While driving your business engine in a certain direction, ask yourself if the traffic signs along the road are correct. Usually, it’s the governmental entity that put the signs into place, representing a certain rule, prohibition… But, what if YOU were able to set yourself up with custom signs, for your own needs? In real-world traffic, that would spell disaster. But doing the same in business development would be a game-changer, as you’d bring more value to the table – welcome NPS.
This added value we are talking about is introduced by a solid metric system, telling you if your business is heading in the right direction. Sure, many tools are available for this purpose. But none stands out by its dynamics and value as the NPS (Net Promoter Score) system.
What is NPS – Net Promoter Score
NPS is a great tool, that is easy to use and understand. This simplicity means that the NPS’s currency value skyrockets, both in startup cultures as well as in any pre-pivot stage business. It consists of a scale from zero to ten and a very specific question: “How likely are you to recommend our service to a colleague or a friend ?”. While this might come off as too simple, it’s value is anything but. By using NPS:
- you reveal a core for long-term customer satisfaction factors.
- people are providing accurate feedback by using a scale system.
The greatness of NPS is certainly in its versatility, but still there are some instances where NPS can even guide you in the wrong direction, if you are not using it to fit your needs. Learn how to avoid using NPS incorrectly.
Types of NPS
There are two types of NPS:
- Periodical NPS
- Transactional NPS
Periodical NPS is being sent to a group of customers (pre-defined target audience), on a quarterly (or custom) basis.
Transactional NPS is provided daily, in every interaction with customers, so they can feed you with data at a much faster pace.
The problem with Transactional NPS is that it is NOT accurate! It doesn’t (or very rarely) collect responses for the asked question (How likely are you to recommend our service to a colleague or a friend ?). This happens because people tend to value data itself more than the meaning of data.
Transactional vs. Periodical NPS
It is safe to say that, companies employing NPS, want to survey the efficiency of their product or service. The NPS questions are usually asked by the customer service or sales reps, at the end of the conversation. And that’s the core of the problem.
If the clients are interacting with an agent, it’s obvious there is an issue at hand. Upon solving the issue, the customer feels happiness. And it is this happiness that corrupts the NPS data.
Imagine facing a roadblock that prevents you to use a service and earn money. The person that solves that for you, in that instant, becomes your hero. It’s likely you’ll give your helper the highest possible score. If you’re using support daily to fix your problems, you’ll be leaving positive grades every day. Notice the problem? You didn’t answer the NPS question – How likely are you to recommend our service to a colleague or a friend? Instead, you rated your customer experience.
It’s this lack of immediate joy that makes Periodical NPS a better option. You interact with your customers cold-headed, and they’ll actually answer your question. Without urgency, the answer will represent a customer’s actual perception of the service/product.
Aside from sending the NPS campaigns periodically, one more thing to help with increasing the customer service efficiency, without corrupting data, is the Customer Effort Score or CES.
CALCULATE NPS PROPERLY
From a customer happiness perspective, the NPS brings a new point of view on grades collected by the support team. From the image above, 3 groups stand out:
Having these three groups in the scaling system, helps the business owners to:
- identify use-cases of each specific group
- based on that, change part of, or the whole customer support strategy
Looking into the three groups, we can say that:
- Promoters are positive about the service quality, and are most likely recommending the service.
- Neutrals will not be walking promoters of the service, but will not make any negative impact too.
- Demoters are the most dangerous ones. Being active on social networks, they will harm your business by demoting its value and dragging potential customers away.
The calculation is simple – detract low rate percentage from high rate percentage – ignoring the Neutrals. But, when you are calculating the percentages Neutrals ARE a part of it. Let’s use this example:
Rates one agent in a fictive company got are as follows: 10,9,10,7,10,1,8,10,9,10. There are 7 high rates (10,9,10,10,10,9,10), 1 low rate (1) and 2 neutral rates (7,8). So we now see that:
- high rates percentage is 70%
- low rates percentage is 10%
- neutrals weren’t needed for NPS, only for calculating high and low percentages
Now the NPS calculation:
High rates percentage – Low rates percentage = NPS > 70% – 10% = 60 (NPs has no unit so it leaves the number as a score representative) > Effectively, this agent would have and NPS score of 60.
