Three aspects of the analysis of NPS and other qualitative indicators

People running their own smaller or larger business at some point in their operations come to the conclusion that they would like to know what kind of experience customers have at various touch points with their brand and what the level of customer loyalty is. They then start by learning about the subject matter through random search terms typed into a search engine, and this is the moment when they come across the phrase NPS (Net Promoter Score) research.

What is an NPS survey?

In a nutshell, nothing more than a tool to assess customer loyalty. The methodology for assessing this loyalty was first proposed in 2003 by Fred Reichheld, Bain & Company and Satmetrix. It assumes that when making a purchase decision, the best incentive is recommendations from friends/family based on their positive experiences with the products and/or services purchased. Thus, it can be said that net promoter score NPS is a "how likely are you to recommend?" question that is often part of customer satisfaction surveys. Thanks to the answers from our customers to this now famous question, we find out what proportion are our Promoters or Detractors. Thus, the coefficient from the NPS survey measures the loyalty of those who purchase products/services to the Vendor.

How to calculate NPS?

Given that the entire methodology is based on asking a single question, the authors of the methodology proposed ratings for answers on a scale of 0 to 10.

The NPS value ranges from -100 to 100, with a score of -100 meaning that all respondents are Detractors of a given product or service, and at the opposite extreme (score of 100) is when all people are Promoters. In between the Detractors and the Promoter are the so-called Neutral people, i.e. those undecided. The NPS indicator itself is the result of a simple mathematical operation: from the percentage of Promoters we subtract the % of Detractors. For example, if 50% of Customers are happy to recommend us, 20% are Passive and 30% are Detractors, then after subtracting 30 from 50 we get the result of 20 - this is the net promoter score indicator. The Passive group is left out of this measure.

What is a "good NPS score" or a good quality indicator score in general?

It goes without saying that any score below zero is a bad score, which indicates the need to make a number of changes so that people who come in contact with our brand want to recommend us to their friends and/or family, this is not debatable or questionable. However, what if our score is, say, 20? And this is where you need to start with IT DEPENDS... Let's pay attention to 3 important aspects of analyzing the NPS score:

• benchmarking against other companies

• segmentation of customers into business-relevant segments

• trend analysis

Benchmarking - comparison with market performance

Benchmarking the NPS index involves comparing the Net Promoter Score with the performance of other companies in the industry. Such a comparison helps to understand how well a company is doing in terms of customer satisfaction and loyalty relative to its competitors.

Why is comparison with the industry important?

Benchmarking provides context for the NPS index. It helps determine whether the score is above, below or on par with industry standards, offering insight into the competitive position and highlighting areas for improvement.

How to conduct benchmarking?

1. Gathering industry data:

   • Obtain NPS data from industry reports, such as Omnichannel reports, surveys or third-party services that specialize in customer feedback.

   • Participating in industry surveys or research projects.

   • Use of dedicated market preference surveys conducted on in-house customers, carried out, for example, by YourCX

2. Analysis and interpretation of results:

   • Compare your NPS index with the industry average.

   • Identify trends and anomalies in your score relative to your competitors.

   • Evaluate the performance of direct competitors and market leaders.

Examples of application

1. Case studies of companies that have successfully applied benchmarking:

   • Example Company A: Improved its NPS by implementing best practices identified through benchmarking, leading to a 20% increase in customer retention rate.

   • Example Company B: Identified weaker areas of customer service by benchmarking NPS against competitors, resulting in targeted training programs and improved customer satisfaction.

2. Benchmarking different industries:

   • Compared NPS scores across industries to identify unique factors affecting customer satisfaction. Examining what is important in the eyes of customers in other industries can be very inspiring.

Benchmarking NPS against industry standards provides valuable information that can influence strategic decisions. It allows companies to:

• Identify gaps in the customer experience.

• Develop strategies to increase customer loyalty.

• Set realistic goals based on industry performance.

