Did you know that retaining your customers is 5-7 times cheaper than winning new ones?

There is an invaluable indicator which allows you to assess your customers’ loyalty and measure the likelihood of them recommending your products or services: the Net Promoter Score or NPS.

This proven measure has transformed the business world and now provides a baseline measurement in terms of customer experience management around the world.

NPS helps you to understand if your customers are likely to become regular buyers or not. It also helps you to identify the customers who are most likely to become your brand ambassadors and to tailor your strategy to further increase the number of loyal customers.

Let’s look at what NPS is in more detail, how to measure it, and incorporate it into your action plan.

What is the Net Promoter Score (NPS)?

Net Promoter Score (NPS) is an indicator which reveals how many customers are willing to recommend a product, service or business to other people. It is one of the most important KPIs that a business should follow as it gives a direct insight into customer satisfaction and brand loyalty. In conclusion, NPS measures customers’ loyalty to a business.

To calculate NPS, you need to run a survey to get answers to a single question: “To what extent would you recommend [the company/the website] to a friend, relative or colleague? ” with a score from 0 to 10.

Calculating the NPS therefore involves carrying out a survey with your customers. To do this, you might need an online questionnaire creation tool such as Survey Monkey, Typeform or Google Forms.

Calculating the NPS identifies three categories of customer: promoters, passives and detractors.

While it is obvious that a company must take care of these three customer types, each must benefit from a different relationship and monitoring with the brand.

Promoters

Score given: 9-10

Promoters are extremely satisfied and loyal customers who will definitely recommend your website/business to those around them. And it’s a fact, that there are fewer costs involved in managing a long-term relationship with loyal customers than in the process of winning new customers.

The promoter is essentially a true ambassador of your business. They should therefore benefit from offers that reward their loyalty, which will result in you strengthening the bond that unites you, while motivating them to share their enthusiasm for your products with their friends, on social networks or by word of mouth.

Passives

Score given: 7-8

Passive customers remain loyal to the brand until someone else better meets their needs, in terms of price, proximity, quality or variety of products.

It is clearly possible to turn passive customers into promoters by working on improving their customer experience. Listen to them, get to know them better and give them the answers they are waiting for. If you don’t take this step, your passive customers risk becoming detractors, which could have a negative impact on your image and your turnover.

Detractors

Score given: 0-6

Detractors are unsatisfied customers who will definitely not recommend your website/business to those around them.

Detractors dissatisfaction will inevitably have a negative impact on the business, which will see your repurchase rate decline. More costly management of customer complaints will also have to be put in place, which will need to be carefully and correctly managed, otherwise there is a risk of losing the customers permanently.

The best way to deal with detractors is to research why they have had an unpleasant experience and why they won’t recommend you. It is by collecting data on their feedback and dissatisfaction that you will be able to let them know that they have been heard, and you are going to do everything you can to give them greater satisfaction.

Why is measuring NPS so important for an e-merchant?

Assess Customer Loyalty

NPS goes beyond measuring customer satisfaction and determines how many customers are loyal to your brand. Satisfaction is nothing if they don’t come back, and your NPS is the best way to identify your level of customer loyalty.

Be sure to regularly implement the NPS measurement. This will allow you to check the effectiveness of strategies and actions that you have put in place and continually optimise them. Customers change but so do your competitors, so make sure you remain competitive in the customer experience you provide. You will give your customer more reasons to remain loyal to your brand and less reasons to go with the competition.

Identify areas of improvement

Collecting data is fundamental to understanding why customers recommend you (or not).

Without their comments, your NPS is just a score. Worse still, you don’t have any way of knowing what to change to improve your NPS score. Changing for the sake of it is ineffective and frustrating for your employees. Consider adding an open-ended question such as “Why have you given us a score of X? ” to get a more accurate idea of what works and what doesn’t work for your customers.

Set up marketing actions to optimise your KPIs

• Thank your customers for taking the time to provide feedback:  Their opinions matter, so don’t hesitate to let them know with a thank you message.
• Immediately request a recommendation: set up an automatic system for requesting and collecting customer feedback (Google Business, social networks) by sending a warm email to all your promoter customers. These are successful strategies which will contribute significantly to improving your online reputation. Strike while the iron is hot!
• after finding out who are your detractor customers and what their pain points are, show them that you have heard them and that you are going to implement improvements to satisfy them. Let them know by sending them a “Following your feedback” newsletter, or through a quarterly blog.
• Share the NPS results with all the staff in your company: this helps make your teams aware of the importance of maintaining customer relations. By putting this at the forefront, you will change the company culture and each employee will constantly have NPS improvement in mind. Thanks to NPS, it will be easier for teams to make the link between customer satisfaction, variation in turnover and feedback or complaint management.

In conclusion: collect, analyse, optimise

The more data you collect and analyse linked to your NPS, the better you will be able to understand how to improve your customer experience. This will allow you to prioritise your actions in order to have the greatest possible impact on your customers. Be sure to measure NPS at different stages of the customer journey.

Finally, get into the habit of sharing your survey results with the different departments in your business (sales, finance, marketing, customer relationship management) to ensure you roll out consistent and effective strategies.

By the end of this article, you will have a better understanding of the challenges and usefulness of NPS. If measuring NPS has become very common practice today in both large and small businesses, that is simply because it is an effective way of measuring your customer satisfaction! So, are you ready to give it a try?