Background: Customer Satisfaction & Loyalty
Customer satisfaction is a key driver of customer loyalty. When customers are satisfied with a company's products or services, they are more likely to become loyal customers who continue to do business with the company and recommend it to others. Loyal customers are more forgiving of mistakes and are more likely to provide valuable feedback that can help a company improve its products and services.
Customer satisfaction is also important for business growth. Acquiring new customers can be expensive and time-consuming, while retaining existing customers is generally less costly and more efficient. Satisfied customers are more likely to make repeat purchases, which can lead to increased revenue and profitability. Additionally, satisfied customers are more likely to recommend a company to others, which can lead to new business opportunities and increased brand awareness.
What is NPS and Why is it Important?
NPS (Net Promoter Score) is a straightforward metric that measures customer satisfaction and loyalty by asking how likely they are to recommend your company to a friend or colleague. It's a valuable tool for businesses to understand their customers' overall relationship with their brand and identify areas for improvement.
The NPS Question:
"On a scale of 0 to 10, how likely are you to recommend our company to a friend or colleague?"
This question is designed to capture customers' satisfaction with a company and their willingness to recommend it to others. The NPS survey typically consists of two parts: a rating question and a follow-up question. The rating question is the NPS question itself, and the follow-up question allows promoters, passives, or detractors to provide context for their chosen NPS scores. This feedback can help companies improve their customer experience and identify areas for improvement.
Calculating NPS Score Results
To calculate NPS score results, follow these steps:
- Categorize responses: Responses are categorized into three groups:
- a. Advocates (scores 9-10)
- b. Neutrals (scores 7-8)
- c. Detractors (scores 0-6)
- Calculate the score: NPS is calculated by subtracting the percentage of Detractors from the percentage of Advocates, resulting in a score ranging from -100 to 100.
Benchmarking: Industry Averages for NPS
Here are some industry averages for NPS scores:
- B2B professional services: 50
- Industrial B2B services: 51
- Fleet management companies: 54
- Pest control organizations: 56
- B2B financial services: 57
- B2B manufacturing: 58
- B2B healthcare providers: 58
- B2B telecommunications: 60
- B2B transportation and logistics: 61
- B2B software and SaaS companies: 40
Implementing NPS in Your Business
To implement NPS in your company, adopt a survey mindset. Design all surveys in a way that captures true and transparent feedback. This feedback will serve as actionable data that you use to make decisions (changes to what we do, confirmations that what we are doing is right or wrong, etc.). The NPS survey is fairly simple and easy to implement. To get it done, follow these steps:
- Choose a method for collecting feedback: You can collect NPS feedback through surveys, online reviews (website collection tools like Qualtrics or Survey Monkey), customer interviews (third parties are best to facilitate this), and exit surveys (consider both digital and on-premises methods). Choose a method that is convenient and cost-effective for your organization.
- Analyze the feedback: Use the NPS feedback to identify areas for improvement, such as customer service, time to resolution, waiting times, and affordability.
- Take action: Use the feedback to improve areas needing attention. Communicate the changes to your customers and ask for their feedback.
- Monitor progress: Regularly measure NPS to monitor changes and evaluate the impact of improvement initiatives. Share this progress with your organization and allow your leadership team to take ownership of the results.
NPS is a useful tool for measuring customer satisfaction and loyalty. However, it's important to remember that NPS should not be used in isolation to understand customer sentiment. While NPS can provide valuable insights, it only measures one aspect of the customer experience. Therefore, it's essential to consider other metrics, such as customer satisfaction (CSAT) and customer effort score (CES), to gain a more comprehensive understanding of your customers' experiences.
If you need help driving more strategic marketing efforts to enable growth, consider working with a fractional CMO company like Thinksia.
We can help you implement an NPS framework and provide insights and recommendations based on your score results, as well as other metrics and factors critical to your organization's success.
We can help you implement an NPS framework and provide insights and recommendations based on your score results, as well as other metrics and factors critical to your organization's success.
