Measuring Customer Satisfaction is Hard
Feedback is something that most businesses neglect to formally collect. Many people often gauge customer satisfaction by how much the client smiles or the frequency they return. Would you believe there is a better way? there is, its called the Net Promoter Score or NPS.
Enter the Net Promoter Score (NPS)
The net promoter score splits your customers up into 3 distinct categories depending on how likely they would be to recommend your product or service. At a recent growth hacking seminar i attended in melbourne, the presenter said that this is the metric you need to be using right now. So lets take a look at this metric
In basic terms
When you ask this simple question “On a scale from 1-10, How likely is it that you would recommend (your company) to a friend or colleague?”, you will find your customers in one of three categories.
- Promoters (score 9-10) These customers will keep buying but more importantly, they refer others
- Passives (score 7-8) These customers are satisfied but may move to another company or product
- Detractors (score 0-6) These customers are unhappy and often spreadnegative word-of-mouth.
Now, how do you work out your company’s NPS?
its easy, take the percentage of customers who are Promoters and subtract the percentage who are Detractors.
Promoters% – Detractors% = NPS
100 customers surveyed, 45% are Promoters, 35% are Passives and 20% are detractors.
45% – 20% = NPS 20.
In this example, the NPS score could be higher. The business needs to discover what is upsetting their detractors and also work to provide a better experience for the passives. Lets set a goal to improve the NPS by 10 points over the next twelve months.
So why bother?
Many successful brands have used this including QANTAS and Kmart because it forces you and employees to put the customer first.
The best way to grow is when your customers are out promoting your brand to others, they are giving you the best source of marketing on the planet, word of mouth, and they are doing it for free!