In the landscape of data and analytics, it’s easy to become overwhelmed by the number of options available for measuring customer interactions with your business. One measure that has seen wide adoption yet underutilized application is the Net Promoter Score (NPS).
Used as a benchmarking tool, a Net Promoter Score indicates how likely your customers are to recommend your business to their network. It’s calculated by asking a customer to answer a single survey question, “On a scale of 0 to 10, how likely are you to recommend (business or product) to a friend?” Responses are then grouped into Detractors (responses of 0-6), Passives (responses of 7-8), and Promoters (responses of 9-10). Then subtract the number of Detractors from the number of Promoters to obtain your NPS number.
This simple metric can be used to measure customer perceptions of individual products or of your company as a whole. Today, it is common for large brands to track their NPS but many small and mid-size brands do not. Of the brands who track their score, very few use the date to its fullest potential.
Tracking your NPS can unlock key insights and actions that will improve your customer interactions and help drive business growth. It should be tracked on an ongoing basis and analyzed as a trend, not a snapshot of customer sentiment at a single point in time. Benefits of tracking your NPS score include; quantitative analysis of marketing strategies, the ability to tailor your message to multiple customer segments, insight for future research, and business growth over time.
Qualitative Marketing Analysis
Your NPS offers a look into the effectiveness of your marketing strategies by illustrating your customers’ overall satisfaction with your product or brand. If your customer is willing to recommend your company to a friend, your marketing tactics have effectively and accurately portrayed your business. The customer has reached the end of the sales funnel and has moved from a “prospect” to an “advocate.” However, it’s important to note that a low NPS score may not be a reflection solely of your marketing efforts. Customer service, product quality, and other factors may influence your NPS score and further research should be conducted to determine the cause(s).
Tailor Messages for Customer Segments
Knowing your NPS and the percentage of customers who fall into the Detractor, Passive, and Promoter categories can help you improve your outreach strategies by targeting each of these segments. Follow-up communication with Detractors can help identify issues they encountered in their customer journey so you can prevent those from occurring again. For Passive customers, follow-up communication can determine what factors created an overall positive experience for them and what factors could be adjusted to make them active promoters for your brand. Following up with Promoters provides an opportunity to give them the tools they need to actively promote your brand. From asking for a product review or testimonial to sending them a cou[on code to share with friends, your efforts can equip them to become valuable advocates for your company.
Insight for Future Research
One of the most valuable benefits of tracking your NPS is the insight it provides for additional research. Once you have the qualitative data of your NPS you can seek out quantitative data by asking customers for the reasons behind their responses. If your NPS score is high, this added information will tell you what parts of your customers’ journey are most successful. If your score is low, this information will help you identify areas for improvement. Your NPS gives you a benchmark to track overall customer sentiment. Having this benchmark can guide additional research into customer service, marketing, product, and operational performance.
Encourage Business Growth
As NPS has grown in popularity as a key business metric, multiple studies have shown that an NPS score with an overall positive trend often correlates with business growth. This is likely due to customers taking a holistic view of their interactions with your brand when considering whether they would promote your company among friends. Thus, if a customer is willing to recommend your brand to their network, it’s more likely each element of your company’s customer-facing operations is functioning as it should.
When looking for a single metric that can quickly gauge the health of your sales, marketing, and customer service tactics, your NPS is a great place to start. It offers a strong benchmark for tracking the success of your business over time and can help guide future research efforts. Insights gained from NPS measurement can help you identify strengths and weaknesses in your operations. With this information, you can develop additional research to help mitigate weak points and optimize your strengths. If information is power, NPS is the information companies cannot afford to overlook.