By understanding your position in the industry, you can better develop strategies to improve customer relationships and overall business performance.

Customer segmentation

Customer segmentation, in the context of an NPS survey, involves dividing customers into groups with similar characteristics, allowing for more accurate analysis of customer satisfaction and loyalty. Through segmentation, companies can create more personalized marketing strategies, better understand their customers' needs and respond more effectively to their expectations. This leads to higher customer satisfaction and increased customer loyalty.

What segments are worth analyzing? Examples

1. Demographics:

   • Age: Different age groups may have different preferences and needs. For example, younger people may prefer modern technology, while older people may value tradition and stability. For example, marketing campaigns aimed at younger people may be more interactive and dynamic, while those aimed at older people may focus on value and quality.

   • Gender: Women and men may have different expectations of products and services. For example, research may show that women value more personalized customer service, while men may pay more attention to product functionality.

   • Geographic location: customers from different regions may have different needs based on local conditions and cultures. For example, customers from large cities may prefer fast delivery, while residents of smaller towns may value direct contact with customer service more.

2. Shopping behavior:

   • Frequency of purchases: Customers who buy regularly may be more loyal and have different expectations than those who buy occasionally. Regular customers may expect loyalty programs and special offers.

   • Average basket value: Customers who spend more may expect higher levels of service and better offers. They may be more interested in exclusive products and services and personalized recommendations.

3. Product preferences:

   • Product categories: Customers may have different preferences for the product categories they buy most often. For example, some customers may prefer eco-friendly products, while others may be looking for the latest technology.

   • Brand preferences: Some customers may be loyal to one brand, while others may prefer variety. Loyal customers may be more likely to participate in ambassador programs, while variety seekers may respond to promotions and new products.

Segmentation methods

1. Data analysis:

   • Using data from CRM systems: CRM systems collect a lot of information about customers that can be used for segmentation. Examples of data include purchase history, customer service interactions and communication preferences.

   • Analyzing behavior on the website and mobile apps: Data collected from customer interactions with company websites and mobile apps can provide information about purchase preferences and habits. Examples include pages visited, time spent on the site, and clicks on specific products.

2. Tools and technologies to support segmentation:

   • Customer Relationship Management (CRM) systems: CRMs allow you to store and analyze customer data in one place, making it easier to create segments.

   • Data analysis tools: Such as Google Analytics, which can track and analyze online customer behavior, enabling the creation of accurate segments. Also, sophisticated and comprehensive customer satisfaction survey platforms, such as YourCX, provide mechanisms for automated customer segmentation.

Examples of application

1. Case studies of companies that have successfully applied segmentation:

   • Company A: Increased customer loyalty through personalized offers to different demographic segments. Company A identified that younger people are more interested in subscriptions, while older people prefer one-time purchases. As a result, it tailored its offers and marketing campaigns.

   • Company B: Improved NPS scores by analyzing purchase behavior and adjusting its marketing strategy. Company B noticed that customers who buy frequently but for small amounts needed additional incentives, such as loyalty programs, to increase the value of their purchases.

2. Impact of segmentation on NPS results:

   • Better understanding of the needs of specific segments: Through segmentation, a company can better understand the specific needs and expectations of different customer groups, leading to more personalized service and higher satisfaction.

   • More effective marketing and communication campaigns: Segmentation enables the creation of more precise and effective campaigns that are better tailored to the needs of different customer groups. This in turn leads to higher campaign effectiveness and better NPS scores.

   • Determining the relevance of different customer groups

Conclusion

Customer segmentation allows companies to fine-tune their strategies to meet the needs of different customer groups. Why is this important? Because in our company, it may be that Promoters make up only 20% of the respondents, but it is this narrow group that is satisfied and, by the way, frequent buyers that may account for 60% of our company's revenue. In this case, having a negative NPS and wanting to improve it, we will be targeting a large group of infrequent buyers Detractors, who ultimately are not the driving force of our business, and by "accident" we will discourage our Promoters.

