Why your Net Promoter Score® needs integrated customer data
The Net Promoter Score® (NPS) is used to quantify your customer loyalty. Its use is on the rise, with two thirds of Fortune 1000 companies using the metric. But is it as comprehensive as it could be? We take a look at how to amplify its impact, by supporting your NPS with integrated customer data.
What is Net Promoter Score?
The Net Promoter Score® (NPS) was developed by Fred Reichheld, Bain & Company, and Satmetrix to calculate your customers’ perception of your brand. It’s used as an alternative to customer satisfaction research, and can be correlated directly to market growth.
It can be incorporated into your metric analysis strategy, to give you a stronger idea of how your brand is perceived by customers. But as you’ll see, it isn’t as valuable if used alone. It needs to be integrated with all your brand data, to give you complete customer intelligence.
How to measure brand loyalty - NPS
Net promoter score is the perfect way to measure your brand loyalty. If customers are likely to recommend you to their friends or colleagues, then it displays loyalty to your brand. NPS is also a more straightforward methodology than repeat purchase rate or customer lifetime value, as it doesn't rely on historic data or through the measuring of rewards programs.
The Net Promoter Score calculation
The methodology relates to a single question:
“How likely is it that you would recommend our company/product/service to a friend or colleague?”
This question is put to customers, with the option to score the brand on a scale of 0 (unlikely) to 10 (very likely). From these responses, brands can identify 3 categories of customers.
People who score 9 or 10 on the NPS question, are defined as promoters. Those who actively promote your brand. They are more likely to be loyal to your brand, more likely to purchase, and are more likely to recommend the brand to other people. When it comes to social media, they’re more likely to become influencers, to create user-generated content, and more likely to be content amplifiers.
People who score 7 or 8 are defined as passives - the customers who won’t actively promote your brand, but also, won’t openly criticize it either.
People who score 0 to 6 are defined as detractors. These are the people that are going to view your brand negatively, creating bad reviews, critical social media comments, and negative word of mouth. If your brand is going to face a social media crisis, then expect it to come from a detractor.
How do you calculate Net Promoter Score?
Once you’ve completed an NPS survey with your customers, calculate what percentage of customers are promoters and detractors. You can then define your score by subtracting the percentage of detractors from the percentage of promoters.
For example, if you surveyed 1000 customers, with 400 rating you 9 or 10, and 200 rating you 6 or less, then you can calculate your score as:
40% - 20% = 20NPS
Your score can vary between -100 (if all your customers rated you 6 or less) to +100 (if all your customers rated you 9 or more).
Once calculated, you’ll want to understand what your score means for your brand. That means comparing your score to that of your competitors and industry. Satmetrix offers a subscription service that provides benchmark scores for 30 industries (and the industry leaders).
To give you an idea of the type of benchmarks to expect, Hubspot benchmarks industries from -1 (Internet service providers) to 62 (Department or specialty stores).
Net Promoter Score issues
Overall, it’s easy to see the benefits of using NPS. It gives you a clear score that measures customer perception of your brand in one easy to understand metric.
This can be used as a benchmark, to help monitor your changing brand perceptions overtime, and be used to benchmark your company against your competitors.
There are a lot of pieces missing from the picture. Much like other marketing metrics, such as advertising value equivalency, and earned media value, the methodology over- simplifies something that is quite complicated, with a narrow viewpoint that misses a lot of data. It shows you the what, but misses the why.
NPS gets an overall level of customer feedback, so you can understand how people see your brand. But it doesn’t provide analysis into why people perceive it as they do.
It is recommended that you should include a process that closes the loop as part of the Net Promoter System. That’s typically a follow up question, call, or survey for detractors, that tries to understand the reasoning behind the customer’s low score.
However, this requires further time and work.
Change over time
Customers are fickle. They can change their opinions at any time. One moment of poor customer service can quickly turn a promoter into a detractor.
By relying on surveys, you’re missing real time results. The day to day changes that can impact your overall brand perception. NPS adds a delay into your analysis that could put you behind by weeks. In the fast paced world of social media marketing, those weeks could be the difference between great engagement, and a real brand crisis.
NPS measures, not actions
Overall, NPS is a measurement. It’s not a goal - you can’t use it to define your goals or brand actions, only as a way to measure success of those actions. Much like a vanity metric, it does add to your overall measurement plan, but it won’t ever lead to actionable insights.
For real success, you need to integrate your Net Promoter Score with other customer data. Only then can you perceive your complete brand position.
Customer Intelligence - Integrated customer data
When it comes to these types of formulaic metrics, they’re good. But they can be better.
Ideally, as a brand, you want completely integrated customer data - empowering your customer intelligence with all the data that relates to your customers. Giving you more comprehensive, actionable insights into your customers.
Customer Data + is the perfect solution to help your integrate this data effectively.
It all comes down to data democracy. Currently, we're seeing data bottlenecking in some parts of the business, with departments running as silos rather than aligned.
Data democracy creates access to data for everyone in the organization. Allowing all business users to make data driven decisions, while standardizing frameworks across the organization.
To be a truly data mature company, this democratization will help drive your business, ensuring every bit of data works together towards that success.
NPS fits into this as a metric that can be used to monitor that success. But only when integrated with other business data. Allowing you to define your score, and understand exactly why it is what it is.
What data should you integrate with NPS?
Whatever can help you complete the bigger picture. You could include:
- Social media analytics. Adding conversational data from consumers can help you understand the topics that are causing them to love or loathe your brand more. Incorporating sentiment analysis can help you align that data with your NPS to detect direct correlation in real time.
- Review data. By adding your reviews, you can see exactly how your detractors and promoters are viewing your brand. NPS data is very formulaic. Review analysis can help you see if that formula needs adapting for your brand.
- Customer data (Email, chat, survey, call center transcripts). One vital element of NPS is closing the loop: finding out why customers view you as they do. Your email data could be doing that for you - with your clients providing brand feedback directly to your inbox. Integrating this could help you understand the reasoning behind your score even faster.
- Sales data. NPS can be directly linked to business growth. Add your sales data into your metric mix, to see exactly how your score relates to sales. Again, you could reformulate the methodology to discover correlation, and help you forecast sales more effectively.
Net promoter score - Integral if integrated
NPS is a useful metric, but like many methodologies used by marketing and PR pros, it only becomes integral when combined with complete integrated customer data. It’s only a piece of your complete brand data picture.
And to see that picture for your brand, you need a complete social data analysis platform - like Talkwalker.
With the ability to combine all your business data, impact metrics, KPIs and more in one single source of truth. To see how Talkwalker could provide your brand with a complete data picture, request a free demo below.
"Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc."