Have you ever wanted to get inside the minds of your customers? What do they think about you and your business? What’s their satisfaction level? Are they considering taking their business somewhere else? If only there was a tool that could gage all this info…
Welcome to the mind-reading world of using your Net Promoter Score (NPS). It’s a great tool that allows you to assess and understand the strength of your customer satisfaction and loyalty. The data is collected as you ask this specific question,“How likely are you to recommend our company/product/service to a friend or family member?” And the customer then responds with a score from 0-10. People who reply with a 9 or 10 are called Promoters, while those with a score of 0-6 are Detractors. Anybody who gives a score of 7-8 are labeled Passives. Your NPS score is then built over time and gives you a gauge of where you stand with your customers. The score can be as low as -100 and as high as +100. Generally speaking, a score above 0 is considered good, a +50 score is excellent and 70+ is exceptional.
Why use NPS?
The Net Promoter Score method is meant to be used as an alternative to traditional customer satisfaction research and provide better results. In fact, studies show that an average NPS increase by 7 points correlates with a 1% growth in revenue. Here are a few other statistics on why it’s important to know and use your NPS:
- According to research among 100+ customer experience directors, NPS is used in two-thirds of companies. CSAT (another customer satisfaction scoring tool) is used in less than half.
- Promoters are 4.2 times more likely to buy again, 5.6 times more likely to forgive a company after a mistake and 7.2 times more likely to try a new offering compared with the detractors.
- Oracle discovered that 89% of consumers began doing business with a competitor following a poor customer experience.
What will my response rates be?
Response rates are usually around 15% per survey sent out and you’ll want to send follow-up surveys to stay on top of your customer satisfaction and track any changes. A good method would be to pick 2 dates each year to collect NPS scores and feedback. If you have a large customer base, feel free to collect scores more frequently but make sure to not ask the same customer for a rating more than twice a year.
What’s your NPS score?
The good news is that if you haven’t done math since high school… you still should be able to figure this calculation out. All you do is subtract the percentage of Detractors from the percentage of Promoters. So if 50% of respondents were Promoters and 15% were Detractors, your NPS is 35. Notice though that it’s not 35%, it’s simply 35. Keep in mind that an NPS score is a number and not a percentage.
A note on the haters: It would take too much time and energy to try and change the minds of every Detractor. Use your common sense to separate those stuck in a Detractor mindset from those who maybe just had one bad experience. Those who have only had one poor experience are most likely still on the fence and can be turned back to the light. Focus your energy here.
What can you do with all the data?
Once you have gathered data and know who your Promoters, Detractors and Passives are, you can set up customized campaigns to engage with each group. For example, at Charles Schwab, they have a team entirely dedicated to reaching out to Detractors. Their sole purpose is to engage with customers, listen and learn about their problems to work towards a solution. Now if you’re an owner of a small agency, this probably isn’t a practical tactic. But even if you don’t have a whole team devoted to Detractors, you still should schedule time throughout your week to engage with those who have given scores of 0-6.
A similar methodology should be used for Passives as well. Consider upping your communication game with those who have given you an average score. Keep close tabs on them with the hopes of bringing them to a Promoter status rather than a Detractor. Offer perks, giveaways and discounts to this group in order to bump up their scores.
NPS and the Insurance World
The average NPS for the auto insurance industry is 44 while the average for the homeowners insurance industry is 42, according to NICE Satmetrix. Life insurance is at 31 and health insurance is at 18. These good scores are due to the fact that insurance agents have more personal contact with customers than other industries might. This also means there’s more competition when it comes to NPS scores.
So with the insurance industry NPS average at about 34, we are proud to announce that customers of Lift Local have an average NPS score of 66. That’s a big difference and can really make the difference when it comes to handling the competition.
What are next steps?
If you’re new to the NPS world, it can be difficult to keep track of and interpret all the data. It can also be hard to find time to use the data. If you’re looking for a more hands-off approach, a service like Lift Local can help you track and monitor your NPS. We actually will take care of the whole process for you – from sending out the requests to reporting on your score each month. Our process also simultaneously gets you Google reviews.
We’d love to help you out and take the stress of generating and tracking your NPS score off your hands. Fill out this form to get started.