The Net Promoter Score (NPS) is a metric used by businesses to gauge customer loyalty and satisfaction. It measures how likely customers are to recommend a company’s product or service to others. Here’s what your brand’s NPS reveals about your customers.
1. Loyalty and Satisfaction
At its core, the NPS reveals a litmus test of general sentiment among your customers. A high NPS indicates that you have many promoters, which can lead to organic growth through positive word-of-mouth and referrals. On the other hand, a large proportion of detractors can indicate potential churn or negative publicity.
Likewise, an upward trend, measured and compared on a monthly basis for example, can signal growth, while a dip should alert businesses to potential trouble.
2. Customer Segmentation
The NPS system categorises customers into 3 groups based on their responses to the question “On a scale of 0 to 10, how likely are you to recommend our product/ service to a friend or family?”
- Promoters (score 9 – 10): These are your most loyal and enthusiastic customers who are likely to recommend your product or service to others by word-of-mouth.
- Passives (score 7-8): These customers are satisfied but indifferent. They are ripe targets for competitors.
- Detractors (score 0-6): These are your unhappy customers who can potentially harm your brand through negative word-of-mouth.
Understanding which segments or groups are more prominent in your customer base allows you to gauge your brand’s overall perception and positioning in the minds of your customers.
3. Areas For Improvement
By following up with an open-ended question in your NPS survey, for example, “What is the reason for your score?” you can gain insights into why certain customers are detractors or passives. This can guide improvements in product offerings, customer service, or other areas of the customer experience.
For example, the feedback of the detractors can be invaluable. They offer a window into specific issues, be it product flaws or service lapses, which might be repelling customers. The ‘why’ behind their score is a treasure trove of actionable insights.
4. Benchmarking
Comparing your NPS to competitors’ or industry benchmarks can provide context about where you stand and your relative performance in the market.
For example, Passives, often overshadowed and neglected in NPS discussions, are crucial. They represent potential defectors—customers who might jump ship if a competitor offers a slightly better proposition. Tracking this segment can inform initiatives to fortify customer loyalty.
NPS is only but one metric…
The NPS is a powerful tool, yet it’s essential to remember that it’s only one metric that reveals valuable insights about your customers. To get a comprehensive view of customer sentiment, NPS should be used in conjunction with other qualitative and quantitative feedback methods.
It’s also vital to take action on the feedback obtained from NPS surveys; simply measuring without implementing change based on the feedback is a missed opportunity.
Related articles
What Is NPS (+Why It’s The Key To Customer Loyalty)
Beyond The NPS: A Multi-Metric Approach To Understanding Customer Loyalty