Your business is only as strong as its customer relationships. It’s practically a law of physics; without customers, your organization fails. It follows that understanding your customers should be priority number one for any business. And for many years, at the heart of this problem, has been Net Promoter Score.
Net Promoter Score was developed in the early 2010s by Fred Reichheld of Bain & Company, and has since become a widely used tactic for surveying customer sentiment.
Where other metrics measure sentiment, Net Promoter Score measures action. It does this by asking which customers are likely to actively promote your business to others.
But, the story isn’t as simple as that. Net Promoter Score, like all Customer Experience (CX) metrics, has its limitations. After nearly a decade in service, is it time Net Promoter Score was retired?
In this blog, we examine what Net Promoter Score is, how it is calculated, and whether your organization should continue to use it. We discuss the value of CX metrics, and how they can drive success for your business.
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What is Net Promoter Score?
The primary goal of Net Promoter Score is to predict customer loyalty; determining which customers are likely to stick with you in the long term, which are vulnerable to churn, and which are on the verge of dropping you.
A customer likely to recommend your organization to others is one willing to put in the work to preserve and deepen a relationship. They like you, and they’re prepared to take action to prove it. These are your up and cross-sell opportunities.
On the other hand, a customer willing to actively condemn your business is a real threat to your future prospects. You need to act quickly to accommodate their needs, before they can defame you to potential future customers.
Those in the middle could go either way. As long as you meet your service obligations, these customers are safe. But you could always do better; by offering a personalized service and tailored rewards, you could convert these customers into promoters.
Part of the appeal of Net Promoter Score is how simple the NPS calculation is to execute. So, how is it done?
How to Calculate Net Promoter Score
The NPS Calculation is simple:
Net Promoter Score asks customers how likely they are to recommend a company to their friends or colleagues. Customers are asked to grade the likelihood on a scale from 1 to 10.
Those that respond with 6 or lower are detractors – they’ll damage the reputation of your business. Those who respond with 7 or 8 are fond of you, but unlikely to sing your praises. Those who respond with a 9 or a 10 are your ‘promoters’ – they’ll actively champion your business to others.
When you pose the question to customers, it’s common to accompany it with an open-ended ‘why?’ Your customers might not offer a response; unless they have something they particularly want to say to your organization. In these cases, any feedback is good feedback.
Collecting Net Promoter Score can be done over any channel, as long as you’re equipped with the right omni-channel surveying tools. Posing the question over email and web-chat is simple enough, asking over voice channels requires Natural Language Processing that will allow the customer to answer conversationally.
The simplicity of the NPS calculation is key to its popularity. A single score, brought into an intuitive, real-time reporting interface, can give you a complete picture of CX at a glance.
Net Promoter Score is certainly popular, and with good reason. But, it might not be the best fit in every situation. Is Net Promoter Score still the best choice when it comes to CX surveying?
Is Net Promoter Score Still Fit for Service?
Customer loyalty is difficult to pin down, and can change on a dime with service quality fluctuations. Net Promoter Score is no different; it tells you what your customers think, but not necessarily why they think it. Net Promoter Score might measure the customer’s attitude to your product, rather than their opinion on your Customer Experience. Without a comprehensive reporting suite, Net Promoter Score is just a number.
You need to be factoring in more than just Net Promoter Score:
Customer Satisfaction (CSAT) – The most common Customer Experience metric. This asks customers, ‘How satisfied are you with your experience’, who answer on a scale from ‘very satisfied’ to ‘very dissatisfied’. Overall, a score beyond 50 indicates that most customers are satisfied with their experience. A score above 70 is a major achievement.
Value Enhancement Score (VES) – A relatively new metric, VES asks two questions, ‘How successfully were you able to use our product/service?’, and, ‘How confident are you with your purchase?’ In answering these questions, the customer gives their opinion on both your business and the impression conveyed by your customer service.
Customer Effort Score (CES) – CES measures how much effort a customer had to put in to reach a solution to their problem. Friction within your customer service estate, confusion on the part of agents, or a failure to resolve a problem all lead to poor Customer Effort Score.
Each of these metrics provides insight into different aspects of your Customer Experience. Ideally, your customer service should be both efficient and high quality. Reaching this high standard is a different matter entirely.
CX KPIs Made Easy with storm®
Net Promoter Score provides a particular perspective on your customer base, and lays the foundation for a more tailored approach to CX. But, it’s not the only CX metric you need to be leveraging. To keep ahead of the competition, you need a complete reporting solution.
Content Guru’s CX reporting solution, storm® VIEW™, provides comprehensive, real-time, and historical Customer Experience reporting. Average Handling Time, Customer Effort Score, and endless customer metrics can be brought into a single pane of glass for easy access, or converted into secure, shareable reports.
Want to learn more about key Customer Experience metrics and contact center KPIs? Download Content Guru’s whitepaper: Keeping Up With the KPIs: The Contact Center KPIs Key to Outstanding CX.