16 Extraordinary Benefits of Measuring NPS® in Retail


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Net Promoter Score for Retail

The Retail arena is becoming increasingly competitive for a number of reasons. Firstly, online shopping has reached massive proportions and the number of people making their purchases online is only going to increase further. And for many products, there’s the facility to order from the click of a button from anywhere in the world. This means that online stores are competing with physical outlets as well, apart from other similar counterparts, which has resulted in a much smaller but more competitive battleground for retailers.

The result is that competing on product or price has become difficult nowadays, especially if you want to grow your business and actually make profits. And considering that many consumers are willing to pay more for a great experience, price isn’t even an issue. It’s all about the experience, making your customers happy in a way that they keep buying from you.

Determining how effective your business is at making customers happy is essential because, more often than not, brands have a tendency to overestimate just how pleased their customers are. This is why the Net Promoter Score® is so valuable.

It’s a system that allows you to quickly determine how happy your customers are, and it’s vital towards building a successful retail business. Read on to discover precisely why you should be measuring your NPS® on a regular basis.

1. Build Customer Loyalty

Building customer loyalty is essential in today’s retail milieu because consumers are literally spoilt for choice. A couple of years back, they might have had two or three brands to choose from. Now, though, consumers can just jump online and find a whole plethora of options in terms of brands, prices, and so on, which means that retailers must secure the loyalty of as many of their customers as possible so that they don’t have reason to go searching elsewhere.

One way to determine precisely how loyal your customers are is with the Net Promoter Score. Measuring customer satisfaction is no longer enough, and this system acknowledges that. You need to know how loyal your customers are to figure out how happy they really are!

Satisfaction should no longer be considered the end-game — the ultimate objective — because it indicates mediocrity. It should only be considered a stepping stone on your journey to building customer loyalty. Nowadays, consumers expect to be satisfied, but want to be happy, and are ecstatic when a company delights them. And your goal should be to delight as many of your customers as possible.

The advantage with NPS is that it’s one of the only systems that allows you to connect improved customer loyalty to business results. Thus, you can accurately determine how pleased your customers are by asking a single question and then, in a few months, you can run another survey to see if the changes you’ve made have had any impact on the customer experience.

2. Improve Customer Satisfaction

As we’ve already mentioned, satisfaction shouldn’t be the end-game. However, it is a stepping-stone and an important one in your journey to achieving customer loyalty. First, you must satisfy your customers before delivering delight.

The problem is that to achieve customer satisfaction, you have to know what customers are thinking, and that’s where NPS® comes in. It gives you the tools you need to determine how satisfied your customers are and then to keep improving until you increase the number of satisfied customers as well as their level of satisfaction.

NPS allows you to quickly measure whether the strategies you are implementing are working or not. This way you can make flexible changes wherever necessary and don’t have to make decisions that impact the customer based on gut feelings and assumptions. You have solid data to tell you whether you’re doing it right or not!

3. Convert more Customers into Advocates

Word-of-mouth advertising is one of the most effective promotional tools in any business’ arsenal. No tool is as powerful in acquiring new customers as recommendations from existing customers.

In the NPS system, those customers who are most likely to recommend your business/products/services to others are called advocates. And with NPS, you can discover just how many advocates you have among your customer base. Having an NPS of 50 means that half of your customers are willing to promote you and actively tell other people about your business/products/services.

If you use NPS on a regular basis, you can find out whether you are gaining more advocates or alienating them and can adjust your strategies accordingly. Remember, the more advocates your business has, the better your bottom line will be.

4. Generate Increased Customer Feedback

The most effective way of improving your products or services is to use the feedback you collect from your customers. NPS can be used to encourage customers to provide you with more feedback based on their scores. It will help you identify those customers with whom you need to establish a better connect to discover what their issues are and fix them instead of making process changes blindly.

So, make sure to take advantage and dig as deeply as you can into the issues that bother and displease your customers. Not only can you fix the problem, but you can also develop systems to ensure it doesn’t happen again to another customer.

