Successful B2B businesses all have something in common– a segment of loyal customers who regularly purchase and recommend their products and services. Consider these statistics:
- A 5% increase in customer retention can increase profits between 25% and 95% (source).
- Current customers spend 67% more on average than new customers (source).
- Customers who are highly engaged with a brand make 90% more frequent purchases and spend 60% more on each transaction (source).
But, building up customer loyalty isn’t easy. You must constantly work to measure and improve the customer experience. Fortunately, businesses can simplify this process by using a popular customer loyalty metric known as Net Promoter Score.
In today’s blog post, we explore the different ways you can use Net Promoter Scores to improve customer loyalty. Let’s get into it!
What is Net Promoter Score?
Net Promoter Score (NPS) is a simple formula used by companies to measure customer experience. The formula is based on how customers respond to the following question: “How likely are you to recommend our brand to a friend or colleague, on a scale of 0-10?” Based on each customer’s answer, they will fall into three classifications:
- Promoters (score 9-10): Customers in this category are loyal customers who will continue to buy your product and refer your brand to their peers.
- Passives (score 7-8): Customers in this category are moderately satisfied customers who have the potential to switch to a competitor’s product.
- Detractors (score 0-6): Lastly, customers in this category are unhappy customers. These people won’t remain loyal to your company and can even hurt your brand through negative reviews.
To calculate your Net Promoter Score, simply subtract the percentage of detractors from the percentage of promoters. This gives you a number between -100 and +100, with a score above 0 indicating a positive customer experience. Example: An NPS survey shows 40% of your customers are promoters and 10% are detractors. Your NPS score is 30 (40% – 10% = 30).
What is a good Net Promoter Score?
There’s no such thing as a “good” Net Promoter Score—and that’s because the average score varies drastically across industries. It can even vary between different departments within a single organization.
Think about it, each department within your company is responsible for a different aspect of the customer journey. For example, your UX and UI team may use NPS to gauge product usability whereas the customer service team might use NPS to measure each customer interaction.
To understand how “good” your score is, we recommend using a mix of both internal and industry benchmarks. Then, use those benchmarks to set your own specific, measurable, and realistic goals.
For easy reference, we’ve compiled a list of current NPS averages by industry (source):
- Healthcare: 62
- Professional Services: 58
- Retail: 54
- Hospitality, Travel, Restaurants: 53
- Manufacturing: 51
- Automotive & Transportation: 49
- Financial Services: 46
- Construction & Engineering: 45
- Consumer Services: 42
- Insurance: 42
- IT & Software: 41
- Banking: 37
- Media: 34
- IT Services: 33
- Telecommunications: 24
Remember, tracking your NPS is an ongoing process. To make the most of your score, you must regularly check it across a variety of customers.
How to Increase NPS Score & Drive Business Growth
1. Follow up with detractors to reduce customer churn.
Customer retention is critical to business growth. And, in order to keep your customers happy, you must identify and subsequently rectify as many negative experiences as possible.
To do so, we recommend sending each “detractor” a personalized follow-up email to address their poor customer experience. Consider including an exclusive offer or discount as a gesture of appreciation and as an apology for a bad experience. The goal is to improve the individual customer’s perception of your brand, while also identifying issues that might impact your interactions with customers in the future.
Next, track your progress by following up with detractors semi-regularly. Send a second NPS survey after some time has passed in order to see if your response led to an improvement. Following up with detractors is also a good way to identify larger business-wide issues.
Here’s a quick example: You follow up with detractors and realize many of their low scores stem from complaints about long wait times to receive an initial quote. This prompts you to implement a new workflow to streamline the process.
2. Leverage promoters to generate more sales referrals.
Statistics prove that business referrals are an inexpensive and effective way to generate new business (source):
- When referred by a friend, people are 4x more likely to make a purchase.
- The lifetime value of a referred customer is 16% higher than non-referred customers.
- Customers acquired through referrals have a 37% higher retention rate.
- Referred customers have an 18% lower churn rate than customers acquired by other means.
- Referred customers generate 16% more in profits than non-referred customers
Here’s the most interesting part: 83% of consumers are willing to refer after a positive experience—yet only 29% actually do. But, by using NPS, you can quickly identify and target the customers most likely to provide referrals and encourage them to do so.
Here’s how: After a customer has spent some time with your product, send an email with an NPS survey attached. Then, send those marked as “promoters” an incentivized request for referrals. This method has two benefits—it will produce referrals from customers who are happy to recommend your products, and you’ll reward promoters, making them even more loyal to your brand.
3. Improve your products and services.
Businesses can also use their score as a product development tool. Here’s how: Run an NPS survey every quarter using the question, “How likely are you to recommend our product to a friend or colleague, on a scale of 0-10?” We also recommend including a second text option to collect more open-ended feedback.
Record each response and note any specific mentions of a feature, product, or service. Once you have cataloged all answers, tally up the number of complaints and generate the NPS score for each specific product or feature. Take note of which features have the highest number of complaints and lowest NPS scores. These areas cause the most customer frustration and must be prioritized accordingly.
4. Leverage promoters to improve brand awareness.
The creator of the Net Promoter System, Fred Reichheld, said it best: “The only path to profitable growth may lie in a company’s ability to get its loyal customers to become, in effect, its marketing department.”
Here’s how to start: When 9-10 ratings come in, reach out to promoters to discuss mutually-beneficial marketing opportunities. Rather than send the same request to every customer, look into existing customer data to understand how each promoter can be an asset to your current marketing initiatives. Here are a few ideas to get you started:
Content shares: Ask customers with an active social media presence to share content on Twitter or LinkedIn.
Reviews: Ask customers who praised your product features to write a review on TrustRadius, PC Magazine, G2 Crowd, or another popular review site.
Case studies: Ask successful customers to participate in a case study.
While some customers will be happy to help, no questions asked– your efforts may be more effective if you incentivize customers using rewards or a loyalty program.
Final Thoughts about Net Promoter Score
As a standalone metric, NPS won’t do much to grow your business. But, it’s is a valuable starting point to gauge customer loyalty and identify areas of improvement across your various business initiatives. Remember: the goal of using NPS isn’t to simply boost your score—it’s to provide a more rewarding experience for your current and future buyers.
And to learn how our B2B contact database can help scale your business growth, contact a sales rep today!