Net Promoter Score (NPS) is a customer satisfaction metric or benchmark that determines how likely your clients are to recommend your products, services, or brand to other consumers.
It is a typical benchmark most profit and non-profit organizations measure to determine and significantly improve client loyalty.
Keep in mind that NPS isn’t the same as other metrics such as client effort score or client satisfaction score. That said, NPS measures a client’s overall sentiment about a brand rather than the customer’s perception of a single purchase or interaction with your brand. You can also understand your employees’ happiness and satisfaction using net promoter score (NPS). Here are other reasons NPS is important for your organization.
NPS measures client loyalty
NPS helps brands to evaluate client loyalty and their likelihood to recommend your brand to other consumers. Also, it helps determine the likelihood of clients churning – failure to renew subscriptions, repurchase, and seeking out services or products from another brand.
Multiple surveys have revealed that it is cheaper and profitable to retain customers than to attract prospects and convert them into customers. A recent study done by Bain & Company showed that an increase in client retention of 5 percent could increase a business’s profitably by 25 percent to 95 percent. As much as you want to attract new clients, it is equally important to empower and retain your current clients. This client management approach is associated with higher ROI.
Measuring and evaluating NPS over time allows companies to identify the clients at a higher risk of churning. Understanding your customers’ perceptions and satisfaction level could help you identify what needs improvement. Remember, excellent customer service and excellent product or service quality can help you retain clients for as long as possible.
Uncover ways to improve
Suppose your customers answer the NPS query with a zero or low score. Well, it is challenging when that happens, particularly if it happens frequently. However, it also presents a chance to zero in on your client feedback and make the necessary improvements to your products or services. For example, if your customers are not happy with having to pay using only one payment method, you may want to introduce other options. This can make a big difference.
It is recommended to design your NPS survey with enough space for customers to leave custom feedback or comment about why they awarded a specific score. Indeed, this is your opportunity to evaluate qualitative client feedback about consumers who might point out specific aspects that need to change to improve customer experience.
Not all feedback is genuine or helpful. There are always trolls on the internet. However, specific comments about poor client experience, bugs, or a bad phone call with the client success manager can be quickly routed to the right team to address.
Complements referral marketing
Client NPS can give your business an insight into how likely they are to get recommendations from satisfied and happy clients – which, as it turns, carries a lot of weight. A recent survey showed that more than 80 percent of happy clients are willing to offer recommendations. Besides, referred clients have a 16 percent higher lifetime value and somewhat greater return on investment than others.
Business organizations can successfully harness the power of effective referral marketing by requesting their clients for testimonials, online reviews, and case studies to attract, convert, and retain new customers. Keep in mind that referral marketing is a form of symbiotic arrangement between customers and brands. But you need to ensure you have happy clients first. NPS results can help your business identify those clients.
NPS makes it easier for you to prioritize reaching to the detractors
Generally, detractors are NPS survey respondents between 0 score and 6 score, indicating they are less likely to recommend your service, product, or brand to other consumers. Just as investing in marketing can increase business performance, reaching to detractors is equally is essential. It could be a matter of misunderstanding that you can easily address.
It is essential to mention that customers can give low NPS survey scores because of bigger-scale complaints you alone cannot solve. However, by following up with unhappy customers, you can make them feel valued and heard. That means they are likely to churn or tell other consumers not to buy from your company.
NPS can help your business grow better
After analysing NPS data and finding happy promoters, do not stop there. Initiate healthy conversations with happy clients and try to engage them in your company’s referral programs. This is one way of getting more customers.
Importance of Net Promoter Score (NPS)