Measure and Grow Customer Loyalty With Your NPS Survey
It’s always great to get a fresh perspective by gathering customer opinions about your brand, product, or business. The Net Promoter Score (NPS) is one such tool to help you measure customer experience and predict business growth.
The idea behind it is simple: If you like using a certain product or doing business with a particular company, you naturally want to share this experience with others. The Net Promoter Score (NPS) is considered as a major leading metric for customer satisfaction and loyalty, for multiple reasons. One major reason is that it goes beyond just measuring how satisfied a customer is; it also measures how willing they are to recommend it to others.
Let’s quickly jump in and take a look at how to calculate your Net Promoter Score (NPS).
Finding out your Net Promoter Score (NPS)
This is how an NPS question is usually framed:
“On a scale of 1 to 10, how likely is it that you would recommend this product to a colleague or friend?”
Once all your responses come back, you can calculate your NPS by using the following formula:
NPS = % of Promoters - % of Detractors
- Who are the promoters, passives, and detractors?
- Benefits of the NPS
- Pitfalls of the NPS
- How to make your NPS survey more effective
- NPS Feedback: What do I with it?
- Benefits of the NPS
Who are the promoters, passives, and detractors?
The responses for the Net Promoter Score (NPS) tend to cluster in three groups, each one characterized by different attitudes towards your product or service. They are:
Promoters are product loyalists who not only love using the product, but also sing their praises. They are far more likely than others to remain customers over time, and may even keep increasing their purchases. These are the people who are most likely to recommend your product to others and will keep fueling your business growth.
As the name suggests, this group is passively satisfied with your products, with lower repurchase and referral rates than promoters. If a competitor’s product catches their eye, they are likely to defect.
These are unhappy customers with high churn and defection rates. While they may be okay from an accounting standpoint, their criticisms and negative attitudes can diminish a company’s reputation and shun away potential prospects.
Here’s an example of a possible Net Promoter Score
If you have 500 responses to your NPS question, then the distribution of the scores should look something like this:
- 50 customers gave 9-10 rating
- 150 customers gave 7-8 rating
- 100 customers gave 0-6 rating
This means you have 250 promoters, 150 passives and 100 detractors. In this case, your NPS score would be:
Percentage (%) of Promoters = (Number of Promoters/ Total Number of Respondents) x 100
So, in the above case, 50% of your total surveyed customers are promoters (250/500*100= 50%).
Similarly, you can find the percentage of detractors using the same formula, by substituting promoters for detractors. This means that 20% of your surveyed customers are detractors (100/500*100 = 20%).
Subtracting the percentage of detractors from the percentage of promoters gives you your Net Promoter Score.
Net Promoter Score (NPS) = Percentage of Promoters - Percentage of Detractors = 50-20 = 30
Ideally, the Net Promoter Score (NPS) should be positive. This means your ideas for growth are working, and your business is on the right track. The value of the NPS can range from -100 to 100, depending on how promoters, passives and detractors are distributed. But a positive NPS means you have a lot of happy customers who are willing to endorse you. So keep up the good work, because you’re doing something right!
How do I evaluate my Net Promoter Score?
Net Promoter Scores can vary greatly depending on industry, customer base, and company size.
Top-notch companies generally have an NPS of +60 or +70. Fred Reicheld, in his calculation of 400 companies across 28 industries in 2003, found that the median Net Promoter Score was just 16.
Any score below 0 indicates that a business has more detractors than promoters. A negative NPS usually means that your business needs to start working to reduce the number of unhappy customers and generate more promoters.
There are two methods for understanding if you have a good or bad NPS: absolute and relative.
With this method, you compare your NPS with a agreeable standard for what a good NPS is across industries. Any NPS above 0 is considered a good score, since this means your promoters exceed your passives and detractors. If your NPS is zero, it means your experience can be improved greatly, and a negative NPS means you need to get started immediately on fixing the gaps in your product/service. These standards are known as “NPS Benchmarks”. Given the NPS range of -100 to +100, any score above 0 is considered good, +50 would be labelled as excellent, and +70 would be world-class.
