Using the Net Promoter Score to increase customer satisfaction

December 13th at 11:39am by Susan Levermann

Originally from the US, the Net Promoter Score has also established itself in Germany as a leading method to determine customer loyalty and satisfaction. In this article, we will discuss the Net Promoter Score as a means to increase customer satisfaction, explore the history and benefits of the metric, and detail the advantages in applying a holistic Net Promoter System such as zenloop.

Contents:

  • The history of the Net Promoter Score as a means to survey customers
  • Measuring customer satisfaction with NPS - How the Net Promoter Score works
  • Measuring customer satisfaction - how to calculate NPS
  • The three classes of customer satisfaction: Detractors, Passives and Promoters in NPS
  • Calculating NPS as a basis for measuring customer satisfaction
  • Comparing customer satisfaction - benchmarking with the Net Promoter Score
  • What the Net Promoter Score reveals about customer satisfaction
  • Benchmarking with NPS to illustrate customer satisfaction
  • NPS as a means to increase customer satisfaction - more than just a score
  • Making corporate objectives out of customer loyalty and customer satisfaction: The advantages of the Net Promoter System
  • The Advantages of using zenloop NPS Software to increase customer satisfaction
  • Sustainably increasing customer satisfaction: How to properly close the Feedback Loop
  • The first steps towards implementing NPS and achieving higher customer satisfaction
  • zenloop as a holistic Net Promoter System: Listen, understand, act
  • Collecting feedback at various touchpoints on the customer journey and specifically surveying customer satisfaction
  • Intelligently analyzing feedback
  • Closing the loop - cleverly using feedback and feeding it back to the organization

The History of the Net Promoter Score as a Means to Survey Customers

The Net Promoter Score is both a metric and a system used as a management tool for determining customer satisfaction and loyalty. The metric was developed by Fred Reichheld and Bain & Company. In 2003, Reichheld presented the metric in the article "One Number You Need to Grow" in the Harvard Business Review as an alternative to the previously tried and tested methods of customer surveys and classic market research.

The NPS system was developed to standardize and simplify customer surveys. Because the Net Promoter Score uses a combination of a quantitative and qualitative survey in a two-stage format, it makes survey results easier to evaluate and categorize. After the system quickly asserted itself in the United States, both the score and the Net Promoter System became ever more popular in Germany and are gradually forming part of holistic corporate strategies.

Measuring Customer Satisfaction with NPS - How the Net Promoter Score Works

Therefore, the first question for the NPS is typically: "How probable is it that you would recommend our / company/brand/product/service to a friend or colleague?". The question is (usually) answered on a scale of 0 (unlikely) to 10 (highly likely). On the basis of their replies, customers are categorized into one of three groups: Detractors, Passives and Promoters.

The second question, however, is open. Here, customers are asked to write a comment supporting their probability of recommendation and to explain the reason for their satisfaction or discontent.

Measuring Customer Satisfaction - How to Calculate NPS

To calculate NPS scores and measure customer satisfaction it is first essential to classify the scores obtained.

The Three Classes of Customer Satisfaction: Detractors, Passives and Promoters in NPS

On the basis of these scores, you can use NPS to classify your customers and satisfaction into three categories: Detractors, Passives and Promoters.

Net Promoter System: Three classes of customer satisfaction

Detractors give scores of between 0 and 6. They are the customer group with the highest churn rate are liable to advise friends and colleagues not to use your company. This means attention and action are needed to turn these critics into fans of your company to dissuade them from abandoning your business or spreading negative publicity.

Any customers leaving a score of 7 or 8 are classified as passives. Because their influence is minimal, they are not included in the calculation of NPS scores or for determining general customer satisfaction.

Promoters are all customers who deliver a score of either 9 or 10 when asked about their probability of a recommendation. They are characterized by having a higher value shopping cart, a longer customer lifetime cycle and a higher customer lifetime value, amongst others. Through their positive attitude towards the company, they also acquire new customers through referrals.

Calculating NPS as a Basis for Measuring Customer Satisfaction

To determine the NPS and with it, the basis for measuring customer satisfaction, you need to calculate the percentage of Promoters and Detractors in relation to all the answers you have. When this is done, you should then subtract the percentage of Detractors from that of the Promoters. What remains is a number that can range between -100 and +100.

For example:

Suppose your NPS survey produced 150 responses. Of those, 75 respondents gave a score of 9 or 10 and are therefore regarded as Promoters. 50 respondents, however, responded with a score between 0 and 6 and are therefore Detractors. The remaining respondents with a score of 7 or 8 are to be regarded as passive and therefore irrelevant for your calculation.

With 75 of your 150 respondents being Promoters, that makes 50 percent. The Detractors make up 50 of 150, a share of 33 percent. This gives us the calculation:

50% minus 33% = 17

The calculated NPS score is never given as a percentage.

