Using Net Promoter Score to Measure Customer Satisfaction
on January 20, 2021
By: Stephanie Hookham, Director of Sales & Member Success, VGM & Associates
Your company can probably survive without a customer satisfaction metric, but should it? And if you did want to measure customer satisfaction, where would you start?
Customer satisfaction surveys provide feedback about your customers’ perception of your products, services, and/or experiences. Positive customer retention, loyalty, and purchase growth highly correlate with customer satisfaction. Specific data about why or what the customer enjoyed or disliked about your product/service is key to knowing what to stop, start and keep doing to maintain current customers as well as attract new customers.
Both the positive and the negative survey responses provide important insight from the customer. Focus on the good and learn from the bad as it is widely accepted that retaining existing customers for additional growth is more cost-effective than finding new customers. A clear justification for initiating a customer satisfaction survey to gauge your current customers’ perception and loyalty.
Determining which type of customer satisfaction survey to use starts with a review of who or what you want to evaluate. Current survey styles ask about the customer’s relationship with your company, the customer’s experience with a service or employee or the customer’s satisfaction with transactions.
There are three well known types of surveys to measure customer satisfaction based on what is being reviewed and measured.
- Net Promoter Score (NPS) ® –Created and trademarked by Bain & Company in 2003, NPS is a quick survey that commonly asks “How likely are you to recommend [company name] to a friend” with a Likert scale question from 0-10 with 10 being highly satisfied. NPS is considered the most popular measure of positive customer connection with your company. NPS associates well with relationship businesses and is deployed after a relationship is established rather than right after a transaction.
- Customer Effort Score (CES) – This metric measures the customer’s satisfaction with completing the task required to interact with your company. This survey typically asks, “How easy was it to deal with our company today?” CES results can be useful to evaluate customer service employees who work directly with the customer or the systems your customers use to contact or transact with your company.
- Customer Satisfaction (CSAT) – This is a commonly used survey for product and services to rate how happy consumers are with what they purchased. The typical survey question to collect this feedback looks like, “How would you rate your overall satisfaction with the [goods/service] you received?” then offers a Likert scale question type between 1-5 with 5 being “highly satisfied” and 1 being “highly unsatisfied”. A CSAT would be an early survey, usually right after a transaction.
VGM & Associates is a user of the Net Promoter Score survey methodology. Deciding to use NPS to measure our customer (member) satisfaction was relatively easy. More intimidating was determining what to do with the survey data. It required us to look at our end goal of measuring the perceived value our members have of their relationship with VGM and our services.
We send our NPS survey to member companies on their VGM membership anniversary. As prescribed in the NPS methodology we deploy a one question survey requesting members to score us a 1-10 with an option to provide a comment for elaboration on the score given. Regardless of what question the survey asks on an NPS survey the scoring falls into 3 categories:
- Promoters: Customers who give scores of 9 or 10. They are found to be most likely to have value-creating behaviors, such as remaining customers for longer, buying more, and making more positive referrals about your services.
- Passives: Customers who give scores of 7 or 8. They generally have neutral feelings about your brand or service. They like it, but not quite enough to recommend it to others. Passive scores are not used in overall NPS score calculation.
- Detractors: Customers who give scores of 0 – 6. These customers are believed to be less likely to exhibit the value-creating behaviors and should be considered a loss risk and potentially harmful to your brand should they provide a public review.
A company’s NPS score is then calculated by subtracting the percentage of detractors from the percentage of promoters. For example, of 100 customers surveyed, if 30% were detractors and 60% were promoters, your NPS would be 30 (60% - 30% = 30). NPS scores can range from -100 to 100. A score of 0 would indicate that your company has more happy customers than unhappy customers. Whereas an NPS score over 70 signifies that customers love your company, and probably generate positive word-of-mouth about your brand and/or services. The higher the score, the more likely it is that customer referrals will convert into new leads and increased revenue.
At VGM, we strive to increase our overall NPS score but just as importantly we use the individual data to learn and improve. On the positive side, scores of 9 and 10 are coveted but we especially love it when a comment is included. Comments help us discover emerging trends, validate value that we can market to prospects, and identify employees or teams that are acknowledged and give them due recognition.
On the other hand, negative results tell a story of our members’ dissatisfaction or misconceptions of current services or needs that we do not yet offer a corresponding service. The negative side garners more of our attention, as it should. Any respondent scoring us a 6 or lower is contacted by their account manager. We thank them for completing the survey, give a brief explanation of NPS and state that our goal is for every member to be satisfied but their score indicates that we could do better. Based on their response, we set out to resolve issues communicated to restore their customer loyalty. We also ask what more VGM could offer to improve their experience with us. Acting on the negative responses shows the customer that you not only care that they completed the survey but that you are using the survey as a process to improve based on actual customer input.
The importance of customer satisfaction to uncover customers’ perception of your service and value should never be doubted. It plays an important role in the lifespan of your customers and the growth of our customer base. A customer satisfaction survey, for VGM the NPS, can serve as a roadmap of customer successes, concerns and opportunities.