If you’ve been following our blog for a while, you know we here at Fieldboom are obsessed with learning about the best ways to generate customer feedback.
While we talk a lot about best practices for creating and implementing customer attitude and satisfaction surveys, we also know that, quite simply, the vast majority of consumers aren’t going to take more than a few minutes out of their day to complete a lengthy questionnaire.
In our article on improving your customer survey response rate, we mentioned that, although brevity is key, it’s also important to not be brief to the point of eliminating important questions from your survey.
But, there’s also a way that you can extract a ton of valuable information from your customers regarding their overall satisfaction with your company by asking a single question:
On a scale of 0-10, how likely are you to recommend our products/service to a friend, family member, or colleague?
Collecting your customers’ responses to this single question will, in turn, allow you to determine your company’s Net Promoter Score (NPS).
In this article, we’ll discuss:
- What NPS is
- How to calculate NPS
- Why knowing and understanding your NPS is important
- How to improve your NPS
- Caveats and pitfalls to avoid when working to improve your NPS
Let’s get started.
What Is NPS (Net Promoter Score)?
As mentioned above, a company’s Net Promoter Score measures the likelihood of that company’s customers recommending its products or services to their peers.
While this information might seem rather singular (in that it only tells you one thing about your customers), a lot of information can be extracted and extrapolated from the answers you receive.
For instance, it’s safe to assume that anyone who responds positively to the question is extremely happy with the service you provide, and is likely to remain a customer for a long time to come.
On the other hand, you can also assume that you’re in danger of losing any customer who responds negatively – or even neutrally – to the question.
In other words, you can use your NPS to determine whether or not you’re providing your customers with the services they expect to receive from you. You can then use this information as a springboard to making necessary improvements throughout your organization (or, perhaps, simply staying the course).
(A quick note: While actually determining NPS only requires that you ask the question mentioned above, we suggest you follow up with your customers by asking at least one open-ended question to identify why they answered as they did. We’ll get into that more in a bit.)
How To Calculate Your Net Promoter Score
While calculating NPS is a multistep process, it’s also relatively easy to do.
Once you’ve collected a valid sample size of responses, you’ll need to separate them into three categories:
- Responses of 0-6 are “Detractors (unhappy customers)
- Responses of 7-8 are “Passives” (neutral customers)
- Responses of 9-10 are “Promoters (happy customers)
You’ll then determine the percentage of respondents who fall into the categories of Promoters and Detractors. Once you’ve done this, subtract the percentage of Detractors from the percentage of Promoters. For the purpose of calculating NPS, you’ll ignore Passive responses.
Example: Out of 100 respondents, you have 40 Promoters and 25 Detractors, or 40% Promoters and 25% Detractors. 40% – 25% = 15%, or an NPS of 15.
Note: The maximum possible NPS is 100 [100% Promoters – 0% Detractors], and the minimum possible is -100 [0% Promoters – 100% Detractors].
After you’ve determined your organization’s Net Promoter Score, you’ll need to actually consider your score within the context of your industry.
Take a look at the following graphic:
As you can see, what can be considered a “good” NPS varies wildly depending on the products or services your company provides. For example, Net Promoter Scores for department stores range from 25-75, with an average of around 60. Net Promoter Scores for internet service providers, on the other hand, range from -25 to 30, with an average of around 10.
(Good to know I’m not the only one who really does not like his ISP…)
So, while it’s obviously best to have an NPS as close to 100 as possible, you really only need your NPS to be the highest in your industry to know you’re on the right track in terms of providing top-notch service to your customers.
If you’re not currently surveying your customers to measure your Net Promoter Score, take a look at Fieldboom. You can create a NPS survey and send it to your customers in a few minutes. You can also ask open-ended questions so you don’t just capture NPS but also understand why each customer chose their specific rating and how you can improve.
A Few Notes On Improving NPS Survey Response Rates
We mentioned earlier the importance of collecting a valid sample size of responses before calculating and assessing your NPS. Simply put, the lower your response rate, the lower your sample size; the lower your sample size, the less valid and usable the data you do collect actually becomes.
