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How to leverage your NPS to improve customer retention

Here’s an age-old question for you: is it cheaper for your business to attract a new customer or win back the business of an old one? If you guessed that it’s cheaper to retain a customer, you’d be right. 

On average, it costs 6-7 times less to win repeat business from a loyal customer than a new customer. But retaining your customers isn’t all about saving money. According to research from Bain and Company, improving your customer retention could boost your business’s performance long term, as a 5% increase in retention can drive your profits by 25%.

Naturally, you’ll want to take customer retention seriously by monitoring your Net Promoter Score. And we can help. In this article, you’ll learn everything you need to know about Net Promoter Score, including what it is, how to calculate it, and how to use it to drive customer satisfaction. 

What is Net Promoter Score? (NPS)

Your Net Promoter Score or ‘NPS’ is customer satisfaction and loyalty measure that determines how many of your customers are likely to act as brand evangelists and fuel the growth of your business through their positive customer experience. 

NPS is one of the most popular digital marketing metrics as it’s quick, quantifiable, has a standardized definition, and can be used to benchmark your performance over time. 

To measure your NPS, you simply ask your customers one straightforward question: “How likely are you to recommend our product/ business to a friend, family member, or colleague?” Then, you capture their response on a scale of 0-10, where zero is “least likely to recommend” and ten is “most likely to recommend.” That scale looks like this:

nps graphic
Source: InMoment

To process these responses, sort them into three categories:

  1. Detractors = People who score 1 – 6 and are not satisfied with your business
  2. Passives = People who score 7 – 8 and are somewhat satisfied with your business
  3. Promoters = People who score 8 – 10 and are very satisfied with your business 

Then, you can calculate your NPS by subtracting the percentage of detractors from the percentage of promoters – like this formula shows:

Net Promoter Score = Percentage of Detractors – Percentage of Promoters

What is a good Net Promoter Score?

Net Promoter Scores scores can range from -100 (all detractors) to 100 (all promoters). 

But what’s the average? In a study of 15,000 organizations, SurveyMonkey found that the average NPS is 32%. However, the spread of scores was quite large, as 50% of organizations scored under 44 and 50% scored over 44. 

Additionally, the bottom 25% of organizations scored under 0, while the top 25% scored 72 or more. That’s a difference of at least 72 (if not more). 

Organizations in different industries also scored very differently. For example, the average NPS was 35 in the technology industry and 43 in the technology and consumer goods industries. 

Though there is a lot of range in NPS scores, you can see where you stand by measuring your NPS score against a standard benchmark. According to this benchmark:

  • A score of 0 – 30 means that very few of your customers are satisfied
  • A score of 30 – 70 means that most of your customers are satisfied
  • A score of 70+ means that the vast majority of your customers are satisfied 

Strategies to improve customer retention through NPS

Calculating your NPS can be a bit scary, as it’s confronting to see how customers perceive your business. 

But there’s no reason to be afraid. 
Feedback from promoters, passives, and detractors is beneficial to your business, as you can use it to improve your customer retention rate. Your retention rate refers to how many customers your business keeps over time. You can calculate it with this formula:

retention calculation formula

Retention rate = ( #customers at the end of the month – #customers acquired this month)/ #customers at the start of the month

Improving your retention rate will drive your sales long-term, as research shows that existing customers are 50% more likely to try new products and spend more than new customers

With that in mind, here are six ways to improve your customer retention by leveraging your NPS: 

1. Address customer service feedback

Did you know that 32% of customers will abandon a brand after one bad customer service experience? 

Your NPS is an important source of information for you, as it gives you a list of detractors, passives, and promoters. Naturally, you can leverage this list to address customer concerns. And as each group will likely have different customer service experiences, you’ll get diverse responses. 

To get valuable feedback about your customer service, add a simple follow-up question to your NPS survey: “Are you satisfied with our customer service, and if not, what can we change to serve you better?” 

Then, compile your responses and sort them by popularity. Chances are, you will discover multiple similar complaints. Use this to signify that the problem is essential, and rank repeated complaints as “high priority.” 

Once you’ve got a list of complaints, consider changes you could make to fix them. For example, if many customers complained that they couldn’t find interesting products on your website, you could implement eCommerce personalization to recommend products based on a buyer’s history. 

After you’ve compiled a list of solutions, implement the ones that are feasible for you (both financially and logistically) and highly sought after by customers.

By addressing your customer service feedback with active changes, you can improve the things people complain about the most. And by addressing the root of these bad experiences upfront, you can keep customers you would have otherwise lost.  

2. Customize your NPS survey for your business type

As mentioned in the ‘What is a good NPS score?’ section, there’s plenty of differentiation between NPS scores. That’s true for NPS surveys, too. 

While most businesses use a very similar NPS question, you can personalize how you collect your NPS data to your business. There are many ways to do this, including: 

  • Presenting your NPS survey at the optimal time for customers (during checkout, after checkout, after you’ve delivered their item, one day before order fulfillment, etc.)
  • Adjusting your NPS survey to fit into your brand’s style 
  • Customizing the channel you send the survey on to your audience (i.e., through social media, email, your website, in person, or by mail) 

Personalizing your NPS survey allows you to integrate it into your customer’s experience smoothly, meaning you can collect NPS data on a continuous, ongoing basis. 

