News

What’s Your NPS? We’ll Show You Ours . . .

Written by Tim Edmundson

Jul 7, 2015


It may not sound cool, but we’ll admit it – we care what people think of us! Most of all, we care what our customers think of their experience partnering with us to reach their digital marketing goals.

This quarter we fielded our first Net Promoter Survey which yielded a Net Promoter Score or NPS. We’d like to share the results and provide a little information about this tool commonly used by many well-known brands to gauge customer loyalty.

ABOUT NPS

Introduced in a Harvard Business Review article “One Number You Need to Grow” in 2003, today NPS is generally considered the standard measurement for not only customer satisfaction, but long term business and brand health.

As business professionals we can do things to drive short-term satisfaction: reducing prices, providing incentives etc, but over the long run these tactics erode the brand and the business. Short-term satisfaction can be quickly impacted, but not likelihood to recommend. This is where NPS comes in.

The NPS, is based on one simple question: On a Scale from 1-10, how likely is it that you would recommend [company name] to a friend or colleague? This single question then categorizes each response into one of these three buckets. From there, we are able to see how that company ranks through the eyes of the customer.

PROMOTERS Score of 9-10 Loyal enthusiasts who will keep buying and refer others, fueling growth.
PASSIVES Score of 7-8 Satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
DETRACTORS Score of 0-6 Unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

GETTING YOUR NPS SCORE

NPS = % of Promoters – % of Detractors

Because the NPS score is able to distinguish the loyal customers from the detractors, companies are able to evaluate the attitude currently associated with them, as well as create a plan of improvement for the future.

SO WHAT’S A GOOD SCORE?

According to the article, “The path to sustainable, profitable growth begins with creating more promoters and fewer detractors and making your net-promoter number transparent throughout your organization.”

The NPS range is from -100 to + 100, not 0 to 100. If more people are detractors than promoters you end up with a negative score and a lot of explaining to do! But if you have more promoters you end up with a positive score and happy customers.

Here are the Net Promoter Scores of some brands you may recognize. For a more robust list of consumer brands, click here.

Audi 28% eBay 39%
BMW 40% Google 19%
Apple 47% Oracle 25%
Budweiser 29% Spotify 46%
Coca Cola 20% Dropbox 34%
Sprite 17% Adobe 25%

HOW WE STACK UP

SteelHouse scored an amazing 89% NPS for our top customer tier and an overall 67% NPS  – compared to the technology benchmark of 62.3%. This puts us ahead of every other digital marketing platform and in good company with the likes of Adobe, Apple, Google, and American Express.

OTHER WAYS TO MEASURE LOYALTY

Many companies struggle to connect NPS with business financial metrics. That’s why it’s important to connect the dots and confirm the correlation between NPS and other benchmarks. Here are a few for you to consider.

CUSTOMER RETENTION RATE – This indicates how long customers stay with you. According to Fred Reichheld, author of ‘The Loyalty Effect’, “ …a 5% increase in customer retention can lead to a 25-100% increase in profit across a wide range of industries.”

How to measure… [(Customers at End of a Period – Those Acquired During a Period) / Customers at the Start of a Period] *100 

NEGATIVE CHURN RATE – Don’t get confused by the double negative, since churn is negative growth you’re really just measuring growth. This can be measured in revenue or number of customers.

How to measure… Existing Customers + New Customers – Lost Customers

CUSTOMER EFFORT SCORE (CES) – This asks customers “How much effort did you personally have to put forth to solve a problem with the company?” This metric is proving more popular than NPS in some quarters because it measures actual experience rather than the emotional delight of the customer. A recent study by the Harvard Business Review found 50% of customers who had negative experiences with a company told 10+ people.

How to measure… Customers rate effort on a scale of 1-5 and an average is taken.

Remember, you should pick methods that make the most sense for your brand and improving your NPS is just one piece of an overall customer satisfaction strategy. We’re honored to have received a score of 67%, and we’re already hard at work to make sure even more of our customers would recommend us.