Last week, some college friends came to visit from out of town, and asked me where we should eat. Such a simple question, but there I was sitting with my wife for half an hour going through options. But we kept coming back to the same choice: Rudy's BBQ. Their creamed corn is to die for and if you are ever in San Antonio, you have to try it.
That made me think of the many people we have recommended Rudy's to over the years. Wouldn't it be amazing if you could identify that type of loyal customer for your own company—the ones who would lead dozens of new customers to your business?
It turns out there is actually a way you can scientifically measure and encourage customer loyalty, so you can work to grow your customer base and encourage your best customers. If you identify the customers who love your products the most, you'll be able to turn your passive fans into active promoters.
That's where NPS—the Net Promoter Score—comes in. And it only takes two questions to calculate that score.
- What Is the Net Promoter Score?
- A Brief History of the (Sometimes Controversial) NPS Loyalty Metric
- How to Calculate Your NPS
- How to Get Started with NPS
- The Art of the NPS Follow-Up
What Is the Net Promoter Score?
The Net Promoter Score® (or NPS, as we'll sometimes refer to it in this article) is a deceptively simple surveying technique to find customers who love your company and products, one that can get you 8-10 times more actionable data than traditional surveying methods.
It's simple because you only ask your customers one question: How likely is it that you would recommend my brand/product/service to a friend or colleague? (Answers are based on a 0-10 scale). That's it.
Here is an example email you might send to a customer to get their Net Promoter Score:
Then, once people answer the first question, there's a second question you'll send: What's the most important reason for your score? You could ask it in a followup email or show it on a webpage after customers click the survey question in the first email. Here's how that could look:
That's all. Ask those two questions and you'll have the data you need to calculate your Net Promoter Score.
NPS is deceptively simple because, to the respondent, it doesn't appear to be a burden to answer. In fact, you can even ask this question in an email or text message and ask for a direct response without sending them to another web page. Compared to traditional surveys with pages of questions, it's far simpler.
Why is this important? Because every time you ask someone to do something (click somewhere, reply to an email, etc.), you create a barrier to your goal, and intrinsically fewer people will complete it.
With each added click or question, your chances of someone opting out of a survey drop 50%.
Here's a general rule of thumb from our experience of sending out over 5 million surveys at Promoter.io: With each added click or question, your chances of someone opting out of a survey drop 50%.
For example, if you ask people to click a link to your survey and fill out four questions—five total actions—only around 3% of people will finish the survey, since 50% * 50% * 50% * 50% * 50% = 3%. This is about average for a typical survey response rate of 3-5%, depending on the study.
If you ask only two questions, then you can expect a 50% * 50% = 25% response rate–eight times more data. You'll possibly get an even higher results, as the average response rate for users of Promoter.io, an automated NPS platform, hovers around 40%. That matches up with studies conducted by Bain & Company about the effectiveness of NPS and its two simple questions.
It seems so simple, so why isn't the Net Promoter Score more widely known and used?
A Brief History of the (Sometimes Controversial) NPS Loyalty Metric
In 2003, business strategist Fred Reichheld published an article in Harvard Business Review titled "One Number You Need to Grow." It discusses how the Net Promoter Score was developed by testing various questions to find which one was best aligned with customer loyalty. NPS was then developed further and eventually trademarked by Fred Reichheld along with Bain & Company (a global management consulting firm) and Satmetrix (a customer experience management platform).
In Reichheld's original proposal for the Net Proposal Score, the worst score you can get is -100 (for example, if everyone gives you a 0, 100% of people are against you, hence -100) and the highest score you can get is +100 (for example, if everyone gives you a 10, 100% of people are promoting you, hence +100). However, any score that is above zero is good, anything above +50 is excellent, and over +70 is considered world-class.
In the decade since that article was published, NPS has become one of the most popular loyalty surveys in use, in large part because of Reichheld's bestselling book "The Ultimate Question 2.0" that expanded on use cases for NPS. Hundreds of Fortune 500 companies have incorporated NPS surveys into their regular course of business. Apple employs NPS in their retail stores. GE used NPS to prompt growth of its stock price. Intuit even started reporting its NPS scores in conference calls with analysts.
