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Net Promoter Score (NPS) - Why it matters

Posted by ConsumerAffairs
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Whether you want to measure customer service or build your persona, the Net Promoter Score (NPS) provides you with the data to direct your marketing strategy. HubSpot defines NPS as, “a customer satisfaction benchmark that measures how likely your customers are to recommend you to a friend.”


The premise is simple, you ask customers, “How likely are you to recommend us to your friends?” Your customers score your business on a scale of 0-10. That data turns into a value between -100 and +100, which is your NPS score.

The concept isn’t new. It stems from a speech by Andy Taylor, the then-CEO of Enterprise Rent-A-Car. In 2003, Frederick F. Reichheld took the idea further and nailed down the basics of the NPS score. In Harvard Review, he claimed that your NPS score “is the one number you need to grow.” The NPS score provides insight that moves your company, as a whole, towards improved customer service and increased brand loyalty.

How to gather NPS scores

Start by surveying your current customers. Entrepreneur recommends that companies “use an in-app survey, where you subtly integrate a feedback bar right into your website, or a slide-in popup that appears for customers and subscribers only.” Other options include surveys through email and on third-party sites. Choose an option that poses no additional hurdles for your customers.


To avoid certain limitations of NPS, be sure to include an open-ended question as well, so your customers can leave personalized feedback. Once you’ve collected the surveys, compile your results. Separate the data into three categories:


  1. Detractors answered 0-6. These customers aren’t satisfied with their experience.

  2. Passives chose 7 or 8. This ambiguous group could be nurtured to love your brand, or they could switch to your competitor.

  3. Promoters scored you at 9 or 10. This loyal segment represents your biggest fans.

 

To get your NPS score, take the sum of promoters and subtract the total number of detractors. The answer is your net promoter score.

Build your persona with NPS data

Once you’ve collected your data, you’ll be able to compare it with information on your customers to further hone in who they are and what they need. By focusing on your most loyal customers—your promoters—you’ll build a persona to use at all levels of your organization. From product creation to customer service, basing your persona off of those most likely to recommend your business helps you attract and retain your ideal customers. In fact, Hubspot calls the NPS score, “a leading indicator of future growth.”

Improve your customer service and marketing strategy

Do you want to know which products perform best? Perhaps you’d like to flag at-risk customers for quick follow-up? The NPS score provides data that influences your day-to-day strategy by identifying problems and giving you the opportunity to communicate with your customers. This communication boosts your credibility and increases brand loyalty, making it a win-win situation.


According to a Temkin Group report “there’s a 21-point difference in Net Promoter Score between consumers who’ve had a very good experience with a company and those who’ve had a very poor experience.” By tracking your NPS score, you’ll be able to:


  • Identify your detractors and follow-up

  • Increase your number of reviews and testimonials

  • Provide your sales team with feedback and measurable goals

  • Track brand loyalty and retain more customers


Regular tracking of your NPS score keeps you on top of your successes and failures. If you notice a shift in ratings, you can immediately take steps to identify the problem and work towards a solution. By doing so, you’re able to address customer service issues with your team quickly. This critical data offers ongoing insight into the strength of your marketing strategy and changing behaviors of your persona—making it, much like Reichheld said—the one number you need to grow.

Tags: Marketing, Customer Retention