Using NPS® for a Targeted Customer Approach
Case Study / published in January 2021 by Sophie Scharrer
The relation between customer satisfaction and company success seems clear: satisfied customers lead to repeat purchases and thus more sales—without incurring the associated high marketing costs. This is because customer retention measures generally have a higher ROI than new customer acquisition measures. As a result, many companies have already realized that satisfied customers are worth their weight in gold.
However, the difficulty is often to identify satisfied customers and address them correctly so that they become enthusiastic brand ambassadors. In addition, companies are often faced with a challenge when it comes to identifying dissatisfied customers and encouraging them to give the company another chance. A proven solution? The Net Promoter System®.
The Customer Groups in the Net Promoter System and Their Influence
Platforms based on the NPS® enable companies to gather, analyze, and evaluate customer feedback. On the basis of a simple question, it is possible to identify which customers are very satisfied (also called promoters), which are neither very satisfied nor very dissatisfied (passive or indifferent), and which are very dissatisfied (critics, also called detractors).
This is especially important because satisfied and dissatisfied customers differ not just in terms of their impact on the company’s success but also how they should be addressed :
- Promoters typically have a larger shopping cart and are responsive to cross-selling efforts
Promoters usually order higher values and can therefore be used very well for up-and cross-selling campaigns. This also means that turning detractors into promoters can increase their shopping cart size by up to 25 %. In addition, promoters are likely to speak positively about both the company and their products to their friends and family. By sharing their positive experiences, they can be used for referral marketing to support the company’s acquisition of new customers.
- Detractors are three times more likely to churn than promoters
This means that if you can succeed in turning detractors into promoters, it is likely to prevent them from ending their business relationship. This not only saves costs—for example, in personnel, as promoters need customer service less often than detractors—but also generates additional revenue as promoters continue to buy from the company. Practice shows: In many cases, former detractors become the most loyal fans and brand ambassadors.
- Passive customers have great potential for referrals and minimizing customer churn
Often, passives are the customers that are most frequently neglected. Similar to detractors, however, these neutral customers also generate great potential when they are transformed into promoters. A key factor in this is that, due to their neutral attitude, they are likely to leave the business as soon as a better deal is available. This means that the likelihood of them churning is twice as high as that of promoters. Turning passives into promoters can also increase cross-sell potential by up to 15 % and more than double the likelihood of positive referral. It should be noted that the correct approach can turn passive customers into promoters, but the wrong approach can often turn them into detractors.
This brings up the question: How exactly can you accomplish all this?
The first step is: Collect customer feedback. The second: take the feedback to heart and respond to it. This is where the style of the customer approach comes into play: it should be personalized and tailored to the customer experience. Instead of event-based communication, such as birthday wishes or a reminder after a customer has not shopped in three months, companies should focus on experience-based communication. In this case study, you will learn what this means and how it leads to success.
The NPS and KELLER Group GmbH
KELLER Group GmbH has been collecting NPS feedback with zenloop at two touchpoints since 2017. At the touchpoint “After Parcel Delivery”, they launched a CRM campaign to target promoters, passives, and detractors. The two main objectives of the mailing campaign were:
- On one hand, promoters and passives should be encouraged to buy again, especially to buy more products.
- On the other hand, KELLER Group GmbH wanted to persuade detractors to give the company another chance and ideally turn them into promoters. It is often enough to listen and indirectly address those customers.