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Business Growth and Retention Using Net Promoter Score (NPS)

Net Promoter Score (NPS) is not just another metric; it's a strategic tool that has the potential to revolutionize how businesses approach customer satisfaction.

Customer Radar

May 01, 2024

Did you know that Net Promoter Score (NPS) is one of the most accurate predictors of business success? It makes sense really—the higher your business’s NPS, the happier your customers, and the more likely they are to return and recommend you to others. Net Promoter Score, commonly referred to as NPS, is a widely recognized customer experience and satisfaction metric used by businesses around the world.

At its core, NPS revolves around a single key question: "How likely are you to recommend our product/service?". This straightforward query is a powerful tool, as it classifies respondents into three categories: promoters, passives, and detractors. The single question used to calculate NPS might seem deceptively simple, but its implications are profound. This question serves as a litmus test for the overall customer experience, encapsulating everything from product quality and pricing to customer service and brand perception.


Promoters, Passives and Detractors

The beauty of NPS lies in its ability to categorize customers into distinct segments, each representing a different level of engagement and sentiment. Promoters are your brand advocates. They are genuinely passionate about your offerings and are more than willing to share their positive experiences with others. Harnessing the energy of promoters can lead to organic growth, as their advocacy serves as a powerful marketing channel that is both credible and effective.

Passives fall in the middle range. They are satisfied customers, but they lack the same level of enthusiasm as promoters. This group is less likely to actively promote your brand, but they can still be retained through consistent quality and engagement. However, this customer group shouldn't be overlooked. Passives can provide some of the most useful feedback and will often be able to identify minor issues about their experience that can take your business from good to great. 

Detractors are dissatisfied with their experience and are more prone to sharing negative feedback, potentially harming your brand's reputation. However, detractors are also a valuable source of feedback—when their concerns are addressed effectively, their dissatisfaction can be transformed into loyalty.


Calculating Net Promoter Score

The calculation of NPS involves subtracting the percentage of detractors from the percentage of promoters, resulting in a score that can range from -100 to 100. This score serves as a clear indicator of your brand's overall customer satisfaction and loyalty levels. More than just a number, NPS offers invaluable insights into your customers' sentiments and the health of your customer relationships.

The results of NPS surveys can drive meaningful improvements in your business practices and strategic decisions. Identifying detractors and addressing their concerns in a positive and proactive manner can lead to significant benefits for your business. By resolving issues and enhancing the customer experience, you not only prevent potential damage to your brand but also have the opportunity to transform a negative customer interaction into a positive outcome. This focus on customer-centricity can foster long-term loyalty, positive word-of-mouth referrals, and sustainable growth. In today's competitive landscape, leveraging the power of Net Promoter Score can be a game-changer for businesses striving to thrive and succeed.


NPS Makes Customer Feedback Easy, Enabling Retention

Retention really is the foundation of a healthy balance sheet for all businesses. Once you’ve got customers in the door, you need to provide a customer experience that will keep them coming back. Loyal customers are an important source of revenue - the probability of selling to an existing customer is 60-70% while probability of selling to a new prospect is much lower at 5-20%. Existing customers are also 50% more likely to try new products and spend 31% more, when compared to new customers.

Most unhappy customers simply leave your business, with statistics showing that 96% of dissatisfied customers don’t complain. Why? Because giving feedback isn’t easy. Most customers don’t want to fill out a 10-minute survey - and they certainly don’t want the stress and embarrassment of complaining face-to-face. Using an NPS platform for feedback makes it easy for customers. It can be done quickly and easily online - selecting a simple star rating and leaving a brief comment - without the awkwardness of a face-to-face interaction that is the hallmark of in-person complaints. 

Making customer feedback easy may mean that you hear more complaints about your business, but it also means you’ll get the opportunity to address them. In fact, 67% of customer churn is preventable if the customer issue is resolved in the first engagement. So yes, nobody likes to hear complaints  - but imagine being able to retain two thirds of the customers that were about to leave your business forever? Better yet, imagine being able to prevent that same issue becoming a problem for future customers? That’s the beauty of customer feedback. 


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