What is Net Promoter Score (NPS) and how to improve it?

Think!

Think beyond delivering just a service.

Address incoming queries with tangible solutions, minimize dissatisfaction and maximize efficiency. 

That’s how you stay competitive in the battleground called Customer Experience (CX). However, many companies have still not woken up to the reality that poor CX is eating their revenue and impacting their Net Promoter Score. 

For sure, there’s a disparity between customers’ expectations and the business’s strategy. 

 In 2021, approx 49% of consumers abandoned the brands due to poor customer experience.

A poor customer experience often turns into a mind set that xyz company do not provide a good customer service. 

That happens when businesses collect data but don’t put it to actionable use to make landmark decisions. 

Most services, especially those in a direct customer-facing vertical such as the contact centers, lack the needed education about the importance of measuring customer loyalty & outlook. 

In this discussion, we explain the Net Promoter Score/System (NPS), related strategies & their prolonged impact on the customer-business association. 

A. What is Net Promoter score (NPS)?

To put it simply, the Net Promoter Score is an index that measures customer satisfaction and furthers their loyalty in return for the service.

It’s like a 5-star rating system but with a broader scope to evaluate your customer’s opinion and intent.

This means, it evaluates a customer’s likelihood to re-subscribe and refer to more users.  

While 0 to 10 is the most popular scale, brands have been customizing it for -100 to 100+ as per strategy. 

 NPS score is not a one-time measurement, it’s an ongoing process. 

It’s important to keep track of the NPS score over time, to see if there is a trend and identify any issues that need to be addressed.

 It’s also important to use NPS in combination with other customer satisfaction metrics, to get a more complete picture of customer loyalty and satisfaction.

B. How to Calculate NPS?  

You conduct a survey of ‘x’ number of questions with 150 customers. The survey, most likely, is an objective questionnaire of rating the service on different parameters. 

Now, out of them, 100 customers participated in the exercise with their ratings. You get the following results:

• 10 customers rated the service between 0-5.
  These respondents, known as detractors, are dissatisfied with the service and may not continue with the service. 
• 50 customers rated the service between 6-8.
  These respondents, known as the passives, are somewhat satisfied with the service but have multiple complaints. 
• 40 customers rated the service between 9-10.
  These respondents, known as the promoters are your happiest customers. They follow you diligently, are loyal and recommend your service to more users. 

Bain & Company once conducted a landmark survey on customers of 362 services and exposed a shocking disparity. 

As per the findings, 8% of customers complained about the poor experience while 80% of the service providers were confident about superlative CX. 

The consulting firm, under the leadership of Fred Reichheld, introduced the NPS; a benchmark for business performance and a myriad of organizations are using it to better understand their customers. 

A very basic query results in answering this major potential question and that is:

 “How would the consumer endorse the product or services of an organization to other people?”

The simplest fact is that if a customer contends with the product then only s/he would recommend it to others. This fundamental thing elucidates whether the response of the customer is positive or negative. 

Likewise, poor feedback indicates that the consumer is least likely to recommend an organization, product, or service. 

C. Convert your NPS to leads 

A  successful NPS campaign provides constructive feedback to non-performing teams or individuals. Make sure to conduct NPS surveys on a recurring basis. Feed your teams with the latest and accurate data. Embrace automation solutions to calculate NPS insights, identify gaps quickly and take effective decisions.

Intrigued? We’d like to prove how Enthu.AI produces smart insights from your NPS campaign and pin-points the exact areas. 

D. key components of NPS

1. The question

The question used to calculate NPS is a simple, straightforward query that customers can easily understand and answer.

2. The scale

 The scale used in NPS is a 0-10 rating system, with 0 representing “not at all likely” and 10 representing “extremely likely.”

3. The calculation

 The NPS is calculated by subtracting the percentage of customers who are “Detractors” (those who give a score of 0-6) from the percentage of customers who are “Promoters” (those who give a score of 9-10).

4. The score

 The resulting score can range from -100 to 100, with a higher score indicating a higher level of customer loyalty and satisfaction.

5. The benchmark

 NPS is often benchmarked against industry standards, so companies compare their results to those of their competitors.

6. The follow up

NPS results are often followed up with open-ended questions to understand why customers gave the score they did.

This helps to understand and address the issue, improve customer satisfaction and loyalty.