However, don’t ignore your advocates either. Just because they’re happy with your products/services/business doesn’t mean they might not have issues too. Only that they could be smaller, but they may be problems that still need to be addressed. Also, don’t underestimate the potential of your advocates to provide you with great ideas that could turn a good product/service into a great one.

5. Lower Customer Defection Rates

Bain and Company, the creator of the NPS system, conducted some studies and discovered that advocates have lower defection rates than neutral or displeased customers. In other words, advocates tend to stay with a company for longer, which means they have a higher value than any other customer.

Considering that customer acquisition costs are high by comparison and are continuing to rise, minimizing the number of customers that jump ship is a very powerful way to grow your business. And since you know that advocates tend to defect less often, you can put more money and effort into converting those customers that are “Passives” and “Detractors” into “Promoters” instead of going all in into acquiring new customers.

6. Increase the Lifetime Value of a Customer

By using NPS®, you’ll have the data you need to help create more advocates for your business. The more advocates you have, the more money you will be making and the easier it will be to grow your business.

Statistics show that advocates tend to spend more than new customers, detractors or even passives. They also tend to be less price sensitive, meaning that a slightly cheaper option somewhere else won’t tempt them to defect. Likewise, a promoter will tend to have larger transactions on average, but they also cost less to sell and market to.

Advocates also help reduce acquisition costs and improve your lead generation efforts because they account for most part of referrals. So, the more advocates you have, the more referrals you gain.

7. Simple and Easy to Use

The NPS system is simple and easy to use, which means you’ll eventually need to allocate fewer resources to market research. Instead of trying to use a small net to catch everything under the sea and then have to throw back half the fish because they’re too small, you can target the exact fish you are looking for rather than the ones you assume customers have. You’ll also save resources because you’ll be working on fixing the problems that really exist.

Furthermore, its simplicity means that an NPS survey can be conducted regularly, so you know whether or not what you’re doing is growing your business. This means that you’ll waste less time with strategies that aren’t working. You’ll also save yourself from alienating customers because you’re taking the wrong approach to fixing their issues.

8. Quick Follow-Ups

Due to the nature of the system, NPS allows you to see the feedback from your customers almost as soon as it’s received. No need to spend days or weeks collating and analyzing data. You can see the results almost as soon as they come in.

This offers you an excellent opportunity to contact those customers who are displeased with you to discover exactly what is wrong. And because you acted quickly and proactively, you still have a chance to convert them into a promoter. Though you should always try to resolve a customer’s concerns, no matter how long it’s been, the quicker you act, the better your chances of winning that customer back.

Also, by quickly identifying customers’ concerns and problems, you can also address those issues on a business-wide scale to minimize the chances of the same situation occurring again and possibly losing you customers.

9. Integral Business KPI

NPS can be used as a key performance indicator for your entire business because it will tell you how many customers are likely to recommend shopping at your store to other people.

Considering that what customers experience when they shop from your store is often related directly to your frontline staff and their behavior, it makes sense to use NPS as a basis for establishing KPIs for these employees.

After all, your frontline staff generally represent the image of your business – or at least they should – and if they are passionate and engaged about the brand, then they will be able to treat your customers in the right manner. One vital aspect is being able to listen to your customers and someone who excels at customer service will be able to pick up on any underlying issues and address your customers’ needs.

And NPS can be used to discover how effective your frontline staff is but also help them understand where they need to focus their efforts more. The more tools and resources you provide your employees with, the better able they will be to offer your customers the outstanding experience they’re looking for.

10. Easier to Benchmark against Competition

The retail arena has never been more competitive. You’re no longer competing just against retailers in your area or town but with retailers from all over the world thanks to the internet, digital disruption, etc. And determining where you stand against the competition is crucial in being able to grow your business and increase market share.

