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Few business owners are content with maintaining status quo, and always have an ear to the ground for new growth strategies or indicators of future performance. One metric, the Net Promoter Score, is gaining popularity as the team’s foundational focus to gauge the health of their products and services. Given its importance, we’ve outlined below the basics of how it works and three reasons your business should monitor your NPS.
How Is It Calculated?
At its core, the NPS is a feedback mechanism in which users or customers are asked to evaluate the how likely they are to recommend a given product, service, or brand to those in their network. Those who respond are grouped into three categories based on their enthusiasm on a 1-10 scale: Promoters, Passives, and Detractors.
Those ranking a 9 or 10, the Promoters, are champions of the brand, advocating strongly for it and helping the business through referrals. In the middle of the spectrum, Passives rank 7-8 and are those without a strong tie, making them likely to hop between competitors and basing allegiances around short-term cost or features. Lastly, the Detractors exist anywhere from 0-6 on the scale and represent those who might actively dissuade other prospects from trying your service.
The NPS itself is calculated by subtracting the percentage of folks in the Detractor end of the range from those 9s or 10s who are Promotors. So now that you know how it works, how do we put it to use?
Because NPS feedback can be solicited through email campaigns, within a platform, or by social media, scores can be collected in real time, rather than at fixed intervals periodically. Making it easy for customers to provide information on their experience in real time provides more opportunities to capture data, and this data can in turn be used to inform decisions.
These timelines are important because a new feature or service change causing a drop or uptick in NPS from that point forward is a clear indicator of how smoothly that initiative was rolled out, or whether it was seen as an improvement to the offering. It’s important to not overreact, because even if no changes are made in response, scores sometimes level out shortly thereafter, indicating folks were simply adjusting to the change. Keeping tabs on these fluctuations and responding accordingly is a great way to either capitalize on momentum or right the ship before things get too far off course.
Create A Dialogue
Perhaps the best part of collecting NPS data is the ability to interact with those who take the time to submit their feedback. Customers who voice their opinions (good, bad or otherwise) are customers who want to be heard. Acknowledging their criticisms and thanking them for their praise helps humanize the frontline of the business, and goes a long way toward actually boosting the NPS in the long run.
Reaching out to a Detractor quickly to solve a problem can help keep them from bad-mouthing your reputation, and connecting with someone who’s Passive provides an opportunity to further improve a mediocre experience, possible moving them into Promoter territory.
Expansion Across the Business
When fully adopted, NPS is an opportunity not merely to measure feedback, but create campaigns, initiatives, and even employee roles dedicated to improving customer experience, boosting company health in the long run.
Especially savvy business owners take things a step further, measuring E-NPS, or employee satisfaction. As a tool to monitor employee morale and willingness to advocate for the business, E-NPS can be a huge boon to both retention and recruiting, drastically limiting personnel costs.
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