NPS is an important step in assessing the loyalty of our customers is determining the likelihood of them recommending our company to friends and family members who share the same commercial needs.
Thanks to the Net Promoter Score (NPS) metric developed by Fred Reichheld and Laura Brooks, both B2B and B2C companies of all sizes and from all industries can now quantify customer loyalty.
This management tool separates customers into three different categories (Promoters, Passives, and Detractors), depending on the score they provide, typically on a scale from 0 (“not at all likely”) to 10 (“extremely likely”), when answering the question: How likely is it that you would recommend our company/product/service to a friend or colleague? We employ the NPS metric to find out where our customers stand from this point of view, and what we can do to provide a better customer experience, and ultimately, better products.
But what sets each category of customers apart, NPS-wise? Those who rate the company 9 or 10 are called Promoters. These are very loyal, and it’s very likely that they would encourage others to behave like them, from a commercial standpoint. The ones who respond with a score of 7 or 8 are called Passives, and while they are satisfied, they can be taken by competitors with a minimum of effort. The customers who answer 1-6 are referred to as Detractors, and are often seen as people who are expected to leave with the first chance they get. When calculating the Net Promoter Score, the Passives are not taken into account, as the result is obtained by subtracting the percentage of Detractors from the one of Promoters.
Who Is It for?
It may sound like NPS can be used only by large companies, but in fact, it can provide businesses of all sizes with an idea about what their customers need in order to promote them. Apple Inc., Google, and Samsung are only some of the big players that make their that make their NPS scores public every year. The Net Promoter Score works equally well for small B2B companies, and in their case it may be even more relevant, as feedback offered by a small number of customers on just a few products provides a clearer view of what works and what doesn't.
NPS: The Thinslices Approach
We can't speak for others here, so the best example we can give you is our own company, Thinslices. At the end of each year, we send out a survey to our actual customers, requesting a score, some formal feedback, and a few words on what the customer expects in the future. Could you please tell us, on a scale from 0 to 10, how likely is it that you would recommend Thinslices to a friend looking for a development team for their project? Since we want to do everything we can to deliver the quality that you want and expect, we would like to ask for your formal feedback. We would also be interested to hear your opinion, in a few words, of how we worked together so far and what you would want to see in the future.
Loyalty Can Be Expressed In Numbers
Out of the 15 companies that we contacted at the end of 2015, 11 provided a score, but only 9 answered the call for feedback. With 9 Promoters, 2 Passives and 0 Detractors, our company's Net Promoter Score is 82%. A majority of Promoters could determine any other company to think that they’re heading in the right direction, but in fact, we strive to obtain scores of 9 or 10 across the board. As mentioned earlier, the likelihood to recommend the service provider and the feedback request are not enough, as a fourth question should be added: What could we do to make you more likely to recommend us?
Collecting and Reacting to Feedback
Following next are the pieces of feedback we’ve collected from our customers, a couple of reasons why the right surveying platform matters, bits on the constructive nature of proper feedback, and the reasoning behind making the company’s CEO the Head of Customer Experience. Some other aspects that we’ve brought into discussion include customers who are available as references for prospective clients, and the way negative feedback should really be seen as constructive criticism.
One of the Promoters, a startup that required a social planning app for mobile and desktop platforms, responded with a score of 10 and appreciated how all members of the team gave their best to create more than just a good product from the very first shot. This particular type of feedback brings us a lot of satisfaction, as we can get a sense of the aspects that work well. By identifying these parts, we have a foundation to built the rest of the customer service upon.
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Recommend TS to a friend yes, but feel a bit selfish. The keyword here is to a friend. Rate 10 out of 10.
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Impressed with how we are able to have a relationship, not only with managers at the top, but also drilled out further in the team. In the past, in business you had to go through several levels and wouldn't always get the best product. Normally in business if you don't do the best job, you can actually get more money on long-term. Doesn't have this feeling with Thinslices, the entire team is trying to get the best product.
Design the Survey on a User-Friendly Platform that Leaves No Room for Half Answers
It’s important to see how knowledgeable of the daily progress is the person providing the feedback. The first Passive, a startup creating an innovative platform to manage high-profile meetings in complex multinational companies, has emphasized the strong points of the team, while also mentioning that some areas could use some improvements.