E. NPS is a key metric to measure CX

 Talking about the vitality of NPS, we need to comprehend that knowing the exact status of NPS is important. 

NPS adds to the system, still, NPS alone cannot bring everything, so we need these supporting elements to accomplish the right result. These elements will highlight the need of possessing essential monitors for the performance of NPS.

F. Good and bad Net Promoter Score?

A good Net Promoter Score (NPS) is generally considered to be one that is positive and above 50. 

This means that a significant number of customers are likely to recommend the company’s products or services to others, indicating high levels of customer loyalty and satisfaction.

An example of a “good” Net Promoter Score (NPS) would be a score of 75.

This means that for every 100 customers surveyed, 75% would be considered “Promoters” (giving a score of 9-10 on the 0-10 scale).

Indicating that they are extremely likely to recommend the company’s products or services to others. 

While only 25% would be considered “Detractors” (giving a score of 0-6 on the scale), resulting in a positive score of 75.

As per PWC, 65% of customers find a positive experience with a service to be more impactful than their advertising campaigns. How huge is that? 

A bad NPS score is generally considered to be one that is negative or close to zero. 

This means that a significant number of customers are not likely to recommend the company’s products or services to others, indicating low levels of customer loyalty and satisfaction.

An example of a “bad” Net Promoter Score (NPS) would be a score of -50.

This means that for every 100 customers surveyed, 50% would be considered “Detractors” (giving a score of 0-6 on the 0-10 scale).

Indicating that they are unlikely to recommend the company’s products or services to others.

While there are no “Promoters” (giving a score of 9-10 on the scale) to balance out the Detractors, resulting in a negative score.

It’s important to note that an NPS score is relative, what can be considered as a bad score for one industry or company might be considered as good for another.

Therefore, companies often use NPS benchmarks to compare their results to those of their competitors.

G. How do you run surveys and collect customer feedback?

1. Email Survey

Sending an email to customers with a link to an online survey is one of the most common ways to collect NPS feedback. This method is cost-effective and allows for easy tracking and analysis of responses.

2. Telephone Surveys

Contacting customers over the phone and conducting a survey over the phone is another way to collect NPS feedback. This method allows for more personal interaction with customers and can provide more detailed information.

3. In-Person Surveys 

Conducting surveys in-person, such as at a store or event, is another way to collect NPS feedback. This method allows for face-to-face interaction with customers and can provide valuable insights.

4. SMS Surveys

Sending a text message to customers with a link to an online survey is a quick and easy way to collect NPS feedback. This method is convenient for customers as they can complete the survey on their mobile devices.

5. Online Surveys 

Creating an online survey on a website or social media platform is another way to collect NPS feedback. This method allows for easy tracking and analysis of responses, and also allows for customers to take the survey at their own convenience.

In addition, it’s important to make sure that the survey is designed in such a way that it’s easy to understand and complete, and that it’s accessible to all customers. 

It’s also important to set a goal for the survey, whether it’s to measure customer satisfaction or to identify areas for improvement, and to analyze and act on the data collected.

H. How to improve NPS? 

There are 7 certain ways to accomplish this goal.

1. Recognizing your current status

The initial step is to comprehend the existing state of your NPS program for this self-introspection. 

Next, know how far you are getting the benefit of the feedback given by the consumers, sometimes this feedback is not even noticed thus the efforts made in calling and asking for their feedback prove unworthy. 

Cover all vital points in the survey form and feedback formats and they are not confusing at all.

2. Bridging the gaps

From top to bottom, include everyone in the exercise. Ensure that the NPS earns participation from all levels, from top management to employees at the bottom of the hierarchy. 

Set the training for agents as per the findings from the NPS. To ensure optimal returns from the effort, circulate the findings to everyone including sales.

The customer care executives should also be a vital part of NPS and they must be encouraged by revealing that they are performing well and contributing constructively to the growth. 

A chain of events occurring like receiving the feedback back, connecting with the sales team, and even involvement of top management and front desk executives in the process is important.

3. Not ignoring the detractors

If you intend to have an NPS analysis then a major factor knows the reasons for low marking given by the consumers. 

Promoters are the customers with rating 9 or 10; a 7 to 8 rating goes for the Passives while a 0 to 6 rating essentially reveals that they are the Detractors. 

Comprehending the problems of detractors and improving them can help businesses grow tremendously. So ignoring the detractors is injurious to the health of a business.

