Net Promoter Score (or NPS) is a simple and accurate method for gauging customer loyalty.NPS came about in 1993, when a research team led by Fred Reichheld sent out 20 different surveys to customers across different industries, then cross-referenced the results with purchase and referral behavior. One question came back as the most accurate predictor of customer behavior: “How likely is it that you would recommend [company name] to a friend or colleague?” Customers choose from a 0 to 10 rating scale, and then typically asked a followup question, “Why did you give that answer?”
The NPS score works better than most metrics precisely because it does not ask about satisfaction of a single purchase or customer service interaction, but about the customer’s overall opinion of the company.
Why you need your NPS score
NPS is a way to accurately predict your business growth. In the social media age, customer loyalty and word-of-mouth endorsements are the strongest drivers of growth. Your NPS responses give you an indication of whether your company is on the right track, and the followup “Why?” provides insight into what you’re doing right and where you need improvement.
Here’s how the scoring breaks down:
- Negative answers from dissatisfied customers are scored from 0 to 6. These are people who are unlikely to recommend you to friends, and most likely to complain about your brand.
- People who choose 7 to 8, are neutral – Reichheld calls them “passively satisfied.” They probably don’t feel strongly enough to hurt you, but they won’t endorse your company, either.
- Customers who give you a high score of 9 or 10 are enthusiastic supporters. They are most likely to make additional purchases, tell their friends, and engage with you on social media.
By asking the open-ended question “Why?” you can also uncover patterns you can analyze to find weak areas and improve customer satisfaction and experience. For example, you may learn that response to questions is slow or inadequate, or your product doesn’t live up to customer expectations. By addressing these concerns, you can improve your NPS score, and with it, your bottom line. It may even be helpful to contact some of your disgruntled customers to address their concerns directly, learn more about what made them unhappy, and use that information to move forward.
The best methods to collect NPS
So how can you collect this information? In 1993, Reichheld’s team must have been limited to mailers and phone calls. You can still use those methods, but we have far easier, more effective, and less expensive tools at our disposal today.
Email surveys
The most direct method of reaching targeted customers in your mailing list, email surveys return high response rates. With a one-question format even mobile users can answer quickly and easily.
SMS surveys
Sending surveys via a simple text message questionnaire is another fast and easy way to communicate with your customers.
Website surveys
Why not collect customer satisfaction information right from your website? This is a great option for businesses without a lot of customer contact information.
The advantages to email and SMS surveys are real-time results over a very short period of time from a targeted list. You might want to hear from recent first-time customers, customers who have bought from you three times or more, or customers who abandoned their carts and did not buy, or bought once a year ago and never returned.
If you’ve already collected customer information, you can segment your lists and know exactly who is responding.
Use the Net Promoter Score® method to discover your customer loyalty metrics. Your customers’ answers may unlock the most valuable knowledge about the future of your company you’ll ever gather.