If we switch the numbers in our example (50 percent of respondents Detractors and only 33 percent Promoters) then the proportion of detractors is higher than that of promoters, giving us a negative NPS:

33% minus 50% = - 17

In our article "Net Promoter Score: Calculation and Interpretation" we go into this topic further.

Comparing Customer Satisfaction - Benchmarking with the Net Promoter Score

To derive valid insights for customer satisfaction, it is not enough to make only a general interpretation of the scores. You must go rather even deeper into the subject and compare your own score with the touchpoints of other, similar companies within your industry.

Assessing customer satisfaction needs a holistic Net Promoter System

What the Net Promoter Score Reveals About Customer Satisfaction

Generally, the Net Promoter Score and customer satisfaction can be interpreted as follows:

  • Scores between -100 and 0 - the danger zone: This score indicates that you have more Detractors than Promoters. Companies that have a score in this range may already be losing customers and likely have a negative public image.
  • Scores of 0 to 50 - good: If one looks Germany-wide, the average NPS score is around 30. The majority of companies are ranked with a score of between 20 and 40. One can therefore safely assume that organizations with such a score are generally meeting the demands of their customers. The number of detractors is lower than those of the promoters.
  • Scores between 50 and 75 - very good: There are significantly more Promoters than Detractors. Customers of the companies that have such a score have faith in their products and services. Their expectations are often even exceeded.
  • Everything between 75 to 100 - Excellent: Customer satisfaction and customer loyalty are central themes to these companies. Actions and processes are controlled almost exclusively from the standpoint of customer orientation. Customer expectations are therefore not only met but regularly exceeded. Examples of companies with such a score are Amazon or Apple.

Benchmarking with NPS to Illustrate Customer Satisfaction

The general interpretation of the score allows one to draw rough conclusions about customer satisfaction, but to derive precise knowledge, it is necessary to benchmark the NPS score in comparison to others the same industry.

When benchmarking it is especially important to consider all the factors which influence an NPS score. These include social, cultural and regional influences and must be compared with similar touchpoints, industries and products.

These factors quickly show differences in the scores. Luxury goods, for example, tend to score a much higher NPS then services from the financial and insurance industries.

Banks, for example, often have a negative score, while goods such as cars and jewelry have a particularly high positive score. Benchmarking allows you to relativize the General interpretations of your NPS score and gives a more accurate picture of customer satisfaction.

NPS as a Means to Increase Customer Satisfaction - More than just a Score

For NPS to be a useful means of increasing customer satisfaction, you must not simply calculate your score, but rather implement a comprehensive Net Promoter System.

The score measures the pulse of customer satisfaction, but evaluating customer comments and correctly approaching customer feedback are vital extra steps.

Then you can look in detail at the input for the Net Promoter Score that you got from the customer. By means of semantic text analysis feedback will be automatically clustered, making it easier to capture and share with relevant stakeholders in a targeted manner.

Bringing feedback into the organization brings customer satisfaction and loyalty sharply into focus, ensuring the long-term success of the company.

This constant score analysis and its long term development allows you to quickly discover trends and fluctuations, giving you a forecast for the future of the business and its direction.

Making Corporate Objectives out of Customer Loyalty and Customer Satisfaction: The Advantages of the Net Promoter System

The application of a holistic net promoter system offers a company many advantages. It is perfectly suited to analyzing and improving both customer loyalty and customer satisfaction, which in the long term help to ensure the success of the company.

Benefits of NPS:

  • High response rate
  • Provides real-time trends for customer satisfaction and loyalty
  • Good measurability and comparability of data
  • Objective analysis
  • Detection of patterns (over longer time periods)
  • Specific questions at various touchpoints of the customer journey
  • Measurement of satisfaction with a certain product/service
  • Low cost compared to qualitative methods, as costs are based on answers actually received and are results-oriented
  • Flexible adaptation for experimental conditions
  • Respondents need not assign a pre-given answer
  • Information is complete, specific and authentic
  • Respondents determine the focus
  • An early indicator for areas of business growth and development
  • Disclosure of the NPS value can increase customer confidence
  • Cross-industry use

Disadvantages of NPS:

  • Quality of data and its interpretation depends on the observer
  • Without software evaluation becomes time and cost intensive
  • Comparison of data relies on many factors and becomes complex and tricky

Possible NPS objectives and applications:

  • Research customer behavior and customer satisfaction
  • Infer necessary improvements at individual touchpoints
  • Focus on customer-oriented management
  • Determine necessary changes of company culture & organizational structure
  • Discern changes to employee development
  • Understand customers better
  • Increase customer loyalty
  • Increase revenue
  • Generate information about future financial development

The Advantages of using zenloop NPS Software to increase customer satisfaction

Our NPS software provides a holistic Net Promoter System and offers many benefits for the collection and analysis of feedback, and to derive recommendations for action.