Any number between 30 and 100 represents a positive feedback. Yet, we should break this down into 3 areas:
Score 30 – 50 – Let’s roll
You are OK, but it’s time to pull-up your sleeves to get past 50.
Score 50 – 70 – Define and conquer
You’re on solid ground and most of your users are happy, where most of them would promote your platform. But, you need to do some polishing to break into the next level. This polishing comes from evaluating the very top of the product hill, and your product goals for next iteration of your service/product. You need to find the niche that you want to focus on (customer happiness, product UI, speed, stability, etc) and now aim the NPS survey towards that niche. Having positive numbers in front of you then, means you’re headed in the right direction.
Score 70 – 100 – King of the Hill
Once your NPS scores are within this range, that means you’ve found a good product-fit, and want to stay there. If, however you find yourself on a lower scale of NPS range use negative feedback to learn and adjust your approach.
Note: Pursuing the NPS without defining your goals CAN get you to the 70 – 100 range. But this will be vanity metrics, only describing global service grade.
CES – Customer Effort Score
Now this is a type of metric that provides everything that is skipped when using Transactional NPS — proper questions. Using CES as a metric for your customer service value, means you can think off new ways of approaching your clients. What makes a CES the industry standard is a question-and-scale combination – “The company made it easy for me to fix my issue?” and the answers scale in the following order:
This approach tests the client’s objectiveness by asking them if it was easy to get the questions answered and issues resolved. By making clients READ the options, there’s no reflexive rate. If it was, the rate would represent customer service satisfaction – since they are interacting with customer service the very moment. Instead of numbers that can be misinterpreted, you give them statements that can not be tied to customer satisfaction scale. This way, we are ensuring accuracy.
CALCULATE CES PROPERLY
Unlike NPS, CES has simpler math behind its metric system. It relies on calculating percentages for each rate/grade the customer service agent/rep received. Lets define some fictive scenarios with following rates:
Strongly agree, Agree, Somewhat Agree, Agree and Strongly disagree
To calculate the score, we simply get the percentage for each of the unique grades:
- Strongly agree: 20%
- Somewhat agree: 20%
- Agree: 40%
- Strongly disagree: 20%
Obviously, same as on college — the higher percentage of high rates — the better.
If you keep your user’s contact details during this evaluation, and give them the option to leave comments, you can define a strategy for improving this score. Here are some steps:
- Examine the the responses.
- Map the core reason for your customers to feel unsatisfied.
- Find overlapping areas and you’ll find your areas to improve.
You’ll end up with a list of reasons for low grades which you should address together with the team.
If you didn’t ask for optional comments it would be rather hard to map and point out to concrete cause of dissatisfaction. In these cases, we introduce the next form of survey – Customer Satisfaction Score or CSAT.
Interested in learning more ways in which you can utilize CES to your advantage?
CSAT is used to rate the customer service reps by asking the customer how satisfied they are with the rep and their approach. The usual question would start with “How would you rate your experience with your [HERE GOES THE ENTITY YOU WANT TO RATE]”.
For instance, we can ask users about their satisfaction with:
- customer service
- product layout
By asking the right questions, we can narrow down the cause of NPS or CES rate drop. All these survey types are complementary with each other. We can use all three separately to properly navigate the product goal or whichever aspect of your business.
Same as with CES, the calculation is done by simply presenting percentages for each rate. In a scenario where a fictive agent would have the following rates: Very unsatisfied, Satisfied, Very satisfied, Very satisfied and Very satisfied the score would be:
- Very satisfied: 60%
- Satisfied: 20%
- Very unsatisfied: 20%
When the examination is performed, and percentages of “Very Satisfied” and “Satisfied” combined are below 75%, you should consider working with your customer support team on improving one or two things that can start building up the value of satisfaction.
Interested in learning more about CSAT? Check out our blog!