Your Net Promoter Score (or NPS), can be summed up as a measurement of how likely a customer is to recommend your business to a friend. Businesses ask their customers the familiar question: “How likely are you on a scale of 0-10 to recommend our products or services?” Customers who indicate 0-6 are called detractors, 7-8 are neutral, and 9-10 are known as promoters. Subtract the percentage of detractors from the percentage of promoters to reveal your NPS. Here is why NPS is an important measurement for your business.
Word-of-mouth is a powerful tool for businesses and NPS can show you whether the talk is positive or negative. There is no marketing campaign a business can launch that will ever outshine a trusted recommendation from a friend. The same logic can be applied to online review sites – the first step in the decision making process for many people. After identifying the promoters in your customer base, encourage them to leave a review of your business. Their positive reviews signal to others that your business is trustworthy and values customer service.
Research has proven that referred customers provide a greater ROI than other customers –16% over the customer’s lifetime. This is likely explained by the fact that referrals arrive in your office with pre-established trust in your business, trust that you would typically have to earn with other customers. These customers are also likely to be more receptive to upsells of other products and services that you may offer. Your NPS can help bring in more referrals by identifying promoters and leveraging their customer satisfaction to your benefit.
Customer churn is a problem that businesses of all sizes deal with everyday. Disappearing customers can be a tough blow to your business’ morale, particularly for small businesses. NPS is useful in combating churn because it allows you to identify and reach out to your detractors. Following up with those unsatisfied customers will make them feel heard and appreciated, which is usually enough to prevent churn. Resolving these issues also helps to turn a detractor into a promoter. By using NPS, you can identify the root cause of churn and stop it before it happens.
First-class customer service is one of the main goals of all businesses. NPS will help your business reach that goal by showing your your business the path forward to improve and maintain customer satisfaction.