A complete guide to net promoter score

A complete guide to net promoter score

You are trying your hands on travel agencies for the first time to plan a wonderful trip with your family. You are most likely to do two things:

-First, consult the internet for the top travel agencies.

-And second, ask your friends for a recommendation. 

Online reviews and recommendations from your friends are very helpful to you in deciding the best travel agency for your next trip. People talk around and share their opinions about a particular brand and the experience they had. However, people are more prone to share their bad experiences than the good ones. The criticism spreads like a hellfire as compared to the appreciation. Now think for a second, what a single bad review can do to your business. This is why ensuring a satisfactory experience for a customer is crucial for your business. This is where the net promoter score (NPS) comes in. 

What is the net promoter score (NPS)?

A net promoter score is a KPI that allows you to measure the probability of your customers recommending your brand to others. NPS is a benchmark used by businesses to measure, evaluate and improve customer loyalty. NPS is different from other KPIs including customer satisfaction score and customer effort score. It measures the customer’s overall sentiments about the brand instead of just perception of a single interaction or purchase. 

How to calculate net promoter score?

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Measuring the net promoter score is quite simple. This involves surveying your customers by asking them how likely they are to recommend your brand to a friend on a scale of 1-10. The responses can be categorized into three groups:

  • NPS detractors: This group of customers are the unhappy ones. They have answered your questions with 0-6, which means not only you are at risk of losing them but they could also share their bad experiences with other people hence, causing damage to your brand. 
  • NPS passive: Customers who answered the question with 7-8 are hard to predict. They can either be promoters or could switch to your competitor’s brand. 
  • NPS promoters: Customers who answered with 9-10 are the promoters of your brand. They are enthusiastic, and loyal customers who would recommend your brand to their friends and eventually bring new customers. 

1. Measuring customer loyalty:

NPS helps you find out how likely your customer is to recommend your brand to a friend. In other words, NPS helps brands evaluate customer loyalty. In addition, it also helps businesses find out the probability of customer churning, i.e., cancelling their subscription or purchasing from a competitor’s brand. While getting new customers is crucial, retaining the existing ones is of utmost importance and NPS helps you do just that.

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2. Allows you to make room for improvements:

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Acquiring customer feedback is one of the best ways to identify where your service is lacking and bring improvements to your current strategies and processes. Customers might score your brand with a 0 more than one time, but it’s nothing to feel bad about, instead, it allows you to make room for improvements and work on your weak points. 

3. It boosts referral marketing: 

Happy customers recommending your brand to a friend carries a lot of value. According to studies, around 70% of people are more likely to buy from you if a friend talked about it on social media. Companies can be benefitted from referral marketing by asking customers for their case studies, testimonials and online reviews to attract potential new customers. In addition, you can also reward your loyal customers with gift cards, swag and discounts, hence retaining your existing customers.

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4. It helps you prioritize reaching out to detractors:

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Detractors are those NPS survey respondents who scale your brand with 0-6. This group of customers are most likely to not recommend your brand to other people, switch to a competitor’s brand or worse, tell others that they shouldn’t purchase from you. While investing in promoters can increase your ROI, focusing on detractors is also important. You must follow up with detractors but only when they flag a problem. Reaching out to detractors will make them feel heard and valued, and might make them less likely to churn. 

Conclusion

While there are many KPIs, NPS has emerged to be one of the most effective metrics for customer experience measurement. The net promoter score (NPS) is a valuable KPI for businesses. It offers a simple and quick method of identifying how they are performing for the customers. Using this metric will help you figure out where you stand and how loyal your current customers are to you.