This comparison is often difficult to carry out but NPS makes it much simpler and clearer. It’s a standardized system used by companies everywhere, which means you can benchmark your store against your competition. You’ll not only be able to track how you’re progressing versus your competitors over time but how this progress is impacting business results.

11. Highly Flexible and Adaptable

NPS can be used to measure various areas of your business because it’s highly adaptable and flexible. You don’t need complicated equipment or highly specialized personnel. It’s a simple system that can be used in your retail stores, but also for your back-end customer service and even to determine the engagement level of your employees.
It’s flexibility also resides in the survey methods.

You can carry out an NPS survey via email, phone, in person or via your website. Or you can use all the methods we’ve listed, depending on how your customers interact with you. The results can then be compiled and shared quickly, so everyone can see how well the business is doing and also how well each employee is doing, allowing you to make the necessary changes just as quickly.

12. Incredible Degree of Scalability

The NPS® system is also highly scalable, meaning that you can score a single department or store, or your entire business or chain of stores.

Need to find out how well your e-commerce store is doing, without involving your brick-and-mortar location? No problem. Own a chain of 30 stores and need to know how well each store is doing or how well stores in different geographical locations are doing? Again, not an issue.

Have a single store and need to find out how each product category is doing? It can be done with NPS. Are you running a new marketing campaign and need to know if it’s effective? Again, you can use NPS to find this out.

The idea is that the question you use for the NPS survey can be as broad or as narrow as you need it to be. NPS is so easily scalable because it’s something everyone understands. It’s a familiar idea that your entire business can get behind, with your entire team being on the same page, compared to other more complicated metrics that don’t have the same effect.

13. Strong Co-relation with Business Growth

Studies have established a correlation between NPS and business growth. Thus, the study conducted by Bain & Company involved the selection of relevant competing companies and then measuring their NPS utilizing identical methodologies and sampling techniques.

Relative Net Promoter Scores were then associated with organic growth metrics, which led to the discovery that in most sectors, NPS could explain between 20% and 60% of the organic growth rate variations between competing companies. Thus, a leader in NPS generally expanded more than two times faster than their competition. In other words, NPS can be used to predict how a company will grow in the future.

14. Lower Research Costs

Though research costs have declined significantly from the days when NPS was first launched, they aren’t exactly non-existent as many companies still choose to use the services of a professional market research agency. The Net Promoter Score, however, helps to lower these costs because it is simple enough to be done in-house without the need for external assistance. In other words, companies gain valuable insight at very little cost, making it easy to run the surveys on a regular basis, which is essential to staying competitive in the retail sector.

15. Higher Response Rates

The defining trait of an NPS survey is its simplicity. For it to be most effective, you should really only have one question present on the survey. However, even if you include a few more – and we mean a few more – it’s still a short and quick survey, which means higher response rates and more data for you to analyze and drill down into.

Higher response rates also mean that you’ll quickly be able to identify problems your customers are experiencing, and in the retail world, this is essential. The faster you can identify the issues and fix them, the lower your chances of losing customers to your competition. Because at times, all it takes is a few seconds to lose a customer!

16. Change of Mindset

This one is a little bit of a bonus, but very important. Measuring the Net Promoter Score will get your organization thinking from the customer’s point of view. In other words, you’ll stop focusing so much on just the sale and transaction and start concentrating more on customers and the experience you’re providing them, which might not necessarily be the one you want them to have.

It also helps you see how you are positioned in terms of future growth and will help you overcome the momentary temptation – we’re convinced it’s momentary and very temporary – of annoying your customers just to gain short-term revenues.

That’s enough number of reasons to adopt the Net Promoter Score system and build your own loyal fan base. So, what are you waiting for? Start your NPS journey right away!

Ganesh Mukundan
I'm a content marketer at Hiver. I've been writing about customer experience for the past 5 years. I'm passionate about narrating delightful customer stories, researching CX trends, and deep-diving into concepts such as VoC and Customer Journey Mapping.


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