Analysis of trends and directions of change

Tracking and analyzing trends in the context of NPS involves monitoring changes in NPS scores over a specific period of time. This allows companies to understand how customer satisfaction and loyalty are changing, which can be the result of seasonal changes, marketing efforts, the introduction of new products or services, as well as other external factors.

Why monitor trends?

Monitoring NPS trends is key because it enables you to:

• Identify seasonal patterns: Changes in NPS scores can be related to seasonality. For example, retail stores may see higher NPS during the holiday season.

• Assessing the effectiveness of marketing efforts: Tracking trends allows you to assess how different marketing campaigns affect customer satisfaction and loyalty.

• Understanding long-term changes: This allows you to identify long-term trends and predict future changes in customer behavior.

How to monitor trends

1. Data analysis tools:

   • CRM systems: Enable you to track and analyze customer data over time.

   • Analytics platforms: Tools such as Tableau, Power BI or comprehensive survey and analysis platforms such as YourCX allow you to accurately analyze trends

2. Frequency and methods of data collection:

   • Regular surveys: Conducting regular NPS surveys, preferably continuous, allows you to monitor changes in customer satisfaction on an ongoing basis.

   • Point-of-contact analysis: Monitor NPS at various stages of the customer path, such as after purchase, after customer service interaction, etc.

Trend analysis

1. Identifying seasonal patterns:

   • Analyze NPS performance at different times of the year to identify seasonal patterns, such as increases during holiday periods or decreases during holiday periods.

2. Analysis oflong-term changes:

   • Comparing NPS scores over the years allows you to identify long-term trends. For example, whether the introduction of a new product has resulted in a sustained increase in customer satisfaction.

Examples of application

1. Case studies of companies monitoring NPS trends:

   • Company A: Regular tracking of NPS trends allowed Company A to identify that declines in performance were related to certain times of the year, enabling it to implement preventive measures.

   • Company B: Analysis of long-term trends showed that changes in customer service policies yielded positive results in terms of increased customer loyalty.

2. Practical applications and conclusions:

   • Optimization of marketing activities: Company B adjusted its marketing campaigns based on NPS trend data, which helped stem the decline in the number of customers.

   • Product and service development: Trend analysis helped Company A make decisions about introducing new products and modifying existing ones.

Conclusion

Tracking NPS trends enables companies to:

• Proactively manage customer satisfaction: By monitoring changes in NPS on an ongoing basis, companies can react quickly to declines in customer satisfaction and implement appropriate corrective actions.

• Better understanding of customer needs: Trend analysis helps understand what factors affect customer satisfaction and how customer expectations change over time.

• Effective strategic planning: Knowledge of trends allows companies to better plan marketing activities, product and service development, and investments in customer service, which contributes to long-term growth in customer satisfaction and loyalty.

We've implemented NPS, we're collecting results, what's next?

There is only one good answer to this question: "it's all up to you." Many companies, having implemented the survey, necessarily want a high score and constantly strive for it, and this does not necessarily translate into company growth at all. In itself, the NPS survey score is not a measurable result, because what if our NPS is 0? We start trying to figure out how to change it, what to do, which areas need improvement, because after all, such a result is not good, but if you find out that others in the same industry have an NPS of -20? Then that 0 is no longer so bad. No company operates in a vacuum, everyone has some kind of business environment, and we need to know who we are competing with and who we are comparing ourselves to, we need to know our competition. We also need to keep in mind that when introducing measures based on the results of surveys, changes in user perceptions will only become apparent after some time, hence the importance of conducting surveys on a long-term basis, thus avoiding seasonality in ratings.

Do the above rules apply only to the NPS indicator? No!

The approaches described in the context of NPS are also widely applicable to other qualitative indicators, such as Customer Satisfaction (CSAT), Customer Effort Score (CES), or Net Emotional Value (NEV). The key is not so much what indicator is monitored, but how the collected data is used to improve the customer experience.