The Net Promoter Score (NPS) is a metric companies use to measure customer satisfaction and the likelihood of customers recommending their company to others. It involves a single question: "How likely are you to recommend our company/services to a friend or colleague?" Responses are typically rated on a scale of 1 to 10, with one representing "not likely" and 10 representing "very likely.
- Scores from 9 to 10 are classified as Promoters. These are the customers who are highly satisfied and willing to recommend the company.
- Scores from 7 to 8 are classified as Passives. The customers are satisfied but not enthusiastic. Meaning they might easily switch to a competitor.
- Scores from 0 to 6 are Detractors. These are customers who are unsatisfied and might even have negative feelings toward the company.
The NPS score is calculated by subtracting the percentage of Detractors from the percentage of Promoters.
- NPS = Percentage of Promoters − Percentage of Detractors
A positive NPS indicates a positive perception among the customers, and a higher NPS suggests a stronger likelihood of customer referrals and positive word-of-mouth. On the other hand, a negative NPS indicates that there are more detractors than promoters, signaling areas for improvement.
Why is it so important for small tech companies?
- Indicator of customer satisfaction: The NPS directly reflects customer satisfaction. A high NPS means a significant portion of the customers are promoters, which also means customers are satisfied.
- Customer loyalty and retention: A positive NPS is associated with customer loyalty. Satisfied customers are more likely to remain loyal.
- Positive word-of-mouth marketing: A good NPS suggests customers are not only satisfied but also willing to recommend the company to others. Positive word-of-mouth marketing is a powerful driver of growth, especially for small tech companies that may rely on organic growth and referrals.
- Competitive differentiation: In a competitive tech market, a high NPS score can serve as a competitive advantage. Small companies with a reputation for excellent customer satisfaction and loyalty can stand out in the market.
- Customer-Centric Business Approach: Maintaining a good NPS encourages a customer-centric business approach. By actively listening to customer feedback and making improvements based on that feedback, small tech companies demonstrate their commitment to meeting customer needs, fostering trust, and building long-term relationships.
- Operational Efficiency: Customer feedback obtained through NPS surveys often highlights specific areas for improvement. Addressing these areas can lead to increased operational efficiency, streamlined processes, and a better overall customer experience, contributing to growth.
- Enhanced Brand Reputation: A good NPS contributes to a positive brand reputation. Satisfied customers are more likely to share their positive experiences, contributing to a positive online presence and enhancing the overall perception of the brand in the market.
- Investor and Stakeholder Confidence: For small tech companies seeking investment or partnerships, a strong NPS can instill confidence in investors and stakeholders. It serves as evidence that the company not only attracts customers but also retains them, indicating a healthy and promising trajectory for growth.
Stateside has a 69 NPS score. How did we get it?
Achieving and maintaining a good Net Promoter Score (NPS) involves a combination of strategic efforts focused on customer satisfaction and loyalty. Here are several actions Stateside takes to keep a good NPS score:
Understand Customer Expectations
- Conduct market research to understand customer expectations and preferences and align our services to those to ensure customer satisfaction.
Implement an Effective NPS Survey
- Design a simple and clear NPS survey, focusing on the key question: "How likely are you to recommend our company, product, or service to a friend or colleague?"
- Establish a consistent schedule for sending out NPS surveys to maintain a continuous feedback loop.
Act on Feedback
- Use feedback to identify specific areas for improvement and take concrete actions to address issues.
Personalize Customer Experiences
- Tailor interactions with customers based on their preferences and history and implement personalized marketing strategies to enhance the overall customer experience.
Reward and Recognize Employees
- Recognize and reward employees who contribute to positive customer experiences.
Innovate Based on Feedback
- Use customer feedback as a source of innovation.
- Develop and implement new features or services based on customer needs and suggestions.
Monitor and Improve Processes
- Regularly review internal processes to identify areas for improvement.
Measure Employee Satisfaction
- Employee satisfaction often correlates with customer satisfaction. Regularly measure and improve employee satisfaction to positively impact customer experiences.
The NPS is valuable because it provides a straightforward, standardized way to measure customer loyalty and satisfaction. Companies often use NPS as a key performance indicator and a tool for making strategic decisions to enhance the overall customer experience. A good NPS is not only a reflection of current client satisfaction but also a powerful marketing and trust-building tool for attracting and reassuring future clients. It can positively influence decision-making, contribute to a positive brand image, and foster a sense of trust in the company's offerings.
If you’re looking for a reliable partner, book a discovery call with us today.