The relative method involves comparing your score to companies within your industry. Evaluating your NPS with this method gives you an idea of where you stand in the industry. For context, most companies have scores between 31 to 50, but that can vary by industry. Going back to the example we took in the beginning, a NPS of 30 would imply that you are in the good side of NPS range, but a deep dive into your industry NPS benchmark would show how you hold up against competitors and emerging players.
Benefits of the NPS
There’s a reason that the NPS is a leading global success metric as compared to others. Here are some of its main advantages:
1. Improve your customer experience
The NPS survey makes it easy to get a quick grasp of how many people love your product and whether you need to rework your overall customer experience. Often, poor customer service is responsible for lower customer satisfaction, resulting in a high percentage of detractors.
2. Predict sales
A good score also implies that your current customers are likely to buy your products in the future. It lets you map future sales and pitch growth plans accordingly.
3. Basis of your sales and marketing strategy
Depending on what your score is, it can be the new starting point for your sales and marketing plans. Analyzing the nuances of why your NPS is high or low can help you create the right marketing or sales campaign.
Pitfalls of the NPS
Some market research circles have been expressed skepticism about the NPS for some time now. Many analysts have pointed out that the model of the NPS and its method of measurement may be too simple. Their position is that customer loyalty and satisfaction isn’t about numbers and percentages, but also about causes, consequences, and correlations
Here are some of the drawbacks:
1. Cannot measure customer behavior
While the NPS does give a good point of reference about who loves your product/service, it’s also said that it cannot accurately measure customer behavior. Besides that, one customer’s recommendation may or may not be valuable to others. Practically, the NPS is sometimes more useful in markets with lot of competition, where potential buyers have a greater tendency to ask around before finalizing a purchase.
2. Needs to complemented with other metrics
Since the Net Promoter Score is used by most big companies, people often end up expecting the NPS to do more than what it is. The thing to remember is that the NPS is best used as one piece of a larger customer feedback program, rather than a standalone measure. For example, you could use NPS alongside brand advocacy programs for your promoters, or with established metrics like CSAT (customer satisfaction) for your customer support.
3. Variations in the score aren’t accounted for
The measurement of the NPS can feel a bit short-sighted, because there’s no distinction made between a 0 and a 6 score. Also, a score of 40+ might be a result of having 70% promoters and 30% detractors, or, alternately, a combination of 40% promoters and 0% detractors. These scores, although same in value, result from two very different customer sets and the fact that the NPS doesn’t make a distinction here doesn’t seem very logical.
While the NPS on its own may not be a foolproof management tool, in the right framework and with some additional questioning, it can still be a very useful metric. So, let’s dive into making your NPS survey more effective, shall we?
How to make your NPS survey more effective
The process of your NPS feedback doesn’t end with creating and sending out your survey. Here are some good NPS practices that you can use to make your feedback more effective:
Visually delight respondents
Getting a 100% response rate for your surveys is difficult, so we must work on identifying where the friction happens between your survey and your respondents.
An often-ignored factor when companies send out surveys is the importance of visuals. Make sure to customize the colors, fonts, and text sizes of your NPS survey, so it appears cohesive with your product. The NPS survey should accurately represent your brand, message, and product use case.
Specific questions based on who your respondents are
The other end the spectrum in NPS survey are your respondents. An important aspect here is who you’re sending your questions to. For the most effective and insightful survey, you have to factor in for your different audiences when you design your NPS Survey.
