Introduced in 2003, the Net Promoter Score (NPS) has become the single most popular customer feedback mechanism available.
It is a one-question survey that measures overall customer satisfaction using a score based on responses to a single question: “How likely are you to recommend our company/product/service to a friend or colleague?” The scoring for the response is usually based on a 0 to 10 scale; each score is then pinpointed to 3 crucial customer segments: promoters, passives, and detractors.
In this article, we’ll explore why measuring customer satisfaction is more important than ever, the two types of data that should be included in your strategy, how to measure your net promoter score, and more.
Although NPS surveys have been around for more than 15 years now, there have been three more recent shifts in customer behavior that have seen companies committing more time and resources to proactively collecting, organizing, and acting on customer satisfaction data.
1. Customers are expecting more from companies
Since the NPS method was introduced, customer expectations have increased. So much so that, 89% of companies now expect to compete primarily on customer experience. The following factors have contributed to this trend:
Technological advances: Customers hear about new and improved technologies on a regular basis. In this context, it can be disappointing to realize the product you’re offering is outdated.
Customers expect to be connected 24/7: Thanks to mobile technologies and social media, customers are able to connect 1:1 with brands at any time, from anywhere. This means they’re more impatient than ever and when you fail to respond to a customer in a timely manner (or at all), you risk alienating them.
A shift towards self-service: Customers can generally find what they’re looking for online. What this means is that customers no longer have to rely on sales or support representatives for the information they need; they can open their computer, type a question into a search engine, and instantly find what they’re looking for. So when customers can’t find an answer to their question using online search, they get frustrated because they are then forced to contact customer support. For this reason, it’s a good idea to refine your SEO efforts for exact queries and create a comprehensive knowledge base on your website.
Customers expect everything to be personalized: Millennials, who are the largest adult cohort worldwide at 21.93% of the total population, are easily able to tweak technologies to suit their needs — and other generations have been quick to adapt. As a result, consumers now refuse to settle for generic products or services — and content, for that matter.
2. The SaaS industry has grown exponentially
Subscription-based businesses have been around for decades (think gym memberships and magazine subscriptions). But since the NPS method was introduced in 2003, the subscription-based business model has exploded. In particular, a lot of software is commonly sold as a monthly service.
The subscription-based business model is democratic, which is great news for customers. It empowers them to vote with their money. But for brands, this model can be risky. Because customers pay monthly for access to products and services, they can end their subscription at any time — and many usually do after they’ve had a bad experience. In this context, brands must keep their customers happy if they wish to survive, let alone thrive.
3. Customers are always connected
Your customers carry phones, tablets, and other connected devices with them everywhere they go. They engage with their networks via SMS, social media, email, and instant messaging. And WiFi is usually within reach, regardless of where they are in the world.
This constant connectivity has a huge impact on brands. Consider this: A single tweet, Facebook post, or a review on Google or G2 Crowd can be seen by many people all over the world. That means a single negative review can leave a permanent scar on your brand. For this reason, transforming your detractors into promoters can be the difference between surviving and thriving.
There are essentially two types of customer satisfaction data: hard and soft. While the NPS method plays a crucial role in your customer satisfaction tracking, it is ideally just one part of a larger customer happiness strategy that involves both hard and soft customer satisfaction data.
Hard customer satisfaction data involves quantitative statistics relating to customer engagement and purchase behavior. When discussing the hard data relating to customer satisfaction, it helps to break it down even further into categories: inferred hard data and concrete hard data.
Concrete hard data relates to customer satisfaction and success without much need for analysis. Essentially, what you see is what you get. A good example of concrete hard data is the Customer Effort Score, a survey that asks customers to rate the amount of effort it took to complete a particular task while engaging with the company. Another is the Net Promoter Score.
In contrast, soft customer satisfaction data focuses on qualitative information your customers have provided, either to your business directly or to a third party; this data provides insight into how satisfied they are with your brand. Great examples of soft customer satisfaction data include:
Further explanation of responses within customer satisfaction surveys
Comments on blog posts, your social media pages, and third-party blog posts that mention your brand
Product review sites such as Capterra and G2
Conversations between your customers and customer support teams, either on the phone, in person, via email, or live chat
The best thing about soft data is that your customers aren’t limited in terms of what they have to say, which means their open-ended responses can provide a more accurate idea of how satisfied they really are. Understanding what went wrong gives you the opportunity to not only learn, but make things right again with your customer.
You can measure your Net Promoter Score in three easy steps.
You first need to ask your customers the Net Promoter Score question: How likely are you to recommend [company] to a friend?
At Ortto, we pop the NPS question using an in-app pop-up that we created using our widgets. This allows us to segment the respondents and follow up with them through automated customer journeys (more on that later).
After receiving your survey, customers respond directly by clicking on a number between zero (very unlikely) and 10 (very likely).
Once you’ve collected enough responses, you can calculate your company-wide score. Simply subtract your percentage of detractors from your percentage of promoters.
Let’s say you received 100 responses from your NPS survey. If 10 responses were Detractors, 30 responses Passives, and 60 responses Promoters, the percentage for each group is 10%, 30% and 60% respectively. Subtracting 10% (Detractors) from 60% (Promoters) gives you 50%. Because NPS is always presented as an integer, your NPS would simply be 50.
While it’s important to collate data, take note of feedback and improve your overall customer satisfaction, it is equally important to be responding to the individuals who are taking the time to complete your NPS surveys.
With the help of a CDP like Ortto, you can set up simple customer journeys that ensure every customer receives an appropriate response based on the score they give you.
