NPS – customer loyalty score

We have already talked about the importance ofcustomer experiencefor business development. It helps understand how customers view the company, what weaknesses need to be addressed, and how to optimize processes to make customer interactions convenient and comfortable. Marketing metrics such as NPS, CSAT, and CES are used to analyze a company's customer experience. Today, we'll look at another one: NPS, which measures the customer's loyalty to the company and its products.

NPS – customer loyalty score

The term Net Promoter Score and the formula for measuring customer loyalty were proposed in the early 2000s by business strategist Fred Reichheld. This metric measures the likelihood that a customer will recommend a company to their friends.

NPS -NPS is a metric companies use to measure, evaluate, and improve customer satisfaction. It differs from other customer sentiment metrics in that it measures customers' overall attitude toward the brand.

There may be many survey options: a questionnaire posted onwebsiteThis can be done through company or social media channels, email or SMS campaigns, post-purchase phone calls, or in-store surveys. It's important to survey customers who have recently interacted with the company.

You can calculate the NPS of not only customers but also employees to understand their mood, as this in turn affects the quality of customer service.

How to determine the customer loyalty index

Create a survey and ask your customers this key question: "How likely are you to recommend us to your friends? Answer on a scale of 0 to 10."
Depending on the respondents' answers, divide them into categories:

a.0-6 pointsNPS detractors are dissatisfied customers who may not only leave on their own but also share their negative experiences with others, damaging the business. On the other hand, detractors are important because they help identify problems and weaknesses.

b.7-8 points– passive NPS or neutrals. They can become advocates for your business or switch to competitors if they offer better terms. They stimulate the desire to make another or multiple loyalty program purchases, such as "fifth coffee free."

c.9-10 pointsNPS supporters or promoters are loyal customers. They will tell others about your business and bring in new customers.

To determine your Net Promoter Score, ignoring neutrals, subtract the percentage of detractors from the percentage of promoters.

For business growth, an NPS score must be above zero. This indicates that the number of positive customers outweighs the number of detractors.

Let's say you surveyed 100 customers. If 30% of them were detractors and 50% were promoters, your NPS would be 20 (50% – 30% = 20).

By regularly surveying customers and understanding their attitudes toward your business, you identify risks and look for ways to improve the customer experience. It is recommended to provide customers with the opportunity to comment and leave reviews. By analyzing comments, you can identify customer pain points and address them promptly, improving the customer experience.

Questions with answers on a scale of 0 to 10 are quantitative feedback. There's also the concept of qualitative feedback, obtained through follow-up questions that answer the "why" question. You can also ask open-ended questions about customer experiences, the company's products, or services.

NPS questionnaire questions might look something like this:

1. On a scale of 1 to 10, how likely are you to recommend the company's products to your friends?

2. On a scale of 1 to 10, how likely are you to recommend our company to friends and acquaintances as a place to work?

3. What was the reason for this assessment?

4. What changes would help improve your experience?

5. What upset or disappointed you about your experience working with us?

The first two questions relate to quantitative assessment, and the following ones to qualitative assessment.

NPS survey tools

There are many tools available for creating, conducting, and analyzing NPS surveys. Let's look at a few:

Survey Sparrow– multichannel software for creating surveys and evaluating responses. The platform allows you to transform surveys into chats for conversations with clients, making them more dynamic, which can increase survey completion rates.

Survey Kiwi– is a survey and form builder that allows you to share NPS surveys and forms with your customers viaSMS,email, social media, or messaging apps. The NPS survey feature allows you to easily set up your survey and receive notifications when responses are submitted.

CustomerGauge– software that offers automated survey creation tools. After sending surveys to clients, you can view, analyze, and share response data through an internal dashboard.

A study conducted by Customer Gauge found that B2B companies and small, customer-focused businesses are the most effective at using NPS metrics.

Customer loyalty is considered an important indicator of a company's success. Brands with high NPS scores are favored by investors. Furthermore, there is a direct correlation between a company's market capitalization and its customer loyalty.

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NPS – customer loyalty score