The definitive guide to Net Promoter Score
Posted: Wed Dec 11, 2024 10:23 am
Did you know that a simple question can predict your business growth? The Net Promoter Score (NPS) has revolutionized the way businesses measure and improve customer loyalty.
There are several factors that influence a customer when choosing a product or service. And one of the most important among them is customer reviews.
In fact, 91% of customers regularly or occasionally read online reviews, and list of peru whatsapp phone numbers % trust these reviews as much as personal recommendations.
So even if you do everything right, from having a great online presence to the best marketing strategy, a poor customer experience can negatively impact your business.
And according to an American Express survey, customers with a bad experience are more likely to spread word of mouth than satisfied customers.
This means that you need to constantly get feedback from your customers, identify their problems, and take corrective action to resolve them as soon as possible. Doing so ensures a second chance for your business with customers who had bad experiences and prevents such experiences for future customers.
Listening to your customers is the best way to understand what they like and dislike, and you can leverage this to optimize your business and improve its performance.
And the Net Promoter Score (NPS) is the best and easiest way to do this.
In this comprehensive guide, we will discuss what it is, its importance, how to calculate it, and more.
What is the Net Promoter Score?
NPS or Net Promoter Score is the measure of a business's ability to gain and maintain customer loyalty.
The Net Promoter Score focuses on the fair treatment of customers and employees. Unlike traditional accounting that focuses on short-term business gains, the NPS looks at the long-term picture.
It focuses on how well a business is perceived through the eyes of its customers and employees.
In simple terms, NPS is the business equivalent of the lesson most of us were taught as children: Treat others as you would like to be treated.
Walt Bettinger, CEO of Charles Schwab, the global financial services firm, says this about the Net Promoter Score:
“The beauty of Net Promoter is that it helps simplify complex problems and helps make the right decisions. It makes people ask themselves: Is this the right thing for our clients and is it economically appropriate for the company?”
Now that we know what NPS is, let's briefly review its history.
History of the Net Promoter Score
The NPS is the result of three entities:
Fred Reichheld – A business strategist specializing in loyalty marketing and loyalty marketing models
Bain & Co – A global management consultancy that provides business consulting services to public and private companies, as well as non-profit organizations
Satmetrix – An experience management software provider
The concept of NPS was first introduced to the world through an HBR article, “ The One Number You Need to Grow ,” written by Fred Reichheld .
The idea behind NPS was to replace the complicated process of conducting a typical customer satisfaction survey. Net Promoter Score simplifies the process to a single question whose answers can be used to determine customer satisfaction and, in some cases, employee satisfaction as well.
Types of NPS Surveys
Conducting an NPS survey is like climbing to the top of Everest.
There are several key aspects to this.
To make the best use of an NPS survey , you need to identify:
The right type of survey to conduct
The scenario for which the survey will be used
The question that will provide the most answers
Before setting up an NPS survey , you should be aware of the various types of surveys that are available to you. The two main types of NPS surveys are:
1. Relational Surveys
Surveys conducted to measure customer loyalty (or their positive relationship) with the brand are known as relational surveys .
These surveys ask customers about their overall experience when dealing with the brand, their satisfaction levels and suggestions for improvement. They are conducted on a quarterly, half-yearly or annual basis .
Example : A video-on-demand streaming service sends out a monthly survey requesting feedback on the quality of its service.
Transactional Surveys aim to investigate customer feedback for each transaction. The main purpose of this type of survey is to find out how to improve the customer experience.
Typically sent immediately or within a day or two after the transaction is completed, transactional surveys are suitable for businesses with a limited number of customer interactions and therefore limited opportunities to seek feedback.
Example : A five-star hotel looking for feedback from a guest who recently completed their stay. Check out our comparison of Transactional NPS vs Relational NPS
There are several factors that influence a customer when choosing a product or service. And one of the most important among them is customer reviews.
In fact, 91% of customers regularly or occasionally read online reviews, and list of peru whatsapp phone numbers % trust these reviews as much as personal recommendations.
So even if you do everything right, from having a great online presence to the best marketing strategy, a poor customer experience can negatively impact your business.
And according to an American Express survey, customers with a bad experience are more likely to spread word of mouth than satisfied customers.
This means that you need to constantly get feedback from your customers, identify their problems, and take corrective action to resolve them as soon as possible. Doing so ensures a second chance for your business with customers who had bad experiences and prevents such experiences for future customers.
Listening to your customers is the best way to understand what they like and dislike, and you can leverage this to optimize your business and improve its performance.
And the Net Promoter Score (NPS) is the best and easiest way to do this.
In this comprehensive guide, we will discuss what it is, its importance, how to calculate it, and more.
What is the Net Promoter Score?
NPS or Net Promoter Score is the measure of a business's ability to gain and maintain customer loyalty.
The Net Promoter Score focuses on the fair treatment of customers and employees. Unlike traditional accounting that focuses on short-term business gains, the NPS looks at the long-term picture.
It focuses on how well a business is perceived through the eyes of its customers and employees.
In simple terms, NPS is the business equivalent of the lesson most of us were taught as children: Treat others as you would like to be treated.
Walt Bettinger, CEO of Charles Schwab, the global financial services firm, says this about the Net Promoter Score:
“The beauty of Net Promoter is that it helps simplify complex problems and helps make the right decisions. It makes people ask themselves: Is this the right thing for our clients and is it economically appropriate for the company?”
Now that we know what NPS is, let's briefly review its history.
History of the Net Promoter Score
The NPS is the result of three entities:
Fred Reichheld – A business strategist specializing in loyalty marketing and loyalty marketing models
Bain & Co – A global management consultancy that provides business consulting services to public and private companies, as well as non-profit organizations
Satmetrix – An experience management software provider
The concept of NPS was first introduced to the world through an HBR article, “ The One Number You Need to Grow ,” written by Fred Reichheld .
The idea behind NPS was to replace the complicated process of conducting a typical customer satisfaction survey. Net Promoter Score simplifies the process to a single question whose answers can be used to determine customer satisfaction and, in some cases, employee satisfaction as well.
Types of NPS Surveys
Conducting an NPS survey is like climbing to the top of Everest.
There are several key aspects to this.
To make the best use of an NPS survey , you need to identify:
The right type of survey to conduct
The scenario for which the survey will be used
The question that will provide the most answers
Before setting up an NPS survey , you should be aware of the various types of surveys that are available to you. The two main types of NPS surveys are:
1. Relational Surveys
Surveys conducted to measure customer loyalty (or their positive relationship) with the brand are known as relational surveys .
These surveys ask customers about their overall experience when dealing with the brand, their satisfaction levels and suggestions for improvement. They are conducted on a quarterly, half-yearly or annual basis .
Example : A video-on-demand streaming service sends out a monthly survey requesting feedback on the quality of its service.
Transactional Surveys aim to investigate customer feedback for each transaction. The main purpose of this type of survey is to find out how to improve the customer experience.
Typically sent immediately or within a day or two after the transaction is completed, transactional surveys are suitable for businesses with a limited number of customer interactions and therefore limited opportunities to seek feedback.
Example : A five-star hotel looking for feedback from a guest who recently completed their stay. Check out our comparison of Transactional NPS vs Relational NPS