At Ortto, our team is alerted to the new NPS rating via Slack, giving our customer success team a chance to react based on the feedback.
Then, we segment users into one of three customer journeys: Promoter, Detractor, or Passive.
Our Promoter group is then segmented further based on whether they are using Shopify or not, and encouraged to leave a review on a third-party website. By segmenting in this way, we ensure we are generating reviews across the sites that are most important to us, without overwhelming our customers with options.
Our Detractors, on the other hand, will receive a personal email asking for more information on where we fell short so we can ensure their problem is fixed, and fast.
Our Passive segment is not contacted about the survey again, but this data point will be paired with other customer data points to help us form more powerful audience segments and personalize messaging (more on that later).
This kind of journey can be set up in minutes and is the best first step to turning detractors into promoters, and promoters into ambassadors.
In terms of cadence, our experts recommend experimenting with both time and event-based triggers.
AskNicely CEO Aaron Ward expanded on this point in an interview:
“High-volume, experience-based services like Uber ask for a rating after every ride, because it’s critical for them to make sure every experience is great. Professional services firms focused on building long-term, profitable relationships with their clients might send an NPS survey every month — as a temperature check. SaaS businesses like to check in with their users four times per year on average.”
Certain points in the customer journey are more effective than others. SaaS companies send NPS surveys either 90 days after customers sign up or 90 days prior to their renewal dates.
Whatever you do, don’t send your NPS survey to every customer at once. If you do, you won't be able to react to customer feedback in a timely manner.
Benchmarking your Net Promoter Score against industry averages helps you assess your performance and set expectations for the future.
In 2022, Retently looked at NPS survey data from 10,000 surveys across industries in both B2B and B2C. In the NPS rating, a low NPS is anything below 0, medium is anything 0 - 30 and good is anything 30 - 100.
Image Source: Retently, 2022
Keeping track of your Net Promoter Score also helps you assess the success of your efforts. If your score gradually increases over time, you can be confident that what you’re doing is working. If your score gradually decreases over time, you should reevaluate.
Similarly, when you make significant investments in product or service improvements, you should see these reflected in your Net Promoter Score.
Conducting NPS surveys comes with at least three benefits:
1. Increased revenue. Once you’ve identified your promoters, you can encourage them to share their experiences with others in the form of testimonials, referrals, and case studies—activities that typically result in increased sales.
2. Reduced churn. By identifying your detractors, the Net Promoter System enables you to save at-risk accounts before they churn by proactively resolving issues and reducing frustration.
3. Increased satisfaction. Being able to identify your passives enables you to deliver programs geared towards educating them about your product and/or service. By helping this group of customers get more value from your solution, you increase their satisfaction.
Based on the score they give your company, survey respondents are divided into three customer segments or groups: promoters, passives, and detractors. We expand on each below.
Promoters are customers who respond with a 9 or higher. Because they’re satisfied with your product and/or service, they’re willing to advocate on your behalf. In other words, they’re your brand evangelists.
Responsible for 80% of your referrals, promoters accelerate the growth of your business. They tend to spend more and cost less to serve than other customers, resulting in higher profit margins. Because they recognize the value you deliver, they’re also less sensitive to price increases.
Passives are customers who respond with a 7 or 8. They’re neither likely to recommend your company, nor speak ill of your company.
Passives cost less to serve than promoters and detractors, but they also deliver less revenue, resulting in minimal profit. While passives are sufficiently satisfied, they remain open to competitive offers.
Detractors are customers who respond with a 6 or lower. Because they’re unhappy with your product and/or your service, they’re likely to discourage others from becoming customers.
Many detractors have had negative experiences, resulting in ongoing issues. For example, detractors are resistant to price increases and tend to complain more often, increasing your service costs. They’re also two times more likely to churn.
For this reason, detractors require your immediate attention. If ignored, detractors can cause irreparable harm to your brand.
Because the Net Promoter System identifies three distinct types of customers (promoters, passives, detractors), it also aids in your segmentation efforts.
When creating smart segments based on NPS data, don’t forget to add online behavioral and transactional data to the mix:
Activity. How active or engaged is the customer?
Recency. When did the customer last buy?
Frequency. How often does the customer buy?
Value. How much money does the customer spend?
Pairing your NPS data with other customer data can help you define more granular customer segments. And the more targeted your segments are, the easier it is to craft relevant messaging.
Consider how a journey focused on high-value promoters might differ from a journey focused on low-value promoters: After responding to your NPS survey, you can send both segments an automated email requesting a review. But from that point forward, you should tailor your messaging to suit each segment.
Because high-value promoters take full advantage of your solution, they’re especially suitable for case studies. For this reason, you should send this segment an email requesting a follow-up interview (for qualification purposes).
Low-value promoters are already brand enthusiasts but may need encouragement to upgrade their accounts. For this reason, you should focus on earning an upsell or cross-sell in emails sent to this segment.
With this kind of information, you could also send educational emails to inactive promoters and passives who’re new users on an account or offer high-value detractors compelling, but temporary, financial incentives to continue doing business together while you work to relieve frustrations.
Like any data set, the Net Promoter Score’s power is only really unlocked when you are proactively collating, organizing, and acting on the data. This doesn’t have to be complicated — even a very simple journey that alerts your team when there’s a new NPS rating and ensures every NPS Promoter or Detractor is automatically contacted will go a long way to ensuring customer satisfaction is top-of-mind for your company, and your NPS score is improving.
In a CDP like Ortto, setting up your NPS survey, scoring, and follow-up journey is simple. Visit our pricing page to find the right plan for your business, and get started today.
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