Achieving loyalty-driven growth using NPS framework in B2C companies

Net Promoter Score (NPS) has gained reputation as the best way to gauge and improve on customer loyalty and advocacy. Higher the NPS score, the better the probability that companies grow organically through repeat purchases and referrals.

NPS is a simple, a two-question survey put forth to customers. The questions are:

  1. How likely is that you would recommend {brand name} to a friend or colleague? (0 to 10 scale)
  2. What is the most important reason for your score (text entry)

Respondents are grouped into three buckets based on the answer to the first question as follows:

Promoters: Respondents who gave the score of 9 or 10

Passives: Those who gave the score of 7 or 8

Detractors: Those who gave a score between 0 and 6

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Then, NPS is derived as:

Net Promoter Score = % Promoters – % Detractors

While the first question in the survey gets the most attention from stakeholders because it generates the score, the second question (also called “verbatim”) is equally important because it makes the NPS framework actionable so you can improve the business.

Designing NPS survey

There are two kinds of loyalty survey methods:

Transactional: The survey is put forth immediately after a purchase or customer support contact

Periodic: The survey is sent few times a year to a sample of customers to get overall sentiment

Our interest here is Periodic surveys.  Transactional surveys are just that – to make improvements in transactions, but does not tie to the big picture. Periodic surveys enable customers to stand back and assess your brand holistically. Therefore, this is the type of survey we are interested in the most.  Therefore, the discussion here is entirely focused on periodic surveys.

Other things to note:

  • It is important to stick to the original wording of NPS questions. Some practitioners tend to deviate from the original wording (example: “How likely are you to buy from us in the future”). Such deviations change the nature of survey completely and defeat the underlying theories behind NPS.
  • Keep the survey short. Some companies try to add other questions into the NPS survey. If other questions need to be included, try to minimize the number of such questions. Also, make sure NPS questions are provided first so they will get the maximum number of responses.

Selecting Recipients

While selecting the survey recipients, it is important to note the different segments you want to report NPS results. The following segments are recommended:

  • Overall population of customers
  • Top customers (based on your definition of top customers, say top 5% by purchase amounts)
  • New customers (who were acquired in the last month, last three months, or other period based on your definition of “new customers”)

Sample sizes in each group need to be large enough to provide high degree of confidence in the results. Separate samples of top and new customers are not needed if there are sufficient numbers in the overall population, but it often is not the case because their population sizes are small.

Frequency and methods

NPS surveys should be conducted at least once a year and ideally up to four times a year.  More the frequency of NPS surveys, more chances you get to use the feedback to further improve your business.

The surveys can be done by email first, and if not enough responses, use phone to supplement. (We don’t recommend in-app or similar channels because it becomes more transactional in nature.)

Tips for Presenting

In addition to providing NPS scores, it would be useful to provide actual representative answers for Question 2 (verbatim) for Detractors, Passives, and Promoters. This will make the survey more “real” to the audience.

Many of the verbatim responses tend to be similar. You can group similar responses by creating categories. Ideally these categories roll up to key decision makers who can take corrective actions (example: Product, Customer Support, Engineering, and Marketing).  Also, estimating proportion of comments by categories, say for Detractors, will provide strong clues on what areas need the biggest improvements.

It will be very useful to present trends in NPS scores over time.  This will give perspectives on how various efforts are paying off. Looking at trends is much more useful than comparing NPS scores of other companies and industry benchmarks. In the end, the goal of NPS framework is to help improve your business practices and earn stronger loyalty from customers.

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Posted by HireJar Staff

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