Loyalty isn't earned with a number. Loyalty is earned by creating authentic relationships with people post-survey.
But all this adoption didn't come without controversy. Critics of NPS say there isn't any connection between NPS and customer loyalty, that NPS fails to predict customer loyalty, and that it isn't any better than other loyalty-related surveys.
For example, in a study presented at the Annual Conference of the World Association for Public Opinion Research in Berlin titled "Measuring Customer Satisfaction and Loyalty: Improving the 'Net-Promoter' Score," the authors found that the 0-10 point scale advocated by Reichheld had the worst predictive value of the scales tested.
Still, a major part of why the Net Promoter Score has been so popular is due to its simplicity, both for the surveyor and the surveyee. There's only one (apparent) question that is easy to answer in just a brief moment, which makes it easy to quantify your satisfaction score in a single number. That simplicity can also be its shortcoming.
You should never treat customers as a number.
Many companies, small and large, make a big mistake by fixating on their NPS score. This is where most of the controversy arises. Everyone wants to be like Apple Retail with a +76 Net Promoter Score, or they make a big deal about making sure their score keeps going up every quarter.
While the score is generally a useful metric to track, I find it to be by far the least interesting part of measuring NPS. This is because you should never treat customers as a number. No matter what your score is, when someone takes time out of their day to give you some feedback, it's an opportunity to engage and deepen your connection with them.
People who complain that the Net Promoter Score doesn't do a good enough job predicting customer loyalty are missing the point. Loyalty isn't earned with a number. Loyalty is earned by creating authentic relationships with people post-survey. If you don't engage your customers strategically based on their sentiment and feedback, there won't ever be an impact that connects to your bottom-line metrics.
If you measure your Net Promoter Score, though, you have the opportunity to open the conversation with customers, improve your business, products, and services, and then perhaps see your satisfaction score grow. NPS is a means to an end—to a happy ending for you and your customers—not an end in and of itself.
How to Calculate Your Net Promoter Score
Now that you understand what NPS is and how to effectively use it, how do you calculate your score? The math is actually pretty easy, but you will need a calculator. Here's how it works:
1. Calculate the total number of respondents who replied
2. Calculate the total number of respondents who gave you a 9 to 10 (promoters)
3. Calculate the total number of respondents who gave you a 0 to 6 (detractors)
Before we go to step four, you might have a couple questions:
- What about respondents who give you a 7 or 8?
Though both good scores, these people aren't fanatical one way or another, so we leave them out of the final score.
- Why are respondents who give you a 6 considered detractors? Isn't 6 a good score too?
Think about it as the person giving a 6. If you gave a "6" to someone else's product/service, you likely think there's something wrong with the product or the way a company operates. If someone asked you about it, you might bring up its problems instead of its benefits. Not good.
Also, negative sentiment, even to a small degree, has much more impact that positive sentiment. We all experience this every day, whether in personal conversations or product reviews online. There's no reason to include any negatives in your Net Promoter Score.
With that out of the way, here's the rest of the math:
4. Subtract the percentage of detractors from the percentage of promoters
Therefore, Net Promoter Score = % Promoters - % Detractors
For example, let's say you get the following scores as responses: 10, 9, 8, 7, 6, 5, 4, 3, 2, 1. Only two out of 10 were enthusiasts (20%), and six out of 10 were detractors (60%). That makes your NPS score -40.
How to Get Started with Your Net Promoter Score
At this point, you know what questions to ask and how to calculate your score, but you might have a few more questions before you get started. At Promoter.io, we frequently receive the following four:
So, I just send an email?
Yes, basically. Just ask the main question (How likely is it that you would recommend my brand/product/service to a friend or colleague? Answers are based on a 0-10 scale) and tell people they can just reply to the email directly.
Of course, you could send them a link to a NPS form in a form builder like Typeform or a survey in Google Forms or SurveyGizmo or any other survey app, but the response rate will not be as high.
