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NPS (Net Promoter Score): Is It Still Necessary

Net Promoter Score

Loyalty is tough to acquire but very easy to lose. No one understands this maxim more than businesses and brands that rely on customer loyalty.

The United States is the biggest consumer economy in the world. Consumerism is encouraged. Consumerism is a large part of how the government funds itself via taxes. But consumerism is also akin to an identity for Americans.

Americans love to shop, holiday season or not. The United States has the largest market for consumerism in the world. Even with the advent of the coronavirus pandemic, Americans spent over $12.5 trillion on various consumer goods in 2020.

In 2019, Americans spent over $13 trillion buying consumer goods. Even a pandemic did not stop Americans from shopping.

Consumers pay top dollar for goods even when they don’t know what they want. Americans waste over $5,400 annually on wasteful impulse shopping habits. Consumers regularly buy things they don’t need or want for their own sake. 

Over 70% of consumers usually engage in impulse shopping at the supermarket.

While it may be easy to judge such consumer habits, business is business. And it is worth noting that consumer spending habits don’t occur in a vacuum.

Something drives consumers to buy as much as they do, besides the thrill of finding a bargain.

Loyalty. Consumers are usually very loyal to companies and brands until they are not. And companies know this. 

90% of businesses have operational loyalty programs. There are over 3.3 billion consumer loyalty program memberships in the United States.

Still, businesses usually employ net promoter score programs to gauge consumer loyalty. But with annual consumer spending statistics in the double-digit trillions, are net promoter scores still necessary?

Do you need innovative solutions for your customer experience challenges? Contact BrainCX today.

Related: The BCX Video Experience for Customers

What Exactly Is Net Promoter Score?

A Net Promoter Score is an industry-recognized marketing metric used to gauge how likely consumers are to recommend a product, brand, service, or company to a colleague, friend, or relative.

Net promoter scores are research metrics analyzing market conditions via loyalty statistics initiated in a survey.

Almost every company with a customer loyalty program or a customer experience program uses net promoter scores to gauge consumer loyalty to a company or brand.

A net promoter score survey features one or more questions with satisfaction values ranging from -100 to +100. The higher the net promoter score, the more likely a customer stays loyal and even refers the business or service to others.

If a company has repeatedly asked you via text or email to fill out a survey ranking their service, or your willingness to refer their business to others, then you were exposed to the net promoter score process.

The survey is also optimally used to help businesses understand their brand and service perception amongst customers.

The net promoter score metric was initially developed by Bain and Company back in 2003.

Why Is It Important?

Shopaholic exits mall with bags full of purchases.

Net promoter score metrics help businesses and brands gauge the market viability of their business models based on customer responses.

Additionally, the net promoter score helps businesses understand how well their customer service departments are operating.

They can also assess the quality of their customer service programs concerning their direct competitors. Businesses can then use this information to improve and upgrade their customer service relation programs accordingly.

Net promoter score metrics can be used to help businesses identify any flaws or problems in their business plans, operations, or customer experiences.

Consumer loyalty trends, and the directions they are heading, can also be monitored via net promoter score metrics.

The point is that the net promoter score helps businesses understand how customers perceive them, their brand or service, their business methods, and how they respond to customers’ needs.

And all of this information can be used by companies to refine their business methods to grow profits through survey referrals and accompanying upsells.

How To Calculate NPS

The start of the net promoter score process begins with a customer satisfaction survey.

Customers can be given this survey via a paper survey filled out in a retail store.

But such net promoter score surveys are now usually filled out via text message, email, or online.

The survey asks how likely you will refer the company, service, or brand to a friend, relative, or colleague.

And your willingness to grant the referral is gauged by choosing a number between zero to 10 on the survey.

The score a customer chooses on the survey ranks them into one of three categories that businesses assess.

Detractors

A “detractor” is a customer who responds with any score ranging between zero to 6. A detractor is a very unhappy customer who is very dissatisfied with a business’ service, brand, or interaction with a worker.

Detractors are highly unlikely to buy from the business again. They may actively discourage others from buying the service.

Very determined detractors can damage a brand name or stunt business growth via unflattering and negative referrals or word-of-mouth.

Passives

“Passives” are customers who answer with a score of either 7 or 8. Passives are generally satisfied with a business and its service and have nothing negative to say.

However, passives are not happy enough with the service to be trusted to promote or refer it to others either actively. 

Passives are unenthusiastic customers who are more likely to be persuaded by marketing to patronize a direct competitor than refer the company to others.

Promoters

Promoters are ultra-loyal customers and consumerism enthusiasts who are likely to give a business a 9 or 10.

Promoters are loyal, will keep patronizing the service, and can be counted on to refer others to patronize aggressively.

How To Collect NPS Feedback

The most optimum way to collect net promoter score feedback is to utilize electronic methods.

You can use paper surveys in retail locations, but they then must be physically collected and analyzed.

Most net promoter score surveys are collected via email, online pop-up surveys, SMS surveys, and downloadable apps.

How To Analyze NPS Results

To analyze net promoter score results, subtract the detractors from the promoters.

Passives are left out of the equation for obvious reasons.

If 9% of those surveyed are detractors, 21% are passives, and 70% are promoters, then the net promoter score is 61%.

Conclusion

Office workers analyzing data from internet server.

Is the net promoter score survey necessary? Yes, even more so in the digital 21st century, where the business world is progressively moving to e-commerce.

It is never a good plan to take a customer base for granted.

Consumer tastes are constantly changing.

Market conditions are always volatile.

And there are always new competitors coming around the corner to join current competitors.

Net promoter scores help businesses understand how their customers perceive them and what they need to do to keep them.

Need assistance with customer experience challenges? Contact BrainCX today.

Related: BCX Digital Experience

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