Customer recommendations are like an unofficial marketing department.
In fact, they’re probably even better than your marketing department. Producing an ad or campaign that speaks to every single customer is near impossible, whereas everyone trusts the products that their friends and family recommend. That’s why referrals and recommendations are so powerful—they give prospective customers an unfiltered view into what they can expect if they decide to buy your product.
That’s why so many businesses rely on Net Promoter Score (NPS) as a key business metric. Achieving a consistently high NPS isn’t easy. But fortunately, if your NPS isn’t where you want it to be, there’s a lot you can do to improve it. It all starts with understanding just how NPS relates to your business.
Improving NPS leads to customer loyalty
A lot of companies tout NPS as one of their key metrics, but then fail to actually make NPS a focus when compared with bottom-line metrics like revenue or conversion rates. That’s because NPS isn’t a direct measurement of income—it’s meant to be predictive of your customers’ future behavior.
This disconnection from direct revenue means that it’s sometimes hard to dedicate energy towards optimizing NPS. That’s an unfortunate oversight, because a low NPS has major consequences for your business. Conversely, a high NPS is a strong indicator that you’re providing a great customer and product experience, which should lead to future growth.
Research across 20 different industries tried to identify the true value of NPS. The outcome was clear:
- 92% of promoters are likely to purchase more.
- 67% are likely to forgive the company if it makes a mistake.
- 62% are likely to try a new product.
- Promoters recommend the company to an average of 3.5 people.
Wherever your NPS is at today, it’s a sure bet that improving your customer experience over time will generate positive results for your business.
How to improve NPS
Nobody wants a low NPS score, but if your score is low today you’re probably feeling pressure to take quick action. That’s understandable—and you may have plenty of opportunities to improve—but keep in mind that there’s no silver bullet or miracle cure to improve NPS. Some changes may have a quick impact, but taking a short-term view on fixing your Net Promoter Score is a recipe for failure.
The key to achieving a high NPS—and the business results you’re hoping for—is to take a consistent approach to improving CX with concerted effort from across your business. As you create a better experience across the entire customer journey, your NPS will naturally improve over time.
In fact, even when your score is quite good in comparison to your industry, improving the customer experience you create will always be worth it—and will likely drive your NPS up even further.
The key ways you can improve your NPS are:
- Develop a customer-centric company culture.
- Address friction points that lead to negative scores.
- Close the loop with customers who rate you.
- Understand the root cause of their ratings.
Develop a customer-centric culture
Your NPS score is impacted by every part of your company. Maybe your marketing team does a sales campaign that doesn’t resonate with your customers. Or your product just doesn’t perform the way your customers expect it to. Or your finance team’s payment process is clunky and outdated.
Here’s the point: improving your NPS score can’t happen in a vacuum. A high NPS is a result of a great customer experience, and that requires buy-in from every department and every level of your organization.
In many ways, it’s quite easy to invest in collecting and sharing information about your customers. Hiring an internal customer analyst or sharing high-level reports of your customer feedback across your company may feel like progress, but you can’t affect change unless other teams treat these KPIs as important and take action based on that information.
Cultural values come from the top-down, so your founders and C-suite executives need to be on board. They need to understand the importance of CX and keep the customer at the center of key business decisions. As individual departments and teams create plans and work out your company strategy, this customer-centricity needs to be lived out across every layer.
One way to get started is to make the customer experience everyone’s responsibility and use shared customer-focused KPIs across teams.
Address friction points
NPS is a lagging measurement of how customers perceive their experience with your business. Every part of their experience plays into their likelihood to recommend you, meaning you’ve got to keep an eye on every part of the customer journey.
If you include an open-ended question in your NPS survey (you should!), you’ll notice quickly that customers often use it to share feedback about everything they experience. Some of those experiences might lead to good metrics in one area of your business, but end up damaging your reputation and your customers’ loyalty further down the road.
Here’s an example:
Let’s say you have a very effective sales team. Your account executives often meet their personal and team goals, so your perception is that the team is as successful as it needs to be. Sales goals are being met and life is good.
