems to work well in your favour. Then one fine day you sit with your marketing team and do a deep analysis, doing some major changes in your marketing strategy with a bit of customization in your customer feedback survey form.

And after analyzing the feedbacks, you work on those things which have not been in your customer’s favour and then things start to come on track. After the research, you get to know that certain changes in your feedback survey helped you achieve desired results like more customer-centric questions and in-depth details of their experience and expectations. This is where NPS played an important role besides analytics going on behind all the feedbacks giving you a detailed view of customer behaviour and changing trends.

Above story is nothing but a quick way of telling you how Net Promoter Score can help you in the growth of your business.

How to increase the Net Promoter Score?

It might surprise you but you can increase the value of NPS and get detailed insights into every feedback received. Some of the many ways which you can adopt to do so are:

• Being a customer, everyone wants personalized service from the brand they are buying products from or taking services from. They want the brand to know them to a deeper level and thus the brand must focus on incorporating personalization in every aspect of the customer’s lifecycle or journey.

• Poor email services affect survey deliverability and thus affect the effect of NPS campaigns, slowing down the overall process of taking feedbacks through surveys and calculating NPS. It works best when there is a strong sender reputation with own domain and dedicated email IP address of the sender.

• NPS emails must be crafted according to the user. Like an unsatisfied or unhappy customer must not be sent an NPS survey and might be removed from the subscriber’s list for some time. Promoters might not be required to mail every now and then, instead of quarterly or bi-annually.

• NPS survey frequency should be kept in mind, else they would be directed to spam folders with reduced click email rates and in return CTR. Neither over survey nor under-survey.

• Consider offering incentives for filling feedback surveys as this might intrigue them more in filling them with a catchy and powerful line like:

Instead of “Kindly fill the survey”, you can have “Do you have 30 seconds to spare? Please help us in improving our services.”

• Choose the survey channel which best suits your brand/business. If you have an app, you can incorporate your survey in it. If you have web app, then do the same for web app. Else email is the best option left if nothing seems more feasible to you. But not always email is the best option. It depends on the best medium of interaction you share with your customers.

• Always show gratitude to those who take out time to fill the NPS survey form by just a sophisticated thank you message as it is the cheapest yet most warming message. This will not only prove to be fruitful professionally but would also let them participate in future surveys. 

But does NPS lag somewhere?

There might be a lot of perks of NPS but there are some not so cool features of NPS which might not make it one of the ideal, yet first preferred choice in deciding customer satisfaction level.

Some of the things your Net Promoter Score won’t tell you are:

1. It won’t help you understand individual interactions or events. It takes everything as a whole and generates a score based upon that. 

2. It doesn’t tell you the “why” that is though you get to know that something is not going right, but why is it not going right is not answered to you. And if you will not get an answer to the why question, how will you figure out what’s the issue?

3. Last but not least, it doesn’t accurately predict success. Customers can only claim to recommend others but what’s the guarantee that they will or even will not recommend. It might be a case that non-customers too might prove to be detractors.

4. There's a lack of conviction about the NPS system regarding the fact that groups aren’t divided scientifically and that numbers or percentages can’t decide customer loyalty and satisfaction completely. What if two companies have the same NPS value but altogether different data? An equal NPS score doesn’t make both the brands equal because ultimately what matters is the percentage of promoters. 

So, what’s next if not NPS?

Marketers are considering analyzing huge data in the form of feedbacks rather than depending on some information being generated out of this one metric.

Moreover, time can be invested in accomplishing more results by investing in other channels. 

• Like asking customers to give product reviews and ratings based on their experience. And also providing them with something or the other for taking out some time to do so. 

• Engaging with them on various social media platforms sighting the fact that people’s lives are now mostly on these social media platforms as compared to other mediums.

• Making a website more search-friendly, putting up more content if required and developing an overall user-friendly design, thus hooking customers to your business’ and/or brand’s website.

Thus, NPS is not one of the best or last resort to look up to when it comes to customer retention or customer satisfaction with your brand and/or business, it’s just one of the multiple ways to do so yet most frequently used due to the ease it offers and flexibility you might gain while incorporating it in your marketing campaigns.

So here we are at the end of this long informative blog on NPS with all possible ins and outs. Hope you have got to know what you were looking for while studying NPS.

But WAIT, there is more to this topic.

We have another blog coming in the series of NPS telling you how to choose the best Net Promoter Score providing software. 

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