Why NPS® is more important than ever Today
During a crisis, one aspect that is most heavily impacted and which influences every purchase decision is Emotions. In a pandemic situation like the Covid-19, which arrived unpredicted and the impact of which is still unknown, economies have been in doldrums. There is no clarity about where the global economy is heading to, while under the surface, a whole new set of customer expectations is brewing.
While the new customer experience phase is taking shape based on the crisis’ influence on customers’ rapidly changing income and expenditure patterns, it is important for businesses to hear the voice of the customer more keenly now. This is the time to strategically think about five things:
- What do my customers need NOW?
- What will my customers need six months later?
- How can I increase loyalty?
- How can I grow in tough times?
- How can I reduce costs without impacting the customer experience?
But how do you get this feedback without long surveys that customers are in no frame of mind to fill in for you? This is where the Net Promoter Score® system plays a key role. The Net Promoter Score or NPS is a method to measure customer experience and also predict the business growth trajectory. It is the most popular loyalty and growth discipline in the world.
The analysis that made NPS popular was the one conducted by Bain which showed that brands with the highest NPS in a market/ category grow by at least 2X the category average and also enjoy 15% lower operational costs on average.
For many businesses this was like finding the holy grail. A system that allowed you to grow, increase loyalty and reduce costs! Now think about what businesses look at doing in tough times. The most popular routes are reducing costs, increasing sales and enhancing loyalty - a perfect solution in tough times.
Unfortunately, many NPS programs only ask two questions; this includes the likelihood to recommend on a scale of 0-10 and an open comment question that asks the reason for the NPS score. This is inadequate to truly understand what customers are exactly thinking. To know what the customer truly feels is important to receive adequate insights. This response is even more critical during a crisis. Hence, an open question is not the best way forward since, in many cases, customers either do not fill in the open comment or their responses are general in nature. These include comments like good service or bad service, dissatisfied, can be better, etc. Plus, open comments are not usually read. Effectively, you have a score without insights.
But, based on my studies of 165+ brands across 20+ industry categories I recommend you measure three important factors:
- Key interactions that are important to your customers during a crisis
- Product & brand attributes
- Relevance of your unique value proposition
Armed with this rich data, you can begin understanding key drivers and pain points. If the survey is designed strategically, it will provide the answer to the question that can take your brand on a growth curve even in tough times - If there was only one or two things my organisation can do now, what would they be?
Do not hoard these insights at the head office or your market research department. Making them available and digestible by sales, marketing and service staff is critical. These are the stakeholders that make the most impact if given the right insights.
Once you have the insights, you can make strategic changes and procedures to better the customer experience you offer. Upgrades, revisions, better returns on deposits, new loans with lower interest rates to help the financially affected tide through – these are a few simple and common options. But what is more important is to reduce the number of Detractors and convert Passive customers into Promoters. And for this, even as the staff amp up their enthusiasm and energy to provide customers with a memorable pleasant experience, it is important that the Leadership plays a key role.
It is imperative for the Leadership to contact high-value Detractors, identify their pain points and fix the issues to the best extent possible at the earliest. Verbatim feedback is often more powerful in times of crisis where even routine functions have a heavy emotional undertone. Hence, a conversation with high value customers can improve your brand’s opportunity to convert them into valuable promoters. Accurate Voice of Customer (VoC) feedback helps key decision makers within the organisation fix loopholes and introduce best practices that can benefit all customers.
Over the years of my CX and Branding consulting globally, I’ve found that about 20% to 50% of sales are sourced from just word of mouth. In fact, I’ve also found that word of mouth is 4X more powerful than even television advertisements. In the B2B industry, I have seen that every time the NPS has grown by 1 point, a brand has enjoyed a 1.25% increase in wallet share. In particular is a national banking studies in Australia that I had conducted which showed that Promoters purchase 2X more products than Detractors, as you will know in finance the more products you have with a brand, the stickier the customer is.
Now imagine the economic benefits of converting every Detractor into a Promoter of your brand! Besides, every customer you retain, you save about 10X of expenditure in acquiring a new customer.
These critical times are crucial for every business that wants to thrive. Now is when you need to go beyond the score, and properly and strategically harness the power of the Net Promoter Score system to identify key drivers that can help your organisation prepare in advance for the new wave of CX. Now is that perfect time when you can make strategic moves to beat the crisis and chart your ultimate roadmap to success.
NPS®, Net Promoter® and Net Promoter Score® are registered trademarks of NICE Satmetrix Systems, Inc., Bain & Company and Fred Reichheld.
Chris is a Global Brand and CX Expert. He is the Managing Director of Engaged Strategy, which is the world’s first official distributer of Nice Satmetrix. Chris is the developer of the Total Engagement Model, which designs and aligns key elements to maintain brand integrity and customer focus. He is a published academic author and a guest lecturer at the University of Queensland at a Masters Level.