NPS, or Net Promoter Score, is a customer satisfaction metric that businesses use to measure customer loyalty.
It's a way to understand how likely customers are to recommend a company to others based on their love and trust for your solution and brand. Think of NPS like a report card for your business, telling you how well you keep customers satisfied.
How to Calculate Your Company’s NPS
Calculating your NPS score involves asking customers a simple question: "On a scale of 0-10, how likely are you to recommend our company to a friend or colleague?".
Velaris has inbuilt survey tools you can gather NPS and survey responses from your end-users with different types of surveys embedded in your web app as well as from your important stakeholders directly via email. Alternatively, you can use standalone tools like Qualtrics or SurveyMonkey to collect feedback.
Based on their responses, customers are classified into three categories: Promoters (9-10), Passives (7-8), and Detractors (0-6).
Your overall NPS score across your customer portfolio is then calculated based on the percentage of promoters and then by removing the percentage of detractors.
NPS = % promoters - % detractors.
For example, if your NPS responses include 60% Passives, 10% Detractors, and 30% Promoters, your overall NPS score would be 20 (31% - 10%).
Interpreting NPS – What Do They Really Mean?
So you've gathered some NPS data and calculated your NPS score, but what does it really mean?
Interpreting NPS scores can provide valuable insights into your customers' loyalty and satisfaction levels.
A high NPS score indicates that your customers are promoters and are highly likely to recommend your company to others. This is a positive sign that your business is doing well in delivering a great customer experience.
On the other hand, a low NPS score suggests that you have a higher number of detractors, which can indicate areas for improvement in your customer service or product offering. By understanding and interpreting your NPS scores, you can take targeted actions to improve customer loyalty and satisfaction, ultimately driving growth and success for your business.
The Importance of NPS
NPS scores are not just a vanity metric. They hold immense importance and offer a multitude of benefits for businesses:
- NPS scores provide a clear measure of customer loyalty and satisfaction levels. By understanding how likely customers are to recommend your company, you gain valuable insights into the health of your customer relationships.
- They can serve as a powerful benchmarking tool. Comparing your score to industry averages or your competitors' scores can give you a sense of how you stack up against the competition. This knowledge allows you to identify areas for improvement and stay ahead of the game.
- They have a direct impact on business growth. A high NPS score indicates that your customers are promoters, spreading positive word-of-mouth and driving new customers to your doorstep. On the other hand, a low NPS score highlights areas for improvement, allowing you to address customer concerns and ultimately increase customer retention.
- NPS is a shareable metric among your cross-functional teams. NPS is a metric that can be used to define which customers would best qualify to speak with your Marketing team for advocacy content to be generated as well as your Product team to get their thoughts on new and updated features.
How to Improve Your NPS
So, you've calculated your NPS score and you're ready to take action to improve it. Here are some strategies to help you boost your business's NPS score:
1. Listen to your customers: Actively seek customer feedback and listen to their suggestions, concerns, and complaints. This will not only help you understand their needs better but also show that you value their opinions.
2. Address customer concerns: Take prompt action to address any issues or concerns your customers raise. Respond to their feedback and provide solutions that exceed their expectations. This will demonstrate your commitment to customer satisfaction. You should also keep your customers informed about your product. Informing them about product roadmap changes and release dates for new features that help with their concerns will help build trust.
3. Improve your products or services: Use the feedback from your customers to identify areas for improvement in your products or services. Make necessary changes to enhance their experience and exceed their expectations.
4. Personalise your customer interactions: Treat your customers as individuals and personalise their experience with your brand. Tailor your communications and offers to their specific needs and preferences. This will make them feel valued and appreciated.
5. Provide exceptional customer service: Train your employees to deliver exceptional customer service at every touchpoint. Encourage a customer-centric culture within your organisation and empower your team to go above and beyond for your customers.
6. Engage with your customers: Regularly engage with your customers through surveys, social media, or other channels. Seek their opinions, ask for their feedback, and keep them informed about any updates or changes within your company.
7. Offer incentives for referrals: Encourage your satisfied customers to refer your company to their friends and colleagues. Offer incentives such as discounts, rewards, or exclusive access to new products or services. This will not only increase your NPS score but also attract new customers.
Key takeaways
- NPS scores are a valuable metric for businesses to measure customer loyalty and satisfaction levels.
- A high NPS score indicates that your customers are promoters and likely to recommend your company to others, which can drive growth and success.
- On the other hand, a low NPS score suggests areas for improvement in customer service or product offerings.
- NPS scores can be used as a benchmarking tool to compare your business to industry averages or competitors.
- Strategies to improve your NPS score include listening to customer feedback, addressing concerns, improving products or services, personalising interactions, providing exceptional customer service, engaging with customers, and offering incentives for referrals
