A key business metric for any company is how willing customers are to recommend your product or service to others. One of the easiest ways to measure this is through a Net Promoter Score® (NPS). An NPS is an index that ranges from -100 to 100 and gauges the likelihood of a customer recommending you and your products or services. Using this score, offered by various software solutions such as Zendesk and Promoter.io, organizations can understand how to improve their customer satisfaction and grow their business via word of mouth.
The NPS is determined by asking customers a simple question: On a scale from 1-10, would you recommend this product (or company) to a peer? How they answer says a lot about how your business is performing.
The NPS scale can be broken into three main groups:
- Positive: A rank of 9-10 is a positive response; indicates customer will promote your product to others.
- Neutral: A rank of 7-8 is a neutral response; customer may or may not recommend your product.
- Negative: A rank of 0-6 is considered a negative response; customer will not promote your product.
A positive NPS can affect revenue in two ways. First, it indicates how likely customers are to be loyal and keep purchasing from you (it’s significantly less expensive to retain existing customers than it is to find new ones.) Second, the higher the number, the more likely you are to get word-of-mouth referrals. According to Word of Mouth Marketing Association (WOMMA) and the American Marketing Association, more than 60 percent of marketing professionals believe word of mouth marketing is more effective than “traditional” marketing.
Why Settle for Average?
NPS varies by industry and market, so it’s important to benchmark your score against your competitors and others in your field. Bain & Company, the inventor of the NPS system, suggests that a score between 5-10 is average for most companies (meaning they have almost as many unhappy customers as ones that are satisfied). A ranking of 50 to 80 is considered outstanding. Some well-known, high growth US companies in this coveted category are Amazon, Harley-Davidson, Zappos, Costco and Dell.
Achieving a great NPS ranking takes support from the top. This requires executives to understand the importance of customer service, use the NPS as a way to continually measure success and implement policies that increase this metric.
Be A Customer Service Leader
As an example, my company NetMotion Software has achieved and maintained an average NPS of 92 for over 4 years. How did we do it? First, we start with a stable product that is well tested prior to release. All software will have some issues, so being committed to solving them quickly is required.
Next, we ensure that our service teams are thoroughly trained and have the tools they need to succeed. This includes an automated CRM and cloud-based voice system for customer calls. Some would say that calling support is dead and deflection of calls to self-help resources should be used. Those channels have their place, but ultimately if a customer wants to call you, that should be a priority.
NetMotion has several KPIs around customer calls, such as answering calls in the first 30 seconds and resolving issues on the first call. In fact, the person who answers the call owns the issue until it is resolved. There is no passing off customer issues between support levels, so issues don’t have to be explained again. Customers appreciate the fact that they never lose their spot in the phone queue. Our staff only make plans to reconnect if they need to do more research to offer a solution.
Employee retention has also enabled our business to establish team consistency, which can be a key driver in customer service quality. Our work from home program has been a big part of that. This flexibility can save an employee time in traffic or provide the ability to live farther from a major city which allows for less expensive rent or homeownership. I personally support keeping cars off the road to promote cleaner air.
By design, the NPS is highly correlated with the customer experience. On average, customer experience leaders enjoy an NPS that is 21 points higher than the NPS of customer experience laggards. As an example, by being laser-focused on customer service, NetMotion has earned a 98 percent satisfaction rate and a 97 percent annual customer renewal rate.
Like every company, we get bad scores from time to time. When this happens, we immediately follow up. In fact, all dissatisfied customers are followed up within 24 hours. This is essential for quickly solving their issues and helping to turn their negative impression of the company around.
Steps to a Better NPS
Our relentless focus on high-quality customer service has created a self-perpetuating sales channel driven by word-of-mouth referrals. Businesses that want to improve customer service, and ultimately their NPS should follow these steps:
Step 1: Make customer service a priority. It should be a key business objective, with support from all levels.
Step 2: Use your competitors’ scores as motivation to improve (or grow your lead).
Step 3: Measure your NPS often and make improvements where needed.
Step 4: Talk to your customers. Ask what else you can be doing.
Step 5: Conduct a survey to get more in-depth information on negative and neutral scores.
Step 6: Build on what customers love; fix what they don’t.
An NPS is just a score. But there aren’t many other metrics like it that can directly impact your company’s bottom line in such a direct fashion.