If you're new to the concept of Net Promoter Score (NPS) and are not sure what benefits it has or why it is a better business metric than the ones you’ve used until now, you're not alone. To help you navigate this new metric, here are five reasons why NSP is good for modern business.
What is NPS? Read: Leverage Net Promoter Score—the one number you need to grow
1. Customer loyalty: the likeliness to stay or leave
If a customer is happy with your products and services, they’re more likely to stay your loyal customer for the long term. And with costs ranging between five and 25 times more to acquire a customer than to retain one, long term, repeat customers are critical to ongoing business success.
This is what NPS measures: customer loyalty. It establishes how likely customers are to recommend your product or service to another person, and as a by-product, the reputation of your business.
Related content: How do you calculate a Net Promoter Score?
2. Business performance and potential growth measures
NPS is a comprehensive system that can make a massive impact on your business’s growth. It provides a true metric to gauge performance. By that, we mean honest feedback from customers. You find what they really think, not what marketing thinks they do.
Moreover, since NPS reveals your potential for repeat business and word-of-mouth referrals, it also acts as an indicator of future growth. According to Bain & Co, businesses with the highest NPS scores in their industry outperform their competitors two-fold.
A good NPS usually ranges between +30 to +40, however what is considered "good" varies from industry to industry. Anything between +50 and +80 is considered outstanding.
A low score, usually anything less than 0, is a red flag. It’s a sign that your business has more detractors than promoters, and that you probably are plagued by customer experience issues.
Read more: What is a good Net Promoter Score?
3. Real, actionable feedback to improve business
With the right NPS system, you can delve beyond your score. Introducing additional questions in your surveys can prompt customers to elaborate on why they ranked you as they did and provide, fast, actionable insights to help you improve your business.
A major benefit of this is the ability to identify unsatisfied customers—the “detractors” who are unlikely to return to your business. Providing a means for your detractors to give feedback can help you identify the critical issues that are causing customers to turn away from your business. You might even tempt them back once the issue is fixed. More importantly, getting and acting on this feedback means you’re less likely to lose other customers down the track, and your future revenue is protected as a result.
4. Finding and leveraging promoters
Word of mouth plays a major role in modern buying behaviour, especially on social media. According to Nielsen, 88 per cent of consumers trust most the recommendations from people they know above all other forms of advertising.
With NPS you can find your promoters, the ones who love your business and are willing to tell the world about it. And through them, you can increase your positive word-of-mouth and grow your business through referrals.
If someone scores you a 9 or 10, capitalise on it! Ask for a testimonial, or prompt them to share your business on social media.
Don’t have time to contact customers?
Online customer experience platforms, such as Customer Monitor, can automatically do this for you. At the end of your customer surveys, thank your customers for their feedback, ask for a testimonial, and provide some pre-written content they can easily share on Twitter or Facebook. They’ve already said they’re willing promote your business, so you’re just making it easy for them to do so.
5. Competitor and industry benchmarks
NPS is a globally recognised system, which makes it easier to benchmark your business against competitors and track your progress over time. And because companies around the world use it, there’s ample data to provide reliable industry benchmarks that you can measure your performance against too.
Learn more about NPS industry benchmarks in Australia and New Zealand.
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