The survey won't feel as personal to your customers, either, especially when you follow up with the second question: What's the most important reason for giving us that score? If you ask that in a personalized email, people will be more likely to give you honest feedback.
Alternatively, another option is to use a service designed for NPS, like Promoter.io. Apps like that will help you send the emails and follow-up questions, so you won't have to do so much manual effort collecting responses, tracking replies, looking at trends and looking at historical score changes over time.
How many customers should I survey at a time? How often?
Most people want to send a survey—whether a full-length survey or a simpler NPS email—to all their customers at the same time once every quarter.
Though you are welcome to do it this way, you tend to get a better perspective if you spread out the survey and send it to 1/90th of your users every day for 90 days. If you have 1,000 users, say, you would only send around 11 surveys per day.
Here's why you should spread out your emails. If you send all the surveys at once, the responses will only represent that moment in time. Add new features or change the pricing of your products, for example, and your score won't take that into account for another 3 months. Spread the surveys out, though, and you can act on the feedback and see your score change in nearly real-time.
Logistically, sending out a few a day is hard unless you use an automated NPS platform that supports it though. But the benefits might make it worth spending a bit more time setting up your surveys.
Do I send NPS surveys immediately after someone places an order (for transactional businesses)?
It depends on what you want to measure. If you want to understand customer loyalty for your shopping cart process, sending a survey right after someone orders can be an effective way to measure that since they will have the experience fresh in their memory.
However, if you want to know how likely people are to recommend the product they purchased (the main purpose of the Net Promoter Score), you will want to schedule the survey a bit further out.
Give your customers enough time to receive and start using the product without completely forgetting that you exist. They'll then be able to give you relevant, actionable feedback.
Do I send an NPS survey after every purchase?
Again, it comes back to what you want to measure: loyalty for individual products they are purchasing, or loyalty to your company in general.
I typically recommend to measure brand loyalty over individual product loyalty, when our customers ask us this question. That means no matter how many products your customers purchase (0 or 1,000), you send them an NPS survey once a quarter—something that's already standard for subscription-based businesses. This helps you measure what people think of your company overall, not just about each individual purchase.
We've found that surveying customers once a quarter on a rolling basis is the most effective frequency that is not too invasive or annoying. Wait longer and you can miss critical feedback or changes in customer sentiment that can lead to churn; wait less and you may annoy people with too many emails.
A big part of NPS is getting a predictive indicator on the health of a customer and their thoughts on your company directly from their mouths, instead of relying on obscure behavioral metrics. This is extremely powerful insight, one that's worth waiting to get right.
Bonus: "The Art of the NPS Follow-Up" PDF Download
The magic of NPS is not in the score, it is in the follow-up. This is the part that most Net Promoter Score critics miss. How to respond and engage after someone sends you their feedback is what really brings value out of NPS.
If you master the art of the NPS follow-up, you can get people to publicly review and recommend your product or service, or discover new business opportunities and product features you hadn't thought of. You can also proactively reduce churn with a higher success rate than any other method.
For a 9 or 10 score, the response is pretty straightforward. Since they are volunteering the fact that they are happy or willing to recommend your service, you can naturally write a response like this:
Thank you for your score of 10! You honestly made my day! If you have just 30 seconds, would you be willing to write a quick review to make it easier for other people to discover the service? Here's a URL: …
For other scores, there are equally effective scripts you can use to kick-off a deeper conversation. Exclusively for Zapier blog readers, we have created a free PDF that gives you templates for how to respond to NPS surveys no matter what score they give you. Download the "NPS Follow-Up Cheatsheet: 11 Customizable Templates To Turn Survey Responders Into Actionable Promoters" from Promoter.io for free, to start putting NPS follow-ups to work for your business.
Do you use the Net Promoter Score in your business, or do you use another metric to help find your most influential customers? We'd love to hear your story in the comments below.
Credits: London Underground photo courtesy Anna Dziubinska via Unsplash. Net Promoter, Net Promoter Score, and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.
source https://zapier.com/blog/nps-net-promoter-score/
No comments:
Post a Comment