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5 Net Promoter Score strategies for business transformation

Posted by Perceptive Insights Team - 10 August, 2016

Here, we list five Net Promoter Score strategies for business transformation that, if used correctly, literally can change your business. They help boost your profitability and customer retention over time, see if you can implement these straight away.

Why do the most successful businesses in the world use NPS?

Because most customers who have a problem with your product won’t actually tell you about it. It’s a scary thought but in fact, a study suggested that on average for every customer who complains about an issue, there are 26 who don’t say anything; they simply leave.1

 

1. Segment your customers wisely

Your strategy should be to segment your data based on the feedback (Promoters, Passives, Detractors.) But the real power comes from additional segmentation by metrics that are specific to your business. For example, a good idea is to segment your users based on tiered pricing plans. You might be able to discover a discrepancy in score and sentiment between different user types. This will help you focus your energy on the right customers.

By thoroughly analysing the data, you’ll be able to identify opportunities for better marketing and potentially predict, and prevent, your customer churn. Many Fortune 500 companies use similar data to target customers who are at a high risk of leaving. Here's a great quote we love from The MIT Technology Review:

The success of many companies increasingly depends on how wisely they can mine data about their customers’ behaviour and respond accordingly.

Did you know these 5 Net Promoter Score℠ strategies for business transformation?

More promoters equal more referrals

The reasons for identifying your promoters are clear. Here’s a snapshot, courtesy of Bain & Co: 

  • Promoters have a higher customer lifetime value as they churn less (these are the ones you want to leverage).
  • They spend more than detractors (no surprises there), and they’re interested in new offerings by using one supplier only (there’s that loyalty factor again)
  • Promoters are less price sensitive, so they’re not always looking for ‘the best deal’, therefore you’re able to up sell more premium products to this bunch.
  • They usually cost less in regards to selling, marketing and advertising.
  • Promoters account for as much as 80-90% of referrals.
  • A Bain study of affluent banking customers, for example, found that promoters are worth an average $9,500 more to a bank than detractors.2

 

2. Focus CX on your revenue peaks

If you’re anything like the majority of companies, most (80%) of your revenue will come from a small portion (20%) of your customers. This is referred to as the 80/20 rule.

Of course, you’ll always want to create a great customer experience (CX), but the 80/20 rule is a good reason you might want to think about how you treat different tiers of your customers.

By comparing your customers’ NPS scores with their actual revenue value, you’ll get useful insights, as you’ll see the vast differences between your group of 80% and the rest.

 

Roll out the red carpet for your VIP customers

Your 20% of customers might become your VIP group, as it’s likely they invested their dollars in your business because they found your services valuable. You’ll want to create an exceptional and personalised customer experience for this group. 

Your marketing strategy should involve promoting special offers and sending targeted emails and newsletters to just this group. This way, you’ll have a better chance of gaining their loyalty long term, and boosting your positive your word of mouth. 

On the flip side, if you’ve noticed that your staff spend a lot of time managing customers that don’t spend a lot but require a lot of time and effort to maintain. Worst-case scenario, you might have to let those customers go. Do the math: how much service should your lower spend customers receive?

 

3. Leverage the powers of your promoters

Think about your promoters as your superheroes – they’ve got the power to influence others (they do, not you). You just need them to activate it.

Many companies focus only on taking care of their detractors, so the nature of their customer care will be reactive, instead of proactive. Of course you will need to keep saving your most-at-risk customers, just don’t forget the power that positive word-of-mouth can have to generate new sales.

A great way of getting your promoters to start talking to you is to incentivise them through exclusive offers and sales, exclusive access to events, freebies,– much like your VIP group in the example above. Also remember to promote your social media channels and forums where so your promoters can voice their opinions.

When you have positive word of mouth working for you, this will be cheaper than activating traditional marketing. 

 

 4. Keep NPS center stage

When you start using NPS as a part of your customer experience strategies, and in order to keep it constantly effective, you need to keep it the absolute center of your business initiatives. This can be a hard nut to crack, as it’s often something that’s siloed and confined to a certain team.

It’s easily done that once you’ve activated your customer experience strategies, even if it’s at one point is the core focus of your business, it’s then put on the back burner. This especially happens when companies are comfortable with using it and it’s become business as usual. 

What’s the risk in this? Ideally, in order for it to be fully effective, NPS and customer experience should be a company-wide practice, otherwise it is simply a one-person or one team initiative. If your whole company works towards the same goals, it is a joint effort with more staying power. What’s the solution?

The initiative needs to come from the top—your CEO needs to be the main ambassador for customer experience.

 

5. Track changes in your customers' perceptions over time

Sending out just one NPS survey will give you a “static” Net Promoter Score, which is great as you can compare your company with other companies and industries. 

However a natural circumstance is that your customers often change their opinion over time meaning that your score also changes regularly. Therefore, ideally NPS surveys are better conducted continuously. You should identify your most important customer touch points (an f example is if a customer has just bought one of your products) then use those instances as a trigger to conduct your NPS surveys. By doing this you can quickly offer to help dissatisfied customer or to benefit from a satisfied customer by using their satisfaction as a promotional tool for your company.

 

To learn more about how to leverage your Net Promoter Score (NPS) get our comprehensive ebook below. It will give you all of the insider info you'll need! 

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1. Lee Resources International
2. Loyalty Insights, Net Promoter System

Topics: Brand Health


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