Collecting regular NPS data will help you understand your customers better, as you can notice trends in responses, track seasonal adjustments, and survey the same customers without fighting survey fatigue. Regular NPS surveys will also boost your retention rate long-term, as when you understand how customers feel about you, you can determine if your current strategies are effective or not and adjust accordingly in real-time.
And of course, conducting surveys regularly allows you to track them easily using a marketing dashboard like this:

nps dashboard
Source: ClicData

3. Incorporate NPS into product feature developments 

When asking customers for an NPS score about a product, many businesses make one crucial mistake: not asking customers why they gave your product a particular score. 

When you ask customers “why,” you obtain critical feedback about what your customers would change. This is crucial in product development, as you can use this feedback to adjust old products and develop new products to customer’s tastes. 

To integrate this feedback, add the follow-up question “why” to your survey. Then, collate the responses and highlight the most popular ones. 

To ensure these are the best features to focus on, send a follow-up survey to customers and ask about the features with a question like: “On a scale of 0 – 10, how important is it that our (product) includes (feature)?”

Then, use this feedback to pick the most crucial features and focus on them.

Long-term, using your NPS data to design your product features will boost your retention rate by helping you keep customers who would have otherwise switched to a competitor that offers the feature they wanted. 

4. Create a referral engine 

Who is your biggest supporter? If you don’t know the answer to that question, you may be missing out on a golden opportunity. 

Your brand promoters are critical to the success of your marketing, as research shows that 92% of consumers trust referral marketing.

To use your brand promoters to boost your business, collate a list of them from your NPS results. Then, enter these people into your referral engine. A referral engine is a cyclical process that funnels people through a series of steps to build their loyalty and incentivize them to refer you to their friends and family. 

To build your referral engine, follow these steps:

  1. Build rapport with your promoters by inviting them into a customer loyalty club (including a Facebook group, email list club, social media chat, or rewards program)
  2. Build trust with your promoters by offering them exclusive access to new products, bonuses, or discounts 
  3. Ask your promoters to leave you online reviews, submit testimonials, or refer new customers
  4. Reward your promoters for helping you by offering them a reward 

Engaging with your most loyal customers through a referral cycle will increase your retention rate by keeping your best customers engaged with your business. It will also improve your customer acquisition, because as Mark Zuckerberg puts it: “Nothing influences people more than a recommendation from a trusted friend.” 

5. Create a stronger product roadmap

In a study conducted by Accenture, researchers found something interesting: approximately 50% of consumers will spend up to 57% more on a brand they are loyal to. 

This statistic should tell you one thing clearly: your most profitable customers are your promoters. So naturally, you should include them when you develop your product roadmap. 

A product roadmap is a document or chart encompassing your product’s progress, positioning, priorities, and positioning. In essence, it’s a working file that documents everything about your product throughout the development process. It often looks like this:

product roadmap
Source: Roadmunk

Developing a good product roadmap is vital in bringing a great product to market, as it will help you align your product with your audience. And, of course, you can enhance your roadmap by leveraging your NPS results. There are two ways you can do this. 

First, you could gather a list of promoters and introduce your product to them by emphasizing three things:

  • What it does
  • Who it’s for 
  • How it works 

Then, ask your customers one key question: “How can we change this product to ensure it meets your needs?” Once you’ve collated this feedback, add it to your product roadmap and adjust your product. 

Alternatively, you could present a problem and possible solutions if you are still in the early stages of product development. 

For example, if you were trying to create a product that ensures customers always speak to the same salesperson, you could ask customers to choose between shared inbox software and software that books a call with a sales agent.

Then, you could use this feedback to drive the direction of your product roadmap (and subsequent product). 

Using your NPS data to create a more robust product roadmap will help you develop according to your customer’s tastes. This will increase your retention rate, as you’ll ensure that you deliver a product that meets the needs of your most loyal customers. 

6. Transform passives into advocates 

When you calculate your NPS, you look at two key groups: your detractors and promoters. But don’t forget about your passives. Though your passives aren’t supporters of your business right now, there’s no reason they can’t be in the future. 

To turn your passives into promoters, target them by inviting them into a special lead-nurturing loyalty program. This lead nurturing program will appeal to passives by offering exclusive discounts, targeted content, group activities like webinars, or a free gift. 

During your program, you should also offer your passives excellent customer service by prioritizing answering their queries quickly, professionally, and thoroughly. 

Nurturing your passives will boost your retention rate by reducing customer churn. As passives feel warmly towards your business, they have the potential to become great customers. But as they aren’t as loyal as promoters, they may also leave if your competition makes a better offer. Thus, when you target your passives, you win great promoters. 

Why NPS is the secret to customer retention

While calculating your NPS may seem like nothing more than a visualization exercise, that’s simply not true. 

Your NPS data gives you critical insights into your customers’ feelings about your brand, product, and customer service. And when you leverage NPS, you can boost your customer retention by: 

  • Addressing customer service problems 
  • Spotting issues in real-time
  • Developing features customer’s love 
  • Seeking referrals from your best customers
  • Developing your products with customers in mind 
  • Transforming passive and unhappy customers into active ones 

To get started on your NPS journey, sign up for ClicData today!

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About the author

Zoe is a content marketing strategist for SaaS brands like FollowUpBoss, Mention.com, and more. Bylines: Ecwid, ProProfs, Score, etc. On the personal front, Zoe is a pho enthusiast and loves traveling around the world as a digital nomad.

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