Here’s a simple visual to help you understand how to frame some additional questions for different audiences:
|Respondents||NPS question (Who are you likely to recommend the product to?)||Follow-up question|
|Businesses||- Friend||- What could we do to improve our products and services?|
|- Colleague||- How satisfied or dissatisfied are you with the customer care that we provide?|
|Consumers||- Friend||- What could we do to make you more likely to recommend us?|
|- Family member||- What could we do to make your life as a customer better?|
|Employees/Co-workers||- Colleagues||- What improvements in our product would help you do your job better?|
|- Friends||- What could the support team do to serve you better?|
Use NPS Surveys at the right stage of your customer journey
The best way to send out NPS Survey is to trigger them with specific in-app experiences, actions, or user behavior. Different stages of the customer cycle, like user onboarding and tutorials, need to interact smoothly with the NPS survey, and must not clash. For this reason, try putting your NPS survey after certain product milestones, like the following examples:
The moment your customers adopt your product
After your customers have activated all product features and are regularly using your product is a great time to send an NPS survey their way. At this stage, they have a fair idea of the product experience, which means more accurate responses for you.
After small successes
Certain stages in the user’s journey can be thought of as mini-celebrations. For example, for a CRM product, this could be sending the first email campaign. You can slide in your NPS survey after these points to get feedback on how much they love/hate the experience.
It’s not really necessary to set NPS surveys triggered only by product actions. You can also choose to trigger them based on how much time the user has spent with your product. For example, you can choose to schedule your NPS survey to be sent 10 days after they start using the product, or a day or two before their trial expires.
More open-ended questions
To understand the motives of your promoters and detractors, it’s a good idea to pair the NPS question with one or more open-ended questions that can help you find out the underlying reason behind their feelings. This lets you make appropriate adjustments by boosting the number of promoters or by reducing the number of passives and detractors (or, even better, a combination of both!).
Like we mentioned in the above table, you can add follow-up questions like:
What do you think could help improve your experience?
What could the support team do to assist you better?
You can also choose to ask some of these questions via display logic or branching, in case the respondent gives a particularly low rating (for example, below 5) for your product.
NPS Feedback: What do I with it?
Calculating your score is just the first step of your NPS journey. You have to learn how to make the most out of your NPS campaigns, take in valuable feedback, satisfy your customers, and, eventually, improve retention and revenue. Once you have your feedback, here are some things to keep in mind:
Always keep monitoring your open-ended feedback, so that you can see if patterns emerge around your company’s strengths and weaknesses.
Get more responses
The impact of your NPS depends on the quality of feedback you receive. It’s important to capture critical feedback from customers who drive your growth by testing personalized NPS survey questions, and to look for other ways to increase response rates.
Expand your program
While NPS is indicative of overall customer loyalty, other customer satisfaction metrics are tailored for specific parts of the customer experience, such as customer service, and can help improve your overall score.
Close the loop
When customers respond to your survey, acknowledge their feedback with a ‘Thank you!’ and next steps. Always aim to turn your promoters into advocates, and your detractors into fans. Learn from the insights you receive, and reach out to your customers to close the feedback loop.
Benefits of the NPS
Once you have the NPS results in your hands, it’s time to acknowledge your promoters, encourage your passives to become more loyal fans, and address the concerns of your detractors. Here are some ways to act on your NPS score:
1. Powerful brand promotion
Make the endorsement process easy, so that your customers can spread the good word via referrals and recommendations. This can improve your brand image and bring in new customers.
2. Pacify detractors
Detractors and passives are not your greatest advocates.Therefore, it’s a good idea to pacify them with incentives, extra care, and high levels of engagement. Turn them into promoters and improve your NPS as a result.
3. Engage with promoters
Keep in touch with customers who love your organization to carry the good relationship forward. Encourage them to spread the word about you, learn from them, and improve your product/service based on their feedback.
The greatest strength of the Net Promoter Score (NPS) is its simplicity, which makes it functional and easy to grasp for everyone. It has certainly proven it’s worth, considering that a huge number of companies continue to use it on a daily basis.
But, keep in mind— the NPS is only the beginning of your journey to greater customer satisfaction. After your survey is complete, the real work can begin. This involves deep examination of the data you have (keep our pointers in mind), working on new strategies to impress your customers, and taking actions to boost your NPS. Improving your NPS means gaining happy customers by offering a quality experience worth paying for. Remember to be consistent at every touchpoint and go the extra mile to generate loyalty and customer referrals, and you’ll see a significant NPS increase.