Net Promoter Score (NPS) was first developed in 2003 by Bain and Company and it measures the loyalty of customers to a company. Net Promoter Score scores can range from -100 to 100. The closer to 100, the better it is. But let us look at a very important question.
Is Net Promoter Score (NPS) still relevant?
An NPS is a method that uses a single survey question to gauge customer satisfaction with a product. This is how NPS is calculated, customer satisfaction surveys are done across the country and will ask people to rate from one to ten how likely they would recommend their company’s services or products to their family or friends. This measures a company’s Net Promoter Score. NPS is also a good metric that will help you drive customer retention.
Read: 7 Data Points That Drive Customer Retention For SaaS Business
If back in 2003 you’d ask me what are the chances that you’re going to recommend me, my friends, or my family on a scale of 1 to 10? I’d say it’s pretty fantastic. But now in 2021, it is not the same.
Why ask when you can measure
Fundamentally, there is no reason why you actually need to ask this question. If you look at the way we live our lives today, we are leaving behind a tremendous amount of digital footprint. Even in the B2B world, it is high. Therefore asking this question in a lot of ways is so meaningless.
It’s like asking a prospect how many employees you have in your organization. We all know that’s available on LinkedIn. So why ask something that you can measure.
I’m not taking away any value that you get out of NPS, it has its value for sure. But fundamentally, it’s a lagging indicator in the customer success world and the subscription economy that we live in.
Benefits of NPS
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Reduce churn
Net Promoter Score gives you an opportunity to gain insight into customers’ loyalty to your brand. When you know your customer better, you can predict their decisions. This will eventually help you provide your customers more if they are not satisfied with your service and hence save chances for possible churn.
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Use feedback to upgrade your product
Net Promoter Score helps you understand how good your product or service is based on customer feedback. If they would not likely recommend your product to their friends or family, it is a clear indicator for you to make some necessary changes in your service or product.
Limitations of NPS
If you want to know about your customer’s loyalty, NPS is a great way, but is it enough?
While NPS does give valuable insight into how loyal your customers are to a business, there are many things it can’t acquire.
“NPS is an excellent quick metric that you can use to gauge whether or not you are performing, But it doesn’t tell you where to go.”
While NPS tells you how your customers feel about your business, it doesn’t tell you why they feel that way or what needs to change in order for your business to grow. Neither does it give you any information about your company’s future.
What is a good NPS score?
According to surveys, Departmental stores have a higher NPS when compared to internet services. Customers tend to give their favorite stores a higher rating because of the branded and personalized. Whereas basic internet service is a necessity.
Hence you should compare other companies in your own niche, in the industry you are working and the customers you provide your services to. This will give you a broad insight into where your business stands and where your competitors are.
According to surveys, Departmental stores have a higher NPS when compared to internet services. Customers tend to give their favorite stores a higher rating because of the branded and personalized. Whereas basic internet service is a necessity.
Hence you should compare other companies in your own niche, in the industry you are working and the customers you provide your services to. This will give you a broad insight into where your business stands and where your competitors are.
The SaaS industry as a whole has an average NPS score of 31. If a company scores around 50, it is considered to be pretty good. According to quora surveys, many SaaS companies never break the 60% barrier in terms of NPS score.
Taking this into account, let us look at some tools and best practices that will help you upgrade your NPS.
NPS tools
Wootric is known for its simplicity and its easy setup. Once properly integrated, you can start sending surveys without any human intervention. Wootric helps you see the trends and hence enhances customer satisfaction. CustomerSuccessBox has integrations with Wootric.
Delighted’s platform focuses on the free-response follow-up to the NPS question, which lets customers give insights about why they gave a certain NPS score to the company.
SatisMeter helps you understand what your customers are seeking in real-time, and thus helps you implement those changes in a simple and structured way.
Qualtrics allows companies to collect, monitor, and act on the feedback from the customers, and predict what customers will do next. It provides complete solutions for monitoring and improving customer satisfaction.
SurveySparrow is a cloud-based conversational Experience Management Platform that provides everything needed to measure and act on customers’ feedback including web surveys, offline surveys, and net promoter scores. The NPS Benchmark Tool allows you to benchmark your NPS scores against your peers.
Zonka Feedback is a comprehensive NPS tool. It is both a Customer and Employee Feedback Survey App. It helps in creating and customizing surveys and feedback forms that can take feedback on multiple channels. You can take these through phones, tablets, iPads, kiosks, emails, website, QR code and more.
Best practices to improve Net Promoter Score (NPS)
Survey Customers Regularly
The frequency of your surveys depends on how your business operates. Companies that make major releases every quarter may want to survey customers every quarter. But you should first give your customers plenty of time to use your product and adjust to it.
Find Trends
You must segment your customers to find trends. You can do this by segmenting them on the basis of their age, location, gender, or the industry they work in. This will help you gain a full insight into how different groups of people think about your product.
Close the loop
Your closed-loop process must include effective communication. Once you get your customers’ feedback, it’s time for you to communicate with them and act accordingly. This might include making some drastic changes in your product or service.
Takeaway
You will in every way want to see your business improve and upscale your customer success. But NPS alone cannot be the leading indicator that is going to warn you of the churn that can potentially happen. But, regular surveys with your customers can help you improve.
P.S. – The main image has been taken from pexels.com
