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We are of course referring to Fred Reichheld, who whilst working at Bain and Co, created the Net Promoter Score (NPS) methodology to help determine customer engagement and loyalty to a product or service - thus fuelling business growth.
The requirement is simple as users only need to respond to a single question - “How Likely are you to recommend our product or service to a friend a colleague”, but the insight it offers to organisations is very powerful indeed.
On average, loyal customers are worth up to ten times the value of their first purchase (Source: Office of Consumer Affairs)
Nearly 80% of companies spend less than 30% of their time and budget on customer retention-focused messaging (Source: Accenture)
The cost of bringing a new customer to the same level of profitability as an existing one is up to 16 times more (Source: Martech)
How does it work?
Users are asked to choose a number between 0 and 10, with 10 being very likely. Depending on the score the user gives, they are divided into three segments:
Detractors (score 0-6) - are the customers you need to worry about. They are generally very or mildly unhappy with your product or service and can do great damage to your brand through word of mouth or social media rants.
Passives (score 7-8) - are positive about your brand, less likely to promote your brand benefits and are also vulnerable to other brands where they discover a strong brand connection.
Promotors (score 9-10) - are loyal, buy more, and more likely to evangelise about your product or service.
To calculate your Net Promotor Score, you simply subtract the percentage of detractors from the percentage of promotors. So as an example if 80% of your users were Promotors and 10% Detractors, your NPS would be 70. (our NPS solution does all of this for you...of course)
Net Promotor Score benefits
The key benefits for introducing NPS into your organisation are listed below.
1. It’s user-friendly, easy and inexpensive to implement 2. It gives you a big-picture view 3. It helps pinpoint areas needing improvement 4. It is a simple and effective measurement of brand engagement and advocacy 5. It can track changes over time
Maximising the effectiveness of NPS measurement
Whilst the one NPS question is a good indicator of brand engagement and loyalty, we would recommend that you ask open ended questions related to the score given.
These open ended questions help you understand the reason behind the score given. This will help you quickly identify areas of improvement needed, but could be just as useful in identifying areas where customers love your product or service.
Some open ended questions we suggest to help you get under the skin of your customer feedback:
Score of 0-4: “Why was your experience so disappointing?”
Score of 5-8: “How could we have improved your experience?”
Score of 9-10: “ What could we have done to make you even happier?”
The importance of action
Whilst NPS results provide incredibly powerful insight, it’s vitally important that you implement change programmes to reflect areas where improvement is clearly needed. It’s also important that customers see that you are listening and acting on their feedback.
Some companies take this to the next level by asking customers who responded with a very poor NPS score to provide their details so they can be contacted. Your ability to deal with individual customer feedback will depend on the size of your customer base and infrastructure. Clearly if you can deliver this level of service, it can only enhance your brand reputation.
67% of customer churn is preventable if the issue is resolved during the first interaction.(Source: thinkJar Research)
47% of consumers won't engage with a business after a moment of brand disappointment. (Source : Accenture)
Implementing your own Net Promoter Score
At Two Elephants we can get you very quickly up and running with your own NPS. Our NPS solution provides you with a link, QR code and text that you can communicate to your customer base at a time of your choosing (e.g. post purchase, 6 monthly etc). With access to live reporting, there’s nothing stopping you help NPS help grow your business tomorrow. All you need to do is get in touch.
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