Net Promoter Score- An Important Metric to Gauge Your Customers’ Sentiments
Customer experience matters for every business. Every one of us has come across this question, How will you rate us on a scale of 1 to 10 on the basis of our services or products?, No matter what is the service- food delivery, online shopping, or a simple online Net Promoter Score survey, today every business has an inbuilt system to gauge customer sentiments. Organizations are using customers’ recommendations and feedback to know what the customers are feeling or how are they considering their brand through Net Promoter Score.
People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” -Maya Angelou
What is the Net Promoter Score?
The Net Promoter Score is an index that measures the response of customers to recommend a company’s products or services to others. It is used as a metric to gauge the customer’s overall satisfaction with a company’s product or service and the customer’s loyalty to the brand. The response is generally asked on a scale of 0 to 10.
How to calculate Net Promoter Score?
Calculate your NPS using the answer to a key question, using a 0-10 scale: How likely is it that you would recommend [brand] to a friend or colleague?
There are three types of respondents:
- Promoters (score 9-10) are loyal, keep buying and referring to others
- Passives (score 7-8) are satisfied but are vulnerable to competitive offerings.
- Detractors (score 0-6) are unhappy customers and can spread negative word-of-mouth.
Percentage of Promoters-Percentage of Detractors=Net Promoter Score,
This score can range from -100 to a high of 100.
This NPS survey response given by the customers is useful when their feedback is fully analyzed, tracked, and used to improve the processes and make them seamless and more customer-oriented. Rating given by the customers on a scale of 0 to 10 with relevant remarks gives an in-depth insight into current customer expectations and this is the main motive behind calculating the NPS score.
Here are the Top 5 NPS Software Tools Worldwide:
Read your Net Promoter Score better
The basic structure of a Net Promoter Score system is easy to understand, therefore it’s easy to understand and popular enough. If a company has more detractors than promoters the score will be less or even negative. A Net Promoter Score provides companies with a simple and easy-to-understand metric that can be shared with their front-end employees or customer executives.
The Net Promoter Score can be used as motivation for employees to improve and provide the best customer experience possible. The ultimate objective here is to convert customers who were less happy, passive, and detractors into promoters who will help in brand advocacy ultimately leading to higher profits.
Higher Net Promoter Scores mean good business, while lower Net Promoter Scores can be a warning to look deeply into potential customer satisfaction and loyalty issues. Net Promoter scores are often averaging quite low. Fred Reichheld, in his calculation of 400 companies across 28 industries back in 2003 (HBR article “The One Number You Need to Grow”), found that the median Net Promoter score was just 16.
Track your promoters and detractors
Today consumers have n number of options for a single service or product, each tailored to perfection and ready to be sold. What’s different is the experience. Customers today, go through information overload. Information pull or push about a product or service leads them to purchase and this process continues till relationship building.
To give them a great all-around experience, organizations run the much talked about metric, the Net Promoter Score (NPS). NPS survey can bring in a whole new aspect for a company to reimagine their services and step up the benchmarks. With NPS comes a lot of customer data, and this data in the form of surveys can be useful in analysis. A good NPS survey keeps a tab on customer sentiments. Today, NPS is not just a simple survey and mathematical calculation, but it is an automated solution that has smart features such as:
- Natural Language Processing
- Smart reporting module
- Quick alerts & recovery mechanism
The sensitive consumer demands get responded to by organizations, and industries and take shape of a product or service with a view to meet and exceed customer expectations. NPS can help the organizations in determining the exact feelings of the customers and improve their experience if it is not considered just a metric but much more.
Why is NPS important for any Organization?
Because it helps in:
- Customer First Approach
- Predicting Business Growth
- Improving the ability of Brand
- Switching from Transactions to Experience
- A holistic view of the organization from a Consumer perspective
- Converting Big data into insights
- Immediate and better issue resolution
- Understanding the Voice of customers from all communication channels
How can a business improve its NPS?
According to global NPS standards, a net promoter score above 50 is good, and above 70 is outstanding. Customers are more likely to report bad experiences, so the actual net promoter score isn’t as important as its direction. Businesses can improve their score by:
- Communicating properly and politely
- Perfecting the product or service
- Promoting customer advocacy
- Listening to detractors and passives patiently
- Accept your product’s fault
- Ask your customers how can you improve
- Improve your font line communication
- Reward promoters and loyal customers
- Stay in touch with your customers
As Fred Reichheld said, “essentially promoters become the company’s marketing department”, this is absolutely true. The balance between promoters and detractors decides the success of any company. It is more expensive to attract the detractors again than to focus on keeping the promoters loyal. Therefore, it’s better to cater to improving the customer experience for your promoters and keep asking them if they are facing any challenges. Promoters will buy more from the company they love.
Promoters are the people who already like your customer service therefore you need not spend much or make high-level changes in the same. Very important is that they will refer your products and services to your friends and relatives. Promoters are your brand advocates and any positive word of mouth means the company will not have to spend much on marketing and advertising too. NPS survey if conducted properly, with a motive to analyze what your customers want or need can be very helpful in improving your market and brand value.
Bain and Co, the originator of the Net Promoter score metric, have conducted a lot of studies and research to find out the correlation between a company’s growth and its Net Promoter Score. The company has found that for most of the organizations from various industries the Net Promoter Score is recorded as 20% to 60% of a company’s organic growth rate. If seen on average, the leader in an industry has a Net Promoter Score more than double of its competitors.
NPS surveys work only in a closed-loop system. This means, that if the frontend executives have collected customer views, then there should be a proper mechanism to analyze those reviews and take action to improve and provide a better customer experience. It should be a company-wide effort, irrespective of departments or a certain team.