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Andrei, as you know, I’m not involved on a daily basis. So, my opinion may not be as valuable or as informed as other [company_name] colleagues. As you can see from my crude rating scale, I think Thin Slices is a good company to work with. I’ve never questioned the TS team’s work ethic or integrity. Moreover, as you can see, the relationship and work product have gotten better over time and I believe we have forged a good working partnership. I think TS has been very flexible and your fee structure is good. I’ve appreciated the fact that you and the team have invested many more hours than you’ve billed for. Your dedication to the product and [company_name]’s success is excellent. Of course, there are still areas where there’s room for improvement in my opinion (as indicated in the ratings). In the end, I would recommend your services to others. I hope this is the kind of feedback you were looking for but ultimately, I hope you ask the others who have worked with you more closely.
If There are No Complaints, It Doesn't Mean there's Nothing Left to Improve
Following up is a very concise answer from a company that required a To-Do app for mobile platforms. While this Promoter has responded with a 10 at the end of the year, the project manager should also look into the feedback that the client has provided throughout the year so as to make sure that there’s constant improvement.
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Given that I already recommended you once or twice last year, I'd have to give it a 10 :)
Yet another 10 came from a company that requested an emergency situations forecasting and monitoring system. While mentioning that the positive and improvable aspects had been covered in the project debrief meeting, the customer was kind enough to list these again.
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With regards to working together, we talked about both the positives and things for improvement during our project debrief meeting. +'ves - communication, task completion, design, demos. Some of the things for improvements: earlier deployment to allow for testing was the biggest one, communication around budget and change orders, tasks acceptance criteria and definition of done.
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I really enjoyed working on this project with Thinslices and I am thankful for all the learning and growth it provided me as a Product Manager.
Detailed Feedback Helps Teams Be More Efficient at Implementing Improvements
Probably the most comprehensive piece of feedback came from a Promoter (an interactive game publisher) that not only pointed out the aspects that they appreciated, but did so from two different perspectives. The more detailed the feedback is, the more efficient can the team be at implementing changes. More than that, this represents a great opportunity for the company to acknowledge its strong points. Responding with a 10, as this client did, wouldn’t have been enough without the following opinions.
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10 out of 10. Here's why:
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you guys answer problems very quickly, and even though we're in total opposite time zones, we never felt a disconnect, because of your immediacy with responses and meetings.
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you're super accommodating with our budgets and timelines (thanks, that's huge!)
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your actual iOS dev knowledge is awesome - there was no idea we had that you couldn't do in a reasonable time frame
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you guys are really great at managing projects and helping us understand the process
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you guys are super easy to get along with:)
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A thought going forward:
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Our only piece of feedback would be for working with first time app builders. Our biggest hiccup was not understanding that the app would need continual upgrades due to new phones, new iOS and changes in back end infrastructure. A couple of times we were taken by surprise and hadn't worked the upgrades into our budget. We should have done more research on our side, of course. That being said, Thinslices might be able to smooth that over for newcomers. You guys have a great opening pitch that walks you through the Thinslices process - maybe, for first time app makers, you could include a section that lets people know the type of upgrades their app will require, over time.
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I think the best thing would be clarity for clients during feature builds (for newcomers or clients with iOS experience) on what elements of the app/server side code are easily scalable, and what will likely need to be upgraded more often, and how that affects budgets. For example, it may cost more upfront for some things, but could help alleviate the need for more updates down the road.
The CEO of the Company also Needs to be Head of Customer Experience
Another great piece of feedback came from a company of consultants for the US Healthcare industry, who not only expressed the intention to recommend us, but also claimed to have already done so. The customer, who responded the main question with a 10, also pointed out that communication with our top management was very satisfactory. This touches upon another aspect of great CX: the company's management also needs to be involved in measuring and improving Customer Experience. The project manager confirmed that customer experience was assessed periodically. Since this is an ongoing project, it’s important to communicate on a regular basis.
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We agree that 2015 has been a great year with very solid progress. Things have moved well and rapidly in the desired direction. We are happy to see the application taking shape more and more every single week.
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Our team here had wanted the “Apple look and feel” and we are very happy to see that with Dan’s creativity and suggestions this has come through. People are really impressed when we show them the software.
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We need to congratulate your team – professional, solid knowledge in their respective fields, always responsive, things run smoothly at every level from the FE to the BE. And all has been managed very well by Alex. Actually I do not recall even one little thing that was not fixed, responded to, or managed in a timely fashion by Thinslices.
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I cannot forget about the good communication with Manu and Ilie who have made this possible.
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Surely we would happily recommend your company to others (and have already done it).
