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NPS: The Most Powerful Stat for Sales, Marketing and Service

Posted by Lisa O'Brien on Feb 10, 2021

In business, there’s rarely a magic bullet that determines whether your company will succeed or fail. But as a description of the Net Promoter Score (NPS), “magic bullet” is really not that far off. Introduced to the world in a 2003 Harvard Business Review article, this simple statistic explains differing growth rates between companies across nearly every industry. The upshot? If businesses can increase their NPS score, they will also accelerate their growth.

There’s nothing complicated about calculating your NPS score. Simply ask your customers, “On a scale of zero to 10, how likely are you to recommend us to a friend?” Once you have collected responses, categorize them according to their score: 

  • Promoters: 9-10
  • Passives: 7-8
  • Detractors: 0-6

Subtract the percentage of detractors from the percentage of promoters to get your NPS score. If you’ve got 30% who are promoters and 10% who are detractors, your score is 20 (30-10). If you’ve got more detractors than promoters, you’d get a negative NPS.

What’s a good NPS score? A negative score is a sign of a company that’s losing market share, so you definitely don’t want to be in that territory. But what constitutes a good score doesn’t have a clear cut answer, because benchmark scores differ greatly between industries. The average score for a software company is 41, while it’s 16 Internet providers, according to Delighted by Qualtrics. Whatever industry you are in, however, your focus should always be on finding ways to increase your own NPS score and not on how your score compares to your competitors. After all, you can’t control their scores — only your own. 

Collecting good data on NPS

Getting consistent, quality customer feedback is never easy. Thankfully, the NPS survey doesn’t require much time on the part of your customers, but it’s important to make sure you’re surveying the right people at the right time to get good data. 

For example, don’t simply survey your entire customer database. You want to make sure you’re targeting the right people, and your customer database of decision-makers may not cover the full range of people who will influence the company’s loyalty. For instance, if you sell an enterprise financial solution, you likely have the CFO and senior IT management on your list, but does it include the actual users who work with the software day-to-day? By the time their complaints rise to the C-level, it may be too late to address them.

Determining the right time to survey your customers is also important. If you’re an online retailer, the sweet spot might be after they’ve completed a purchase or immediately after they’ve received your product. If you sell SaaS solutions to enterprise customers, you might want to wait until they’ve had a certain number of hours of interaction with the product or survey them at specific time intervals post-deployment, such as quarterly or twice a year.

Whenever possible insert your questions directly into their experience with the product, which will be much more likely to get a response than a blind email query.  If that’s not possible, use whatever channel is your primary means of communication with your customer.

Finally, when you’re surveying your customers, don’t just ask the 0-10 question. This is an excellent opportunity to get qualitative feedback. The more questions you ask, the less likely customers will be to complete it, so keep the number of questions small, but some additional ones that you’ll probably want to include are:

  • Why did you give us this score?
  • What was missing in your experience with our product/service?
  • What do you value most about our product/service?
  • What can we do to improve your experience?
  • How can we make you a happier customer?

Strategies for improving your NPS score and accelerating growth

The foundational strategy for using the NPS score is to collect NPS data regularly and monitor how it changes over time. If your score starts dipping, that’s an early indication of customer churn, and you’ll need to take quick action to right the ship.

Of course, before you can do that, you need to know what needs fixing. The qualitative questions above can give you some guidance, but the best course of action is to reach out to detractors. Tie the NPS survey into your customer relationship management (CRM) system so that account managers can follow up to rectify the situation and gain additional intelligence before the customer leaves. It’s critical to understand exactly why they are unhappy and create a process for aggregating these findings. After all, for every customer that complains, another 25 unhappy customers remain silent and simply leave.

But an unhappy customer isn’t necessarily a sign that your company is doing something wrong. You may simply be targeting the wrong type of customer. Try segmenting your customers according to their NPS scores and see if there are significant differences between them. Are they facing different challenges? Are they using the same features? What problems are they facing in the product, and are these problems that you really want to fix? 

If you find that your detractors are significantly different kinds of customers from your promoters, then the best way to improve your NPS score may not be to change your product or shake up customer service. Instead, adjust your sales and marketing strategy to target customers who more closely resemble your promoters.

And don’t forget to market to your promoters once you’ve identified them! They’re great sources for referrals, case studies, and upsells. Happy, loyal customers will be much more receptive to additional solutions, so follow up to understand what additional challenges they’re facing that you can address.

This leads to the final use for NPS scores I’ll address here. Use your NPS responses and the qualitative data associated with them to identify new product opportunities. Some customers may be upset because you don’t solve a problem that your product was never designed to solve … but maybe a new product could!

NPS is an extraordinarily powerful tool for sales, marketing, and service. Those companies that collect NPS data regularly from the right people at the right time and then use it intelligently will be well on their way to accelerating their growth and success.

Want to learn more about determining and using your company’s NPS score? Contact us!

Topics: Marketing & Sales Analytics, Inbound Marketing & Lead Generation

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