“A brand is no longer what we tell the customer it is – it is what customers tell each other it is.” – Scott Cook
Customer retention trumps customer acquisition hands down. Businesses love to have loyalists on board. In fact, increasing your customer retention rate even by a mere 5% can increase your profits by 25% to 95%.
But how do you figure out the overall sentiment of your customer towards you? Net Promoter Score (NPS) is the answer.
If you’ve heard of it and track it religiously, pat yourself on the back. If you haven’t, fret not, you can cover your basics about this metric for relationships here, and if you are looking for ways to improve it, read on.
What is net promoter score?
NPS is a barometer to understand the health of your customer experience and loyalty.
How your respondents answer to your unique NPS question, divides them into:
- Promoters – who score you 9 or 10
- Passives – who score you 7 or 8
- Detractors – who score you 0 to 6
Why is NPS important for customer retention?
NPS answers how happy/unhappy customers are with your brand and how they promote their experience. Not only this, but NPS also allows you to:
- measure customer loyalty
- identify ways to improve it
- boost referral marketing
- improve brand awareness
When you know how many of your customers are unhappy and what makes them unhappy, you can get on your way to identify your most ‘at-risk’ customers and work on winning them back.
This not only helps in increasing customer retention but also assists in boosting the holy grail to the ultimate customer experience – brand loyalty.
How do you calculate your NPS?
Each time a customer has a meaningful interaction with you, you send them surveys via email asking for feedback. For instance, if you offer a product trial period, you can tie your survey timing to the user’s trial schedule. Your marketing automation platform (MAP) helps orchestrate creating and scheduling the NPS surveys. Once you’ve collected responses to your NPS surveys, you can then use the following formula to calculate your NPS:
Net Promoter Score = % of your Promoters – % of your Detractors
% of Promoters = No. of Promoters / Total Respondents
% of Detractors = No. of Detractors / Total Respondents
Promoters – These folks are loyal to your business and will likely, as their survey response suggests, be good advocates for your brand.
Passives – These folks are neutral; unless something happens to charm them exceptionally, they probably don’t have much to share about their experience and may switch teams if they get a better offer.
Detractors – These folks aren’t happy and will probably recommend their family and friends to steer clear of you.
For example, if you surveyed 100 customers, out of which, 60 were promoters and 40 were detractors, that would make your promoter percentage as 60% and the detractor percentage as 40%. Therefore, your NPS calculation formula would be:
NPS = 60% – 40% = 20%
What does your unique NPS mean?
NPS scores range between -100 and +100. Any NPS over 30 is considered good, 50+ great, 70+ excellent. However, you should consider other factors that make your NPS score unique like industry, product offering, and price. Insight into NPS average across industries helps to understand how key competitors in a specific industry are doing and what counts as a ‘good’ or ‘bad’ score.
Why is marketing automation essential for NPS?
Your MAP can help segment your database based on scores received from the NPS surveys making it easier to identify your target audience and their stage in the buyer’s journey. For instance, your MAP can help keep tabs on what stage your detractors are at:
- Are they awaiting contact from your rep?
- Is their issue resolved?
This highlights the areas of improvement or opportunities to reduce churn and boost customer experience.
What are the ways to improve NPS?
There are a number of best practices you can implement to improve your NPS. We’ve enlisted a few for you:
1. Keep track of your NPS to understand your efforts and improvement over time. If you’re new, use the first set of your results as a baseline.
2. Use your marketing automation platform to segment your contacts based on their scores.
3. Send follow-up emails like a ‘Thank You’ email after a response is submitted or if the score is low, you can ask them the reason for their score or what you can do differently in the future.
4. Set up automated email campaigns to go out in two to five days after someone gives you a rating. For instance, if these are promoters, encourage them to follow you on social media, give rewards/incentives, etc, to boost loyalty.
5. Based on customer action, add triggers to help automate the next relevant action. For instance, if you see low scores or detractors, you could create a trigger that notifies your customer service team that a customer is in need of attention.
6. Use dynamic content on your landing pages/pop-ups after the survey, so your content differs from user to user based on their NPS score.
NPS won’t magically fuel your growth rather it depends on how you actually leverage the insights, how you follow up with the respondents, and engage them. This is where your MAP can chime in to help make all this as easy as 1,2,3 for you.
Want to learn how marketing automation works its NPS magic? Talk to us.