NPS Unleashed: A Blueprint for Cultivating Loyal Customer Champions

Happy end of August. Where did this month go? I’m not ready for fall. Anyway, I can’t let engagement marketing month go without talking about the Net Promoter Score (NPS). I really believe that this KPI is the single most important engagement metric a brand should track. It’s simple, concise, and a true reflection of how invested your customers are. Let’s discuss.

What is NPS?

NPS stands for Net Promoter Score. This metric is used to measure customer loyalty and satisfaction. It helps brands assess the likelihood of customers recommending their products or services to others. The NPS is measured through one simple survey question:

“On a scale of 0 to 10, how likely are you to recommend [company/product/service] to a friend or colleague?”

Based on the responses, your customers are classified into three categories:

1. Promoters (Score 9-10): These are highly satisfied customers who are likely to recommend your business to others. They contribute positively to your brand’s growth and reputation.
2. Passives (Score 7-8): These customers are satisfied but not extremely enthusiastic. They are less likely to actively promote your business or switch to competitors.
3. Detractors (Score 0-6): Detractors are unhappy customers who may spread negative word-of-mouth and potentially impact your brand’s reputation.

The Net Promoter Score is calculated by subtracting the percentage of Detractors from the percentage of Promoters. Your score can range from -100 to +100. A higher NPS indicates stronger customer loyalty and a greater likelihood of positive recommendations.

Why is NPS valuable?

NPS is valuable for measuring true customer sentiment, identifying areas for improvement, and tracking changes in customer satisfaction over time. It provides actionable insights you can use to enhance customer experience and ultimately drive growth.

Net Promoter Score (NPS) is valuable for several reasons:

1. Simple and Understandable: NPS is based on a single, straightforward question, making it easy for both businesses and customers to understand. This simplicity makes the NPS usable for any industry, business, or customer, and it’s perfect for benchmarking.
2. Customer-centric: NPS focuses on customers’ perceptions and likelihood to recommend, helping you understand how your customers truly feel about your products or services. Humans are more apt to answer a “Would you recommend” question honestly, more so than “Are you satisfied” or “Do you like.”
3. Predictive of Business Growth: Research has shown a strong correlation between high NPS scores and business growth. Promoters are more likely to stay loyal, make repeat purchases, and refer others, contributing to increased revenue. And we all know how critical loyalty is to business strength.
4. Actionable Insights: NPS provides actionable insights by segmenting customers into Promoters, Passives, and Detractors. This segmentation helps you understand their pain points, needs, and preferences and where to allocate resources for improvement.
5. Benchmarking: NPS allows companies to benchmark their performance against competitors and industry standards. This competitive context helps you set goals and strive for continuous improvement.
6. Customer Feedback Loop: Following up on NPS surveys enables you to gather more detailed and consistent feedback from customers. As I’ve said in prior blogs, this feedback loop is crucial for making specific changes and improvements based on customer input.
7. Employee Engagement: High NPS scores are often correlated with engaged and motivated employees. Your employees are more likely to take pride in their work when they know they’re contributing to positive customer experiences.
8. Cultural Focus on Customer Experience: NPS encourages organizations to adopt a customer-centric culture and prioritize customer satisfaction throughout your company.
9. Early Warning System: Detractors provide valuable insights into potential issues that could escalate if left unaddressed. Armed with this insight, you can identify and address problems early to prevent further negative impact.
10. Long-Term Sustainability: It’s proven that focusing on customer loyalty and satisfaction contributes to long-term sustainability, reducing the number of lost customers and the cost of winning new customers.
11. Marketing and Branding: Positive NPS scores offer critical information to use in marketing and branding efforts to highlight customer satisfaction and build trust with potential customers.

Starting an NPS initiative

Starting a Net Promoter Score (NPS) initiative involves several key steps to ensure its successful implementation and meaningful results. Here’s a step-by-step guide to help you get started:

