There’s something appealing about one score having so much meaning behind it.
A Net Promoter Score (NPS) program is the leading indicator of growth for a business and can be based on a single question: How likely are you to recommend our company/product/service to a friend or colleague?
In this post we are taking a step further by exploring how a combined NPS and media data analysis can give your business a holistic view of the overall sentiment towards your organisation.
Aside from its ease to implement, its appeal is two fold – it’s attractive for the user to answer one question and it’s easy for the business to calculate and measure the results.
As Frederick F. Reichheld wrote in his Harvard Business Review, titled ‘The one number you need to grow’ having a useful metric to measure customer loyalty is a good indicator of business growth. The path to sustainable, profitable growth begins with creating more promoters and fewer detractors and making your net-promoter number transparent throughout your business. Obtaining feedback is key to success for a customer centric business.
Interestingly, statistics show every hour spent calling detractors generates more than $1000 in revenue. Businesses have leveraged NPS in boosting sales: with sales increasing by 20% when converting a detractor to a passive, and by 26% when converting a passive to a promoter.
Understanding the Net Promoter Score
An NPS score is calculated by subtracting the percentage of detractors from the percentage of promoters. This score can then be compared to that of similar businesses as a reliable benchmark.
“Promoter” customers are enthusiastic and loyal, who will continue to buy from the business and ‘promote’ your business to others. With your promoters, tailor your marketing efforts and send them specialised promotions to continue their loyalty.
“Passive” customers are happy but can easily be tempted to leave by an attractive competitor deal. Passive customers have the ability to become promoters if your products, service their customer experience are improved.
“Detractor” customers are unhappy with your product, service or customer experience, they will either cancel their dealings with you or reduce the amount they purchase from you. With the information and feedback provided by this group of people, not only use it to try to win them back as a customer, but also use it to identify and empower your biggest promoters.
5 benefits of NPS
- It’s reputation
NPS is a good measure of customer satisfaction for reasons such as simplicity, executive understanding or availability of external benchmarks.
2. Known as a good indicator of business growth
Each response on an NPS survey indicates either loyalty and expansion in the future or the risk of churn. A customer who responds with a 4 is at a much higher risk of cancelling than a customer who responds with an 8. If a risk percentage is assigned to each number, the impact on future growth and churn can be predicted.
NPS is a measure of your whole business as its a KPI that is relevant to everyone, not just a particular team or department.
A strong NPS reflects that your business is performing well – from account management to your products, marketing and customer experience. Alternatively, a low score could indicate there are a few minor issues that need addressing and by introducing one or two additional questions to the survey can be valuable to capture this information.
4. Easy to benchmark against competitors
As it is a universally recognised survey, it is easy to benchmark against your competitors and track your business progress against your industry.
5. Measure loyalty
Surveying your customers at least twice a year will allow you to get their latest sentiment toward your business and enable you to identify trends and track business performance over time. You can also track how different local and global teams are tracking against each other. Asking your customers to rate their experiences offers a deeper view of customer sentiment and enables quick learning and action.
NPS enables your business to get invaluable voluntary feedback on all aspects of your business from a sample of your customers multiple times a year, in real time. Combining NPS with media data can provide for a powerful outcome. It provides the ability to action insights faster with the visual aid of dashboards, word clouds, top voices in the media and automated sentiment – indicating if media mentions about your business are positive, neutral or negative.
By seeking information from multiple sources, you can listen, learn and find tools that separate real insights from background noise, sense check benchmarks and get a firm grasp of your competitors, influencers and the current landscape. All these elements help provide endless possibilities for your business.
Combining media data and NPS also enables you to observe patterns and correlations that might exist between what is being said about your business throughout the media and the likelihood that your customers will promote your business to others. By recognising trends and correlations between broad social sentiment can help inform your social media, marketing and PR strategies.
Want to learn more about gaining insight into your business and competitors, get in touch with us today.