Use NPS to measure the loyalty of your customers

Did you know? Consumers are three times more likely to talk about a bad experience and share it with others. And this phenomenon is further amplified by social networks. That's why it's important to understand the image your customers have of your brand. But what measurement tool should you use?

Have you ever heard of the Net Promoter Score (NPS)? You've probably asked yourself: how do you grow your results with direct customer feedback? What is the financial impact of customer loyalty?

Have you heard of NPS but the concept is still unclear to you? The Pimster team wrote this article for you 👉

What is NPS?

NPS is a customer satisfaction measurement, measuring the likelihood that your customers will recommend your brand to their friends and family.

This index was developed by Fred Reichheld, who introduced it in 2003 in the article "The One Number You Need to Grow" published in the Harvard Business Review.

The NPS is used in particular to analyse post-purchase behaviour and predict sales. Today, it is used not only to measure customer loyalty, but above all to assess the health of the brand, by also studying the responses of people who are not customers of the brand.

But beware! NPS is not a magic tool for predicting sales! Many brands have developed poor methods of measuring NPS, which some academics have turned into real study subjects. That's why we will also show you the good practices to make NPS a real asset.

How do you write an NPS survey?

In an NPS survey, you are looking for customer satisfaction on a scale of 0 to 10 about some aspect of your brand (product, after-sales service...), so you can ask the following questions:

• On a scale of 0 (unlikely) to 10 (very likely), how likely are you to recommend our products to a friend or colleague?
• Following your interaction with our service department today, how likely would you be to recommend our brand to a friend or colleague?
• On a scale of 0-10, how likely would you be to recommend working with us to a friend?

As the survey and NPS are there to help you understand the relationship your customer has with your brand, it is important to include qualitative questions in your questionnaire. This will help explain areas for improvement and help you find solutions to any dissatisfaction that may be highlighted.

You could add the following questions:

• Why did you give such a score?
• Why are you satisfied with our after-sales service?
• Can you tell us more about your dissatisfaction?
• How can we improve?

When to send out your NPS questionnaire ? It's up to you to choose the most appropriate time to survey your customers. Depending on the questions you have, you can send your questionnaire directly after an interaction with your brand (purchase, after-sales service) or in an email or SMS a few days later.

How do you calculate your NPS?

Once you have launched your survey, you now need to analyse the data you have collected.

1. Sort the responses

Customers can be grouped into 3 categories based on their responses:

• Detractors: for a score less than or equal to 6. A detractor is a customer who has been unhappy with their experience with your brand or product, and will not only no longer be a customer, but will also talk about their bad experience and discourage your products. Thus, a detractor damages your brand image.
• Passive: for a score of 7 to 8. Passive customers are customers who are satisfied with your products or their experience, but are not satisfied enough to recommend your brand to others. In addition, passive customers are very sensitive to competitors' offers and have no real loyalty to your products.
• Promoters: for a score above 9. Promoters are satisfied customers who will recommend their experience on social networks or to friends and family. They are true ambassadors of your products, who remain very loyal to your brand.

2. Calculate the Net Promoter Score

Once you have done this sorting, simply apply the following formula:

The calculation does not take into account the "Passive" consumer group.

This results in an NPS between -100 and 100.

3. Analyse your NPS

What does your score really mean? The closer your score is to 100, the better your relationship with your customers.

A few points to remember:

• Always analyse your score in relation to your competition. If you have a score of 50, but your competitors have an average score of 70, this is a bad sign and means that your competitors have a better relationship with their customers who are more loyal.
• Your score needs to be put into perspective according to your industry, as it can vary from one industry to another. For example, the industry with the highest NPS is the depot and speciality shop sector (NPS of 56). Conversely, companies providing internet services have the worst score (NPS of -3).

Graph representing the NPS of different industries in the United States in 2021. Source: Statista

Finally, don't forget to analyse the answers to the qualitative questions to find explanations for your score. Indeed, calculating the NPS is not enough. It is only an indicator to "take the temperature" of your customer relationship. It often needs to be accompanied by in-depth qualitative analyses to understand the core of the problem and solve it.

Finally, don't stop there! Once you have finished your analysis, try to get back to the detractors, starting with a thank you message, to ensure that they continue to buy from you and do not go to the competition. But also don't hesitate to go back to the promoters to offer them benefits or insert them into an email marketing loop. Similarly for passive customers, look to understand how you can improve your customer experience so that they become 100% satisfied customers.

Why is this so important?

• Measuring customer loyalty by knowing how your customers feel about your brand. Why is this crucial? Because it allows you to predict your future sales and customer acquisition or retention costs. Having a high NPS bodes well for the future and bodes well that some of your customers will use your products again. In fact, a company that has a higher NPS than its competitors in a given industry has an annual growth rate twice as high as its competitors.
• Use the NPS to go further in your customer satisfaction research. You can use the analysis of qualitative questions to understand the issues your customers face, and focus your CRM (Customer Relationship Management) efforts on them.
• Know and understand which persona to target in your next marketing campaign. Indeed, a low score allows you to focus your efforts on customers analysed as detractors, to convert them into promoters. The NPS allows you to segment your customers to better target them.
• Use NPS as a starting point to care for your customer relationship. Customer feedback has become absolutely essential, as it allows you to target areas of dissatisfaction in order to improve your brand's customer experience. This allows you to convert your customers into loyal customers and even brand ambassadors.

After reading our article, here are the questions you may ask yourself within your company:

• Are we using a platform or system that allows us to get direct customer feedback?
• Are we using the data we collect in our customer feedback effectively, followed by qualitative analysis?
• Do we pay enough attention to our post-purchase customer relationship?

How to improve the user experience?

Once you know how loyal your customers are to your brand, you have all the cards in your hand to make the user experience better.

Why not opt for Pimster? We'll help you create user guides that will help you build customer loyalty from the moment they pick up their products.

Did you like our article and want to know more? You can find more information and tips on our blog.

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