But when you run NPS surveys a few months later, you might find that detractors make comments about your sales team making exaggerated claims and being a little too pushy about selling.
The feedback only comes up later in the customer journey—long after your sales team has handed those customers off to your customer success and support teams. In fact, your sales team may not even be considering NPS as important, because they’re focused on net new customers (not existing customers).
That’s just one example. You can probably name ten more. Maybe you’re experiencing product quality issues that result in frequent bugs, so your customers are feeling frustrated because the are repeatedly dealing with technical issues. Or maybe your accounting team’s invoicing process isn’t as seamless as it could be.
The power of working with KPIs like NPS is that they force you to connect the dots and look at the full picture of your customer experience. You can start by mapping the customer journey and charting out where each of these issues crops up.
Once you’ve got visibility, then you can mobilize your teams to address these friction points individually.
Close the loop with customers
Whether your customers give you positive or negative feedback, following up with them is extremely valuable.
It’s been estimated that 50% of your company’s detractors are likely to churn within the next 90 days. Because they’ve reached out to you by completing your NPS survey, you have a huge opportunity to potentially retain them by providing a better experience now.
How you approach this is up to you. Some options to close the loop with detractors might be:
- Reaching out in response to their rating and asking for more information.
- If they raise an issue you’re already working on, follow up with an explanation of what you’re doing to address it and get their feedback on the solution.
- Owning up and admitting to your mistakes, explaining how you want to avoid creating the same experience in the future.
- Offering them a goodwill gesture, such as a short-term discount or a bonus.
Every opportunity to connect with your customers as individuals can build a deeper relationship with your brand.
When you’re following up with passives, try asking open-ended questions like, “How could we have done better?” Maybe you’ll uncover that last small thing that would push them from being neutral towards your company into becoming advocates.
Finally, rewarding your promoters (or loyal customers in general) through messages of appreciation or special offers can keep them on board for a long time. It’s important not to focus so much on the negative scores that you neglect your relationship with promoters, or you’ll risk losing them too.
Understand the root cause
Customer feedback often follows what’s known as a J-distribution.
This is because people are much more likely to respond to surveys or share feedback if their experience was on either end of the extremes: very positive or very negative. If you plot the numbers on a graph, you’ll usually see more volume at the ends rather than in the middle (unlike a typical bell curve, where the highest volume is in the middle).
This reality means that customer feedback can sometimes feel misleading, since the majority of your customers’ experiences are probably somewhere in the middle. They’re simply underrepresented in your feedback because they have little to say.
That’s why understanding the reasons behind NPS ratings is so important. You can understand the root cause by:
- Asking an open-ended “why” question as part of your survey.
- Analyzing your customers' responses to this to categorize their issues.
- Finding recurring themes and patterns to identify areas for improvement.
Another way to dig deeper into understanding your NPS score is to do some user segmentation. For instance, if you offer a free trial and the distribution of NPS in that group is tilted towards detractors or passives, you can separate out the issues that they experience and deal with them. This won’t only increase your NPS score, but will also (probably) increase your conversion rate from free trials to paid customers.
Understanding the key drivers of both positive and negative scores is essential in improving your NPS. It’ll help you know what’s going well, so you can build on those areas and leverage them further. Of course, knowing the drivers of low scores will also show you where you need to focus on improving.
If you analyze your NPS data over a longer period and notice that the same underlying issues keep appearing over and over, it also makes it easy to build a business case to prioritize fixing those problems.
How to increase NPS with powerful insights
If you’re serious about improving your customer experience, you need good customer feedback analytics.
Feedback analysis provides you with insights that tell you what matters most to your customers, positioning you to take appropriate and strategic action. Consistent action to improve your customer experience over a sustained period of time results in the best possible outcomes for your business.
Focusing on NPS can be a great way to kickstart these important conversations and to create a customer-centric culture. At Kapiche, we’ve developed a tool that can take all your survey data and process it—along with any other customer data you have—to give you valuable insights into your customers.
Book a free demo today to learn more about how you can supercharge your customer experience.
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