4. Smarter root-cause analysis 

 As discussed in the beginning, most companies collect big data but don’t have the expertise to put it to actionable use. 

An NPS campaign may attract a diverse range of feedback on different questions from different types of customers. 

 Usually, this makes it difficult for businesses to consume the right data simply because they have too much of it. 

 AI can help here by instantly filtering the most important issues. 

 Enthu.AI for example consumes machine learning expertise to crawl through big data generated from the campaign and ultimately group the most important concerns. 

 This is a great hack to forward valuable feed to the trainers and their agents.

5. Kill the waiting period to avoid negative NPS ratings

Most often in call centres, there is a long queue of consumers, who are waiting to get their problems sorted out, this might annoy them and can negatively affect the feedback system. 

So the most avoidable thing is to keep them waiting and transferring calls un-necessarily to multiple departments.

Businesses are required to perform introspection and find ways to repair the flaws.

6. Designate the task well to strengthen NPS

Designation of the tasks effectively to varied departments makes the whole method more interesting but integrating the main outcome is also an essential task. 

Integrate various departments with one goal and they must be effectively given and trained for their tasks. 

This will no doubt boost up the NPS scoring and obtain the dividend.

7. Valuing the client

Consistency in providing solutions and achieving CSAT which is the contentment of the client is the main aim to set up the NPS system, thus the practical targeting is done as an initial step then setting benchmarks and reducing the response time. 

 Moreover, the intervals between sending surveys must not be too long or shorter and they must reach the persons who are using the products or services and the channels should be apt. 

8. Implementing AI solutions

Analyze customer interactions, identify pain points, and implement solutions to increase customer satisfaction and boost NPS scores with the use of advanced conversation intelligence software.

I. 12 point checklist to an effective NPS improvement strategy

 Making an efficacious strategy is a daunting task and it can be done effectively in the manner defined below:

1. Structure a personalized NPS survey and white label the form.
   
2.  Be punctual and set the time intervals and accountability for each task. NPS should not contain long conversations and interactions, till they are critically required.
   
3. Do it the right way and use the proper mediums like SMS, text, or email according to the individual needs.
   
4.  Never ignore any details like follow-up & queries, you must find out the real reasons why it is happening and should solve the problem there and then
   
5.  Review the VOC dashboard & monitor performance metrics. Find the detractors, passives, and promoters.
   
6.  Satisfying detractors by positively interacting with them. Always probe into the details of loyal clients and admirers. Look into their feedback.
   
7.  Notice high CLV customers and prompt them to respond, and address them individually.
   
8. Combine CSAT and CES with NPS to make it more effective. Integrate CSAT and CES (consumer electronics show) with NPS and even bridge the gaps which can delay the solution providing process.
   
9.  Converting slow responding customers to high responding customers, changing detractors into loyal customers, and remembering polite words can do a lot.
   
10. Remind everyone that unresponsive customers should not be ignored at all.
    
11. Monitor, review and check all the parameters that are strictly adhered to or not.
    
12. The levels from top to bottom are to be indulged and should be aligned with the organizational goal, sometimes call centers are treated as completely separate units which is not a robust way to deal with them. 

J. Global NPS for different sectors

In these insightful findings from Statista, NPS varied drastically from sector to sector.

While the training & education sector recorded an NPS of 71, others such as healthcare were as low as 24. 

Similarly in the telecommunications industry, an NPS of 30-35 is considered good, while in the healthcare industry, an NPS of 50-55 is considered good. 

The retail industry also has a relatively lower NPS compared to other industries.. 

NPS can also vary by region, with some countries having a higher average NPS than others. 

Other countries like Germany, France, and Japan also have relatively lower NPS compared to other countries.

What does this signify? External factors directly impact a brand’s NPS. It is also not incorrect to say that NPS evaluates your service’s performance in high-pressure circumstances.  

Conclusion

Net Promoter Score (NPS) provides a simple, yet effective way to gauge the overall perception of a company and its products or services. NPS is based on a single question that asks customers how likely they are to recommend a company to others. 

NPS compares a company’s performance with that of its competitors and measures customer satisfaction across different products, services, or departments.

By using NPS as a key performance indicator, companies can continuously strive to exceed customer expectations and provide exceptional experiences.

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Tushar jain

Tushar Jain is the CEO and Founder of Enthu.ai. In this free time he loves to read books.