Here are some tips to improve your response rates:
- Use email subject lines that are personable and engaging, and that make clear that completing the survey will literally only take a moment of the respondent’s time
- Keep follow-up questions to a minimum, allowing respondents to answer them quickly and succinctly
- Send the survey at a time in which your audience is most likely to receive and engage with it (Note: This timing depends on your audience and your industry)
- Send the survey via the right channels (again, this depends on your audience and industry)
- Ensure your survey offers a positive user experience (e.g., it matches your brand’s style, it’s mobile responsive, and it’s bug-free)
Now that you understand what NPS is, how to calculate it, and how to analyze your collected data, let’s discuss the implications of a high, low, or even average Net Promoter Score.
Why Is Your Net Promoter Score So Important?
While analyzing your Net Promoter Score – along with all of the data that comes with it – you’ll want to ask yourself two questions:
- What does it all mean for your company as it currently stands?
- Where do you go from here?
We’ll get to that second question in the next section when we discuss what you can do to hopefully increase your NPS in the future.
For now, let’s talk about what this data will tell you about your company’s performance at the current moment.
- It may only take a single poor experience for a customer to stop doing business with a company
- Consumers tell almost twice as many of their peers about a negative experience as they do about a positive one
- It’s much more cost-efficient to retain current customers than to acquire new ones
That being said, a high NPS is a sign that your company:
- Rarely, if ever, makes missteps when it comes to customer service
- Is beating the odds, so to speak, in terms of positive/negative recommendation ratio
- Isn’t spending excess money on acquiring new customers (as many of them come from referrals)
On the other hand, a low NPS makes it clear that something within your organization is turning your customers off – and that this “something” is costing you money due to the high probability of poor recommendations and customer churn.
It’s also worth noticing that, for a respondent to be considered a Promoter in terms of the NPS survey, they need to report an extreme likelihood of recommending your brand to others. On the other hand, even those who report a 60% chance of recommending your brand are still considered Detractors.
This, of course, reinforces the notion that you need to provide top-notch service if you want to have any hope of earning positive recommendations from your customer base.
How Can You Improve Your NPS?
You do want to improve your Net Promoter Score, right?
I only ask because it can be easy to look at where your NPS currently stands within your industry, see that your company is near the top, and figure everything is going well enough.
But, as we alluded to in the last section, you might not even realize how much better your company could be doing.
Case in point, according to Fred Reichheld (who literally wrote the book on Net Promoter Score), companies that find themselves at the top of their industry in terms of NPS grow at least two times faster than the other companies in their industry – including their closest competitor.
So, if you’ll allow me to answer my own question for you:
Yes, you certainly do want to improve your NPS – no matter where you stand in comparison to your competition.
If you’re low on the totem pole, you’re most likely losing a ton of actual and potential customers through churn and poor recommendations.
If you have an average NPS, you might be doing okay in terms of revenue and profit – but you could be doing so much better.
And, if you’re currently your industry’s NPS leader, you want to stay there as long as you possibly can.
Now, before we begin discussing how you can improve your company’s NPS, it’s important to recognize that it’s not just about improving an individual’s likelihood of recommending your brand; it’s also about improving the services you provide so your customers become more likely to recommend your brand.
So, rather than discuss how to increase your NPS as a whole, let’s talk about what you can do for Detractors, Passives, and Promoters that will lead to them reporting a higher propensity to make a recommendation the next time you conduct an NPS survey.
Let’s start at the bottom, shall we?
As we said earlier, Detractors can be those who have anywhere from a 0% chance to a 60% chance of recommending your brand to someone in their network.
Obviously, that’s a pretty big gap. And there’s definitely a huge difference between a customer who absolutely will not recommend your brand and a customer whose probability of making such a recommendation is a bit higher than a coin flip.
Regardless of where Detractors stand on the NPS scale, there’s one common thread among all of them – they’re unhappy about something (or things) about your service.
On your end, this is one case in which ignorance is not bliss. Amazingly, 96% of unhappy customers won’t take the time to express their concerns to you; but, again, there’s a large chance they’ll tell others about their poor experiences with your company.
And, of course, if a customer isn’t getting the service they believe they should be getting from your organization, they’ll find a different company to give their money to.
While it’s undoubtedly disheartening to discover a customer is unhappy with your services, all is not lost – if you act quickly.
