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Net Promoter Score: Right Approach to Improve Customer Loyalty

Posted on the 07 June 2021 by Uplarn @UPLARN_MEDIA

Your business is nothing without your customers. Satisfied and happy customers become your loyal customers. Businesses need to know how happy their customers are so that they can provide a better customer experience. This can lead to increased brand awareness, customer satisfaction, order value, customer retention, and ROI.

Introducing Net Promoter Score (NPS) in your business' daily operations can help you measure customer loyalty. It also gives you useful information on your customers' thoughts about your products and services- like the benefits, the demerits, the lovers, and the haters. These details can be used to improve customer retention. Thus NPS can be one of your best customer retention strategies.

This blog is a complete guide to Net Promoter Score. It tells you what NPS is, how to calculate it, why it is important and lists some of the NPS best practices.

What is NPS?

Net Promoter Score is a benchmark that evaluates customer loyalty to a business or brand based on their feedback. It is a complex metric that tells you of your brand's customer experience quality, customer loyalty and satisfaction levels, brand sentiment, organizational performance, and growth potential.

Unlike other benchmarks that measure a customer's perception about a single purchase or interaction with your brand, NPS measures its overall sentiment about your brand.

How to calculate NPS?

You can calculate the NPS of your brand by surveying your customers on a single question- "How likely are you to recommend us to a friend?" Request to rate them on an 11 point scale 0 to 10. Once you receive the responses, categorize the respondents into the 3 groups based on their rating.

Categorize scores from 0 to 6 as detractors, scores from 7 to 8 as passives, and scores from 9 to 10 as promoters. Detractors are your unhappy customers, promoters are your most loyal customers, and passives are those "satisfied but unenthusiastic" customers.

Now, for calculating the NPS, disregard the passives, and subtract the percentage of detractors from the promoters' percentage. This is your NPS. This can range from -100 to 100. For instance, if 40% of the respondents were promoters and 10% were detractors, your NPS score will be 30 (40-10).

Why is NPS important?

Different facets of the NPS make it the right approach for working on your customer loyalty. Here are the important features of NPS that make it indispensable for your business.

  1. Do say a "thank you" at the end of your survey. This will let the respondents know that you are grateful that they took the time and effort to respond.
  2. Distribute your NPS survey through including different marketing channels , email marketing, web push notifications, SMS, etc., to have a wider reach.
  3. Attend the feedback, both positive and negative. This can improve your NPS in the future.
  4. Focus on both promoters and detractors. This will help you make the most of your customers.
  5. Keep measuring NPS regularly to get precise scores. This will help you know in real-time how customers are reacting to the changes you are introducing.
  6. Get a tool that lets you easily interpret your results through data visualization. For instance, the NPS tool helps you get deep analytics and insights to help reduce churn and activate growth.
  7. Get instant notifications of low scores. Doing so will help you to respond promptly in real-time.

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