“We take most of the money that we could have spent on paid advertising and instead put it back into the customer experience. Then we let the customers be our marketing. Historically, our number-one growth driver has been from repeat customers and word-of-mouth.”
– Tony Hsieh, CEO Zappos (source)
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Like Hsieh, any CEO will concur with the convenience of building up business through referrals over scouting for customers through advertising, cold calls, marketing.
[pullquote align=”right” cite=”” link=”” color=”” class=”” size=””]Net Promoter Score allows businesses/brands to measure Customer Loyalty.[/pullquote]
Referrals from existing customers easily bring new customers leading to organic growth, sustainable in the long run.
You must have heard of Word of Mouth, Referrals, Customer Lifetime Value, Moment of Truth and their causal relationship with Customer Loyalty. Let’s see how Net Promoter Score system works.
What is NPS?
Net Promoter Score (or Net Promoter System) is a management tool to gauge customer loyalty, developed in 1993 by Frederick F. Reichheld. In 2003, it was adopted and is now a registered trademark of Bain and Company, Satmetrix. It gained popularity after the Harvard Business Review article “One Number You Need to Grow”.
Frederick’s years of research on understanding customer loyalty, word of mouth and growth resulted in cutting the clutter around too many customer satisfaction surveys. In the attempt to simplify things and to narrow them down to one question; Net Promoter Score was modelled and after that has been greatly accepted worldwide.
Net Promoter System classifies customers as Promoters, Detractors, and Passives.
|Promoters||the ones extremely satisfied with your business/brand. These are the enthusiasts that give your business positive word of mouth, boosting referrals.|
|Detractors||the ones most likely to defect to the competition. And, vociferously spread negative word of mouth about your business.|
|Passives||the ones unenthusiastic about your business, and thus are prone to switch loyalties.|
NPS question has an 11 point scale, from 0 [Not at all likely] to 10 [extremely likely] and a standard question that reads like:
NPS is a Number, not a Percentage
Net Promoter Score is calculated by subtracting the percentage of Detractors from the percentage of Promoters. For e.g. out of 10,000 respondents, 45% marked 9 or 10, and only 15% gave ratings in the range of 0 to 6; then the NPS is 45 minus 15, i.e. 30.
NPS is a result of subtracting two percentages. Therefore it’s a number, not a percentage. The range of NPS is between -100 to +100 ( if all respondents are Promoters NPS is +100 and if all are Detractors NPS is -100)
It seems that the number of Passives is redundant and does not affect NPS. But the number of Passives affect the Net Promoter Score. Passives contribute to the total number of respondents and hence affect the percentage, indirectly impacting NPS.
When to Solicit NPS survey response from customers:
The buzzword here is segmentation. Given a big enough business you’ll invariably have a list of contacts yet to turn into customers. Also, you’ll have a readily updated database of contacts converted into customers.
Needless to say, it is logical to solicit NPS once a user has experienced your service/product. Now how you define this experience could depend on the following nuances:
- Users who have just made the purchase
- Users who have received the product (transaction completion)
- Users who have used the product (for a reasonable time)
The following instances will explain how segmenting on the above classification impacts your NPS.
In an email a while ago, I received NPS survey from a renowned online retailer before I received the product.
And, it also happened with a colleague that she was asked to fill NPS survey even after she had returned the product.
In the former case, the transaction is although complete in the online sense but the promise (read product delivery) was not rendered. For the latter one, the transaction was complete – the purchase happened but the product didn’t meet expectation and thus the return.
If for you NPS is not just another vanity metric to measure once every quarter, delving into the nitty gritty of segmentation will give an unbiased picture of the state of customer loyalty towards your business.
Triggering an NPS survey into action should be a function of what you intend to measure. In other words, what is it that according to you if the customer has experienced that covers the essence of your business. It could be – an online order. product delivery, product usage experience, amongst others.
Three strategies to automate the NPS survey:
Every channel has its corresponding metric like views, click-throughs, open rates etc. On an aggregate level, use a user’s past responsiveness to all the marketing communication over a channel as a determinant of choice of channel to send NPS survey. [Snapshot of WebEngage’s Journey Designer]
* the journey is triggered by the event “Goal Complete” defined by a predefined event (like transaction complete, delivery completion etc.)
** to avoid sending multiple survey requests the journey provides for an ‘exit trigger’ by tracking the event “On NPS Submit” across channels.
In sequential approach map the user’s journey from completing the transaction to availability on different channels post purchase.
Let’s say a user completes a transaction on the app or website, hence seek NPS response there. The approach follows a set sequence of channels like email followed by Text message and Push Notification.
This approach is pretty straightforward, the system simply checks for reachability of user on different channels.
For channels like Web and In-app a user has to be present on site or in the app to be shown an NPS survey.
However, merely contact details like email, contact number are sufficient to determine reachability of a user. And, for push notifications, app install and opt-in are pre-requisites.
Once you are done automating NPS, here’s a post that covers the 5 actions you must take to make the most of NPS survey. And, also if you want to make good use of already available data at your disposal learn how to pair it with NPS data to get incredibly useful insights.
And remember, there’s little use of only weighing yourself and hoping to lose weight. Weighing doesn’t help you lose weight; exercise does. Similarly, simply measuring NPS is futile, acting upon it is what really matters. Hope you’ve a great time automating the NPS survey and not just measure the score but also act on it.