Take Advantage of the Customer’s Availability as a Reference for Prospective Clients
Another Promoter, who required a mobile app for tracking academic performance, responded with a 10 and expressed his availability as a reference for prospective clients. When such an opportunity arises, you should take advantage of it.
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I am extremely satisfied in working with ThinSlices thus far. I would, without hesitation, recommend the firm to a friend or a colleague looking for an overseas team (10). Too often, overseas development teams are poor communicators with their US clients - this couldn't be further from the truth with ThinSlices. They do highest-quality work and maintain excellent communication with their clients. Feel free to consider me as a reference for prospective clients in the future.
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ThinSlices helped us pick up the pieces after the previous firm we were working with dissolved. They worked under a tight timeline to help us ship our initial release. Considering our unique circumstances, the Team proved to be incredibly flexible and agile in working with our shifting scope. Since that initial release, ThinSlices has worked with us to fix certain bugs. Once again, they have been incredibly flexible and accommodating.
Involve the Entire Company in Improving Customer Experience
The second Passive, who is activating in the dry cleaning industry, pointed out that the score of 7 is motivated by the somewhat disappointing after-sales service.
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I think that we had a really good start at the beginning. Your team was enthusiastic and the delivery came very fast.
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I appreciate it also al lot, that you helped us out with our backend, after K left the company. We see definitely that it was not that easy to change something on our source code without bringing the system in trouble because of no existing framework and the was how K wrote the code.
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So on the ongoing project I was really happy with you and I would definitely recommend you.
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However, I am a bit disappointed about your after sales Service.
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After you have delivered the software there were still some issues and we a not so happy how you react on Mails.
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S wrote you a couple of times some errors and the first thing you did was to write that this has nothing to do with your job.
Even if it isn’t a specific team member’s responsibility to solve an after-sales problem, he or she should at least point the customer in the right direction. Furthermore, customer experience shouldn’t be the duty of a single department, as really the entire company must know what turns Detractors into Promoters and vice versa.
Turn Negative Feedback into an Opportunity
The type of feedback presented just above can have several consequences. If the final outcome of a project depends on the customer or a third-party, the client should become aware of that. Since it is unable to make any changes that would move the project further, the team can focus on helping other teams. Make this a pivotal part of your organization’s culture, teach team members to become team players, and rely on feedback to help your company grow. The problems identified in the feedback provided by clients need to be solved at a granular level, but their existence should be acknowledged across the entire company, so that they don’t occur in other departments.
The same goes for the strong points that were appreciated by the customers, as one team might not be aware of how another team implemented a certain solution. That is why it’s important to prevent top management from being the only part of the company with access to such data. While this is not the case for small companies and startups, it could become a problem for medium and large businesses. These are the things that can make or break customer experience, and there’s no doubt that you will either encounter at least some of these mentioned in the feedback you’re receiving from customers, or you’ll notice that these factors have led to that specific feedback.
NPS is a closed circuit system, meaning that if you want to improve future customer experience, you need to analyze the effects of previous CX actions. Many companies assume that if an action solves a problem, there’s no point in measuring the effect. Poor communication and misunderstood meanings could determine a fix to a problem to cause another one. Then comes the question of how often should we send out surveys to our customers. Once a year may not be enough, so your company could try recalculating the score every quarter, while also keeping in mind that over surveying is negative. Once customers are identified as Promoters, it’s not enough to know that they have the intention to recommend your company to others. Certain incentives could determine them to become active in doing it, so you should consider offering exclusive deals, free gifts to top spenders, discounts for bringing in new clients, and exclusive access to new products before the actual launch date.
Conclusion
There are many aspects to consider when measuring the Net Promoter Score for your company, from the format of the survey and the involvement of the person providing the feedback to the revenue value associated to each customer and the frequency of the surveys. Some of these can be tweaked by the company, while others depend entirely on the customers, not to mention that the business size should also be taken into account.
Ultimately, this is our experience with NPS and the feedback we’ve collected from customers, and while every company has its particularities, the guidelines described above should give business owners an idea about how the metric works and how customer loyalty can be assessed.
Key Takeaways:
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Design the survey using a user-friendly platform that leaves no room for half answers
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Detailed feedback helps companies cover all bases when implementing improvements
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The company’s CEO also needs to be Head of Customer Experience
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Involve the entire company in improving CX
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Turn negative feedback into an opportunity
Here's an awesome additional resource you might enjoy reading: Everything you need to know about Net Promoter Score (NPS) in 2020 – Complete guide.