What is a Net Promoter Score (NPS)?
The Net Promoter Score is a simple method to measure the customer loyalty of the organisation with one simple question. Customers answer the following question with a number between 0 and 10: ‘How likely is it that you would recommend our organisation to friends, acquaintances or colleagues?’ The resulting score, but especially the feedback given about the reason behind the score, is very valuable for a company, because it gives an indication of the loyalty of their customer base, and of potential growth. Growth is only possible if the existing customer base wants to stay with you.
Detractors / promoters / passives
As described above, the NPS score is calculated by asking the customer base the question: ‘How likely is it that you would recommend our organisation to friends, acquaintances or colleagues?’ Customers answering this question with a 9 or 10 are called promoters. Customers answering this question with a 0 to 6 are called detractors. The percentage of promoters minus the percentage of detractors = the Net Promoter Score, a number between -100 and 100. Example:
Why did Appical carry out an NPS zero measurement?
Appical is 5 years old now, and has a growing customer base. Six months ago, Appical decided to set up Customer Success as a separate department, underlining the importance of its customers, to put them first in the organisation. In October, I first carried out an NPS survey, to get a zero measurement, for the following reasons:
- If you really want to put your customer first, it is important to demonstrate the relationship of that customer with your company. If this is substantiated with figures and feedback instead of only your own gut feeling or assumptions, you can actually start building on the basis of the customer’s perception, and you really put the customer first.
- Growth potential: the final score gives an idea of the loyalty of your customer base, and of the growth potential of your company. It is a great KPI to use if ‘growth’ is one of the spearheads of your company. Without loyal customers, growing becomes quite difficult. If the score does not match your own perception of the company, it is important to align these first. You don’t want to make the wrong strategic choices, which can result in a higher churn rate instead of a loyal customer base.
- Double-check: if you know exactly why customers would or would not recommend you to other people, you also know what to work on to improve the NPS score. This is a great double-check for any plans you may have for the coming year, or a good starting point to write or rewrite those plans.
- For each department: the measurement is carried out for all customer journey phases, from sales to support. Apart from it being a great foundation to build the Customer Success team on, it is important that each department is aware of their impact on customer loyalty and satisfaction.
The ultimate goal of such a measurement is, of course, to increase the group of ‘promoters’ and ultimately improve your score. What has Appical done so far to improve their score?
- The results of the zero measurement is of great importance for the entire organisation. Of course, starting with the board, that is drawing up the plans for 2017. After presenting the figures to the board, and formulating action points, it is important to inform the rest of the team. It is great to see what the customer actually thinks of your team and how you can influence the score.
- As indicated above, you have to adjust the strategic annual plans to the results from the NPS survey.
- You really underline the importance of the NPS score by turning it into a central, strategic, company-wide KPI, and by including a target for improvement. At Appical, this is now a fixed element of our plans. Ultimately, it would have to be a separate KPI for each team, not just at a company level or for the CSM department.
- The strength of the NPS measurement lies in repeating it over time, to discover trends. Appical has therefore decided to carry out this survey periodically. If your customer base is large enough, you also want to distinguish in the various customer journey phases (sales, implementation, app launch, account management, etc.), to give the perception of the customer for each phase.
Conclusion: communication is key
Ultimately, proactive communication with the customer when improvements are made on the basis of the feedback they have given, is of the utmost importance. You can do this during 1-on-1 meetings, such as evaluations & business reviews, but also in mailings, newsletters or social media posts. If you don’t communicate, the customer won’t realise that their input is really used to improve things.