The first thing you need to do is reach out to your Detractors and apologize for providing what they considered to be subpar service. This initial communication is effective for a number of reasons:
- It shows that you truly care about their problems on a personal level
- It keeps them engaged with your brand (rather than defecting to a competitor)
- It helps you discover the root causes of their problems, so you can fix the issues – with that individual customer and within your company’s operations as a whole
Once you’ve determined where the problem lies, you’ll then, of course, need to fix the issue. This will, of course, cost your company time, money, and other resources upfront. But it will be well worth it in the long run, as you’ll a) hopefully convince your at-risk customer to continue doing business with you, and b) ensure that other customers don’t face the same problem in the future.
Finally, even after you’ve mitigated the Detractor’s problem, consider adding some extra value to the deal. You might provide a coupon or special offer, or you may go as far as to refund their initial order entirely (even after you’ve spent time and energy fixing the issue).
One caveat to this advice: you need to know which Detractors are worth fighting for. While not an entirely hard and fast rule, a high-end Detractor (i.e., 50%-60%) will probably be much more receptive to an offer to fix an issue than a low-end Detractor is. In other words, you don’t want to expend too many resources helping an at-risk customer that – no matter what you do for them – probably isn’t going to be around for much longer.
Something to realize when collecting and calculating survey data that we didn’t mention before is that, although there is technically a limit to how high a company’s NPS score can be, this doesn’t mean that it’d be impossible for a company with a “perfect” to make improvements.
Although, if you do end up with an NPS of 100%, you’ll have to let us know how you did it!
That being said, it’s also important to recognize that, even if customer reported a 90% or 100% chance of recommending your brand to a peer, this doesn’t necessarily mean they’re completely satisfied with the service you’ve provided.
Think about some of the brands you’re loyal to. There’s almost certainly been at least a few times you were put off by an engagement with them that was less pleasurable than usual.
While it’s prudent to focus on making improvements so your Detractors don’t abandon ship, you also don’t want to put the needs of the customers that provide your company with the most revenue on the backburner.
Reach out to your Promoters. Find out if there’s anything that makes them even the slightest bit hesitant to recommend your brand. Probe deeper to see what other problems they face that you might be able to help them with.
As with Defectors, you want to show your Promoters that you’re thankful for their business, and you truly care for them as individuals. Additionally, reaching out to your biggest fans in such a way will, in their eyes, make them confident that sticking with your brand is the right move to make.
Remember we said earlier that the typical “satisfied customer” isn’t likely to go out of their way to recommend a brand to their peers?
Rather, most customers tend to make their purchase, get what they need from a product or service, and go on their merry way.
While this isn’t necessarily bad for business, it’s not great, either. For one thing, it’s a sign that, though your company provides an expected level of service to these customers, you’re not exactly “wowing” them. Secondly, any instance in which a customer isn’t singing your praises to their network equates to a potential loss in future customer acquisition. Lastly, customers who are rather blasé about your services could easily become Defectors if they have a negative experience with your company.
Since we’ve already gone over how you can go about improving your relationship with a rather unhappy customer, let’s focus here on what you can do for customers who like your brand to make them start loving it.
Again, you’ll need to reach out to your Passive respondents and ask them what you could be doing better in order to help them reach their intended goals more efficiently. As with Defectors, be prepared to offer individualized services to these customers; however, you probably won’t be doing so to mitigate problems more so than you would be to show these customers what more you’re capable of doing for them.
Even so, even if you do “wow” your Passive customers, they still might not feel the need to actively recommend your brand to their network. If this is the case, you need to figure out a way to streamline the process of making recommendations. For example, you might decide to:
- Develop valuable, educational content for your audience to share via social media
- Create engaging content that requires their input for them to get the full effect of it
- Gamify the recommendation process through loyalty and referral programs
However, it’s important that you don’t make your content or referral programs to gimmicky, and that you don’t over-incentivize content sharing and recommendations. You want your customers to share their experiences with your brand because they actually had a positive experience – not because they’re getting something in return.
To be clear, your goal here shouldn’t be to improve your Net Promoter Score; it should be to improve your processes and services so that your customers honestly become more than happy to recommend your brand – thus increasing your Net Promoter Score in the process.
Despite its simplicity, the Net Promoter Score can tell you a lot about how effective your company is at meeting the needs of your clientele. But, it’s what you do with the information you gather that will allow you to serve your customers more efficiently.