1. Define Project Objectives and Scope:
   Clearly outline your goals, such as improving customer satisfaction, identifying areas for enhancement, or tracking customer sentiment changes over time. Define the scope of the project, including your target audience (customers, leads, social media followers), the specific products or services to be assessed, and the time frame for collecting data.
2. Choose the Survey Delivery Method:
   Decide how you’ll administer the NPS survey. You could use email, SMS, social media, website pop-ups, or even in-person interactions. The method should meet your target audience where they are and make it super simple for them to respond.
3. Set Up Data Collection Tools:
   Using a survey tool or platform to collect and analyze NPS responses will make measurement and analysis simpler. There are various survey software options available that offer NPS-specific features. Ensure the tool allows you to track responses, calculate scores, and generate reports.
4. Segment Your Audience:
   Determine the customer segments you want to survey. Consider factors such as customer type (new vs. existing), product usage, or demographics. Segmentation allows you to gather insights specific to different customer groups.
5. Determine Frequency:
   Decide how often you’ll conduct NPS surveys. Common frequencies include quarterly or biannually, but it can vary depending on your business needs and industry. You could send an NPS survey after every online transaction or product demo. It could be integrated into the training portion of a B2B product implementation or as a check-in your sales team does three months after a sale.
6. Design the Survey:
   Craft the survey questionnaire, focusing on the NPS question and any follow-up questions that will provide context and qualitative insights. You may want to include an open-ended “why” question to dive deeper into the reasons behind each response. However, keep the survey concise to encourage higher response rates.
7. Pre-Test the Survey:
   Test the survey with a small group of customers to identify any issues with clarity, formatting, or wording. Make sure the survey flows smoothly and delivers the intended message.
8. Launch the Survey:
   Deploy the survey to your selected audience. Depending on the chosen method, this might involve sending emails, adding pop-ups to your website, or using other relevant touchpoints.
9. Collect and Analyze Responses:
   As responses come in, gather and analyze the data. Calculate your NPS by subtracting the percentage of Detractors from the percentage of Promoters. Also, analyze open-ended feedback to gain deeper insights into the reasons behind customers’ ratings.
10. Segment Analysis:
    Break down NPS scores by customer segments to identify trends and differences in satisfaction levels. This can guide targeted improvements for different customers or products.
11. Act on Insights:
    Based on the NPS feedback and analysis, create an action plan to address issues, enhance customer experience, and capitalize on strengths. Prioritize the actions that will have the most impact on customer loyalty.
12. Monitor Progress:
    Continuously track NPS scores over time to gauge the effectiveness of your improvements. Monitor how changes impact customer sentiment and adjust strategies accordingly.
13. Share Insights and Results:
    Communicate NPS results and improvements to stakeholders, employees, and customers. Transparency about your commitment to customer satisfaction can enhance trust and engagement.
14. Iterate and Improve:
    Treat NPS as an ongoing initiative. Regularly refine your survey, review your approach, and adapt your strategies based on changing customer needs and industry trends.

Starting an NPS initiative requires careful planning, execution, and commitment to using the insights gained to enhance your customer experience and drive business growth. It’s well worth the effort.

NPS Benchmarking

Benchmarking can be useful when measuring NPS because it gives you something to compare yourself to. Net Promoter Score (NPS) benchmarks can vary across industries due to differences in customer expectations, competition, and business models. However, here are some approximate 2023 NPS benchmarks based on various industries:

1. B2B industries range from 39 to 65
2. B2C range from 9 to 74
3. Technology and Software: 64
4. Retail: 61
5. E-Commerce: 50
6. Insurance: 74
7. Healthcare: 45
8. Logistics and Transportation: 41
9. Communication and Media: 29
10. Internet Software and Services: 9

It’s important to note that these benchmarks are approximate and can vary based on individual companies, geographic regions, and specific customer segments. To get the most accurate and up-to-date NPS benchmarks for your industry, consider consulting industry reports, surveys, and research conducted by reputable organizations. However, this research can offer interesting ways to compare and contrast your brand’s NPS with your competitors and colleagues. This can assist you in understanding what is working or not working with your products, services, or marketing.

Embracing the power of Net Promoter Score (NPS) goes beyond a mere metric—it’s a transformative journey towards customer-centric excellence (pardon the over-the-top rhetoric!) By listening to your customers, understanding their sentiments, and acting upon their feedback, you can build stronger relationships, enhance your products or services, and drive sustainable growth. NPS empowers you to unlock valuable insights that bridge the gap between customer expectations and business success. As you embark on your NPS journey, remember that customer loyalty and advocacy are not just outcomes of engagement marketing but the cornerstones of a thriving and resilient business. Start measuring, start improving, and start thriving with NPS. Your customers and your business deserve nothing less.

If you would like to set up a customer engagement feedback loop featuring the NPS, I would love to help you. Contact me today.