Thanks to individual integration and enhanced usability, our zenloop NPS software achieves especially high response rates. Using our smart label analysis drivers of churn can be automatically identified in customer comments.

Alarm systems can be individually configured and critical issues immediately forwarded to those responsible. This can be done via email alerts, push notification apps like Slack or with our other forwarding options. This allows you to get in touch quickly and personally with those identified as critics and other disgruntled customers.

Loyal and satisfied customers however, can be asked for a recommendation. They can, for example, be automatically forwarded to review portals or refer-a-friend programs.

To keep all your employees up-to-date and to provide motivation, zenloop can configure livefeeds. This gives everyone on your team information about how customer satisfaction currently is and can make their contribution to continuously improving it.

Sustainably Increasing Customer Satisfaction: How to Properly Close the Feedback Loop

Closing the Loop - to increase customer satisfaction, it is essential with the NPS system to close the Feedback Loop. This is all about using the given feedback to learn more about the customer and their actions and to derive proactive strategies and improvements; for example, turning a negative perception around, making promoters to recommend you more actively and to turn detractors into promoters.

Our NPS software zenloop offers differing possibilities to close the Feedback Loop and thereby increase customer satisfaction. Via the action page you can choose from the options "Report", "Redirect" and "Integration".

Under “Report”, you can configure a regular e-mail update which will update you on the development of your NPS and the satisfaction of your customers. You can select if you would rather have a daily or weekly report, which labels or specific themes or market contact points it should include and if any other employees in your organization should automatically get updates.

The redirect option allows you to choose the form in which feedback is fed back into your organization. The automatic e-mail alerts allow employees and stakeholders to be immediately informed about particular subjects. Webhooks send feedback to a specific URL. Livefeeds allow for filtered or unfiltered feedback to be displayed on monitors in the office making it available to all colleagues.

Generally speaking, these four principles should be followed to successfully close the Feedback Loop and increase customer satisfaction:

  1. Measure the influence/impact of your actions
  2. Act quickly and elegantly
  3. Take care of the majority of the clientele
  4. Solve strategic problems

We have summarized more information about these four principles and successful Feedback Loops in our article"Closing the Loop - how to define a successful Feedback Loop with NPS".

The correct usage of the Net Promoter System can quickly derive finding and activities for the company to develop and implement which will sustainably increase customer satisfaction.

The First Steps Towards Implementing NPS and Achieving Higher Customer Satisfaction

The journey to real and lasting customer satisfaction should not be undertaken without a plan. First, you must define clear objectives. Only with a clear goal can you correctly determine at which brand contact points the customer should be asked about their satisfaction.

zenloop as a Holistic Net Promoter System: Listen, Understand, Act

With the use of zenloop, the first customer feedback can be collected and analyzed within 24 hours. We offer a holistic system of NPS through SaaS (software as a service), which allows you to collect customer feedback to understand the needs and feelings of your customers and transform analyzed feedback into executable actions. This helps you put the customer, and therefore customer retention, at the center of your business.

Collecting Feedback at Various Touch Points on the Customer Journey and specifically Surveying Customer Satisfaction

Our NPS software lets you collect feedback at various touchpoints on the customer journey. We do this though multichannel communications. This lets each user decide if a customer should be asked by e-mail, a website-embed or through an overlay.

One of the first steps, therefore, is to try out a test survey on your own colleagues in order to familiarize yourself with the tool. Next, we recommend your first NPS survey goes to customers from the previous week before it is fully automated via the email embed and the internal Net Promoter System CRM tool.

Intelligently Analyzing Feedback

We have created a powerful AI tool to help the analysis of feedback. Based on smart labels, the feedback is automatically categorized with semantic text analysis This clusters feedback as it arrives according to theme, meaning that it can be forwarded to relevant stakeholders allowing them to both easily summarize and respond to it.

Closing the Loop - Cleverly Using Feedback and Feeding it back to the Organization

On our action page you will find three ways to bring feedback back into the organization "Report", "Forwarding", and "Integration". For example, a livefeed can be transmitted to monitors in the office. In addition, automatic push notifications for apps like slack or other ticket systems can be easily configured. E-mail alerts can also be setup This puts your customers and their satisfaction In permanent view and allows the relevant stakeholder in your organization to be informed in real time.

To start right away with NPS techniques, you can sign up here for a free account and test zenloop, quickly, simply and without obligation for 14 days.

Once you have created your test account, you can start directly with the NPS system and create your first survey. Once set up, you will get your first answers within a few hours.

Would you like more information? Make an appointment with one of our advisors here..

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Susan Levermann

Content Marketing Manager