What is NPS and Why it Matters for Your Business

Have you ever wondered how to gather feedback from every customer who shops at your store without bombarding them with mass emails that are unlikely to be opened?

Have you ever considered how to keep track of your loyal customers, and maybe find out why some of them may not want to return?

At the end of the day, you did something right, and they made a purchase, but will most of your customers rave about your product or services to their inner circle? Or will they make sure to take their money elsewhere next time?

Net Promoter Score (NPS) is a business tool that provides valuable insights into your business’ customer satisfaction and loyalty. It uses an easy-to-understand scale of 1-10 and it is the go-to tool for businesses to gather analytical information about their customer's perceptions of their business.

While it shouldn’t be the only tool you use to get a health check on your business, let’s look into the dos and donts of implementing NPS for your business.

What is Net Promoter Score (NPS)?

Invented by Fred Reichheld in 2003, NPS is known as the modern way to understand exactly how customers feel about your business.

It was born out of the idea that people will undoubtedly talk about a business when their experience falls on either end of the spectrum. So, why not work towards identifying these groups and uncovering the reasons behind their sentiments? After all, word-of-mouth marketing and customer loyalty are some of the most powerful marketing channels.

With NPS you can identify your biggest fans (promoters), your biggest haters (detractors), and everyone in between (passives).

For every business, there is a chance to learn and act upon the feedback that each group provides.

What does each group represent?

Everything You Need to Know About a Successful NPS Implementation

How NPS Is Calculated

Your Net Promoter Score is calculated by taking the difference between your promoters and detractors.

Percentage of promoters - percentage of detractors = Your NPS

Your score can range between -100 to 100, meaning that on one end 100% of your customers that responded to your NPS survey are detractors (scored your product or service between 0-6) or 100% are promoters (scored between 9-10). While these represent two extremes, what does a healthy score look like?

At the end of the day, any positive score is great because it means you have more promoters than detractors, but a healthy NPS score will look different for most businesses depending on their industry.

How to Interpret Your NPS Score

NPS scores offer real-time analytics on how your business is doing, and once you have an idea of what a healthy NPS score looks like for your business, you can use it as a tool to measure the success of changes you make in your business.

But how should you interpret your score? Especially if you just got started with NPS.

Your promoters and detractors are the ones that provide you with clear insight into what they're thinking about your business. These two groups can give you a good idea of any trends in your business and help you identify areas for improvement.

However, it's important to keep an eye on the passives. Paying attention to your passives is crucial because they can be an early warning sign of potential problems. If your passives are trending upwards and your promoters are decreasing, it's an indication that you might start getting more detractors if you don't take action.

The Next-Generation of NPS

If you're looking to get more honest and accurate feedback from your customers, you might want to consider a whole new way of asking how they score your business.

As we discussed earlier, emails tend to have a lower open rate, and asking customers to click through multiple links to provide an NPS score may come across as assigning homework. So, what’s a more effective option? Asking for your NPS score via text message.

Texting is quick and easy, and most people are more likely to respond to a text message than to an email. Text messaging is not only a more accessible form of communication; all you are asking them to do is rate their experience with your business on a scale of 0 to 10. Effort level: almost 0.

Here’s the beauty of text messaging, you just opened a whole new communication channel with your customer and now you have the chance to have a real conversation and clearly strategize how you want to move forward with each customer group.

Maximize Growth with NPS and Text Messaging

The Power of Follow-Ups

First, it’s important to remember that timing is crucial when it comes to asking for an NPS score. If you ask too early or too late, you may not get an accurate reflection of the customer's true feelings about their interaction with your business.

But asking at the right time can make a significant difference – we have found that the sweet spot to ask for an NPS score is 24-48 hours after the interaction.

You can ask for an NPS score after an in-store purchase or a web chat interaction that started on your website. Our customers have found that asking for an NPS score right after a sale more often results in ‘I haven’t had a chance to try the product yet’. Remember, wording and timing go hand in hand when asking for your NPS score. No worries, we got you covered – we will go over some examples below.

Once you receive your NPS score, you can strategize how you approach each customer group. For promoters, you can ask for positive reviews to boost your online reputation, we map out the how-to in this blog post.

For passives, you can probe deeper to understand what could have been better. This customer group allows you to increase your score by showing that you care about their experience.

For detractors, you can address their concerns in a personable way because you are now on texting terms and you have the opportunity to solve any issues outside of a public platform. The important part is to remember that while your team's intentions may have been in the right place, it's always essential to actively listen and gauge how your service is perceived by your customers. There's always room for improvement, and customer feedback is a valuable tool in achieving it.

Showing your customers that you value their feedback and using it to make improvements will help you build a stronger and more loyal customer base.

Escape the Email Sludge With Texting

Personalizing the way you ask for an NPS score can make all the difference. Customers are more likely to respond positively and honestly when the interaction doesn’t feel “transactional”. Sprinkle in some personality to make it feel more casual.

One way to personalize your NPS request is to use the customer's name or use it as an opportunity to ask specific questions about the customer's recent experience.

For example, if you tried curbside pickup for the first time this holiday season, it might be a good idea to check in and see if it’s something your customers appreciate.

Here are 5 different ways to ask for an NPS score that allows you to shine through some personality depending on your industry.

The #1 NPS Mistake to Avoid

The #1 biggest mistake that businesses make with NPS is falling into one of two extremes.

Some businesses become obsessed with their NPS score and forget about the bigger picture. On the other hand, some businesses dismiss the importance of NPS altogether.

Businesses should view NPS as a helpful tool that gives them the opportunity to make data-driven decisions and really get to know their customers.