How to Grow Your Bottom Line with Net Promoter Score Data

Peter Sharkey on 9th of Sep 2016
Net Promoter Score Calculation

Net Promoter Score Calculation

For the last few weeks, we’ve been exploring the Net Promoter Score® method through a 3-part content series. In the first installment, we covered the basics of the Net Promoter Score® method—including the relative value of promoters, passives, and detractors. In the second, we revealed 3 trends that helped the Net Promoter® method gain momentum: the rise in customer expectations, the explosion of subscription-based businesses, and the shift to constant connectivity. This week, we’re wrapping up the series by exploring how to use Net Promoter® data to grow your bottom line. At this point, you’re an expert in the Net Promoter Score® method. You understand how it became popular and why it’s such a valuable metric. Now it’s time to put it to use. Follow these 3 steps to grow your business—segment by segment:

Step 1. Collect Net Promoter Score® survey data

First, you’ll need to collect NPS® data from your customer base. That’s right, it’s time to pop the Net Promoter® question: How likely are you to recommend [company] to a friend? Using this question, you can determine how likely your customers are to recommend your business on a scale from 0 (extremely unlikely) to 10 (extremely likely). Once you have this data, you can segment your customers into three categories: promoters (9-10 score), passives (7-8 score), and detractors (0-6 score). BloomThat NPS email

How often should you send NPS® emails?

We spoke with AskNicely Co-founder & CEO Aaron Ward to find out. Here’s a summary of his insights:

1. Send NPS® surveys every day—but not to every customer

“The old approach was to blast out NPS® surveys periodically (e.g. quarterly) to your entire customer base. This was good for providing a score, but useless for providing any practical insights. At best, you got an avalanche of verbatim responses—far too many to act on in a timely manner.” To avoid becoming overwhelmed, Aaron recommends adopting “the modern approach”: Sending NPS® surveys to a selection of customers every day, triggered by key events.

2. Choose a cadence that is specific to your industry and business objectives

“High-volume, experience-based services like Uber ask for a rating after every ride, because it’s critical for them to make sure every experience is great. Professional services firms focused on building long-term, profitable relationships with their clients might send an NPS survey every month—as a temperature check. SaaS businesses like to check in with their users 4 times per year on average.” In other words, there is no standard frequency.

3. Avoid being too trigger happy

“Pick your moments carefully,” Aaron warns. “Some businesses get a little over-excited with automated NPS triggers and send surveys after actions that really don’t move the needle or provide a natural ‘next best action’ for you to take. If someone just started a trial, downloaded your ebook, or changed their billing details, don’t pull the trigger just yet.”

At what points during the customer journey should you send NPS® surveys?

It’s important to experiment to find the event-based (e.g. the customer downloaded your mobile app) and time-based triggers (e.g. 7 days after becoming a customer) that work best for your business. Having said that, Aaron provided a great example: “For SaaS businesses wanting to drive trial-to-paid conversion and minimize churn, it’s best to send NPS® surveys during specific moments of truth in the customer journey (and automate follow-up activities accordingly).” According to Aaron, SaaS companies should send NPS® surveys at 4 moments:

1. “5 days before the trial expires”

Sending a NPS® survey 5 days before the customer’s trial expires helps you discover any issues the customer has experienced throughout the trial period. That way, you can solve any problems that would have prevented the customer from becoming a paid customer before the trial expires.

2. “30 days after converting to a paid account”

Sending a NPS® survey 30 days after a customer converts into a paying customer helps you detect issues with your onboarding process. By identifying customers who may defect, it also serves as an early warning system.

3. “90 days later”

By now, the customer should be hooked—assuming you’ve addressed any issues revealed by the previous two surveys. That means it’s an ideal time to ask happy customers to post reviews, provide testimonials, and help you create winning case studies.

4. “30 days before renewal”

Sending a NPS® survey 30 days before a customer is scheduled to renew helps you detect any issues that may prevent your customer from renewing. By resolving these issues, you’ll have a much better chance of keeping the customer.

Step 2. Create data-driven customer segments

Remember a few weeks ago, when I said that scholars thought Reichheld’s research was inaccurate because he collected information about repeat purchases and referrals instead of transactional data? In turns out that, to best leverage your NPS® data, you should be tracking it in combination with transactional data. That’s why I recommend pairing your NPS® data with RFM data—how recently each customer made a purchase, how often each customer makes purchases, and how much money each customer spends. These data sets will help you determine where each customer falls along three continuums:

1. Value

Value continuum Determine the annual value of each customer by multiplying their average purchase amount (e.g. $60.48) by the average number of purchases they make per year (e.g. 12).

2. Engagement

Engagement continuum Determine how engaged your customers are by assigning them a score based on how often they purchase and how recently they’ve made a purchase.

3. Willingness to recommend

Net Promoter Score continuum This is where your Net Promoter® data comes in. Is your customer a promoter, a passive, or a detractor? Based on your findings, divide your customer base into 12 segments:

  • High-value, engaged promoters
  • Low-value, engaged promoters
  • High-value, engaged passives
  • Low-value, engaged passives
  • High-value, engaged detractors
  • Low-value, engaged detractors
  • High-value, disengaged promoters
  • Low-value, disengaged promoters
  • High-value, disengaged passives
  • Low-value, disengaged passives
  • High-value, disengaged detractors
  • Low-value, disengaged detractors

Step 3. Engage with worthy segments to grow your bottom line

Now that you have data-driven segments to work with, you can decide how best to engage with each segment to grow your bottom line. You’ll want to focus the majority of your efforts on high-value customers. Why? Because they consistently deliver higher revenues, so you can afford to invest in them. There’s one exception: Low-value promoters. These customers can be offered compelling incentives (encouraging them to spend more) to spread positive word of mouth (encouraging others to try your product or service). Because passives are indifferent toward your company and its products and/or services, it can be difficult to transform them into promoters. You’re much better off to target promoters (those who already love you) and detractors (those who’ve had a bad experience or who’ve had an issue that can be fixed). Finally, you’ll want to target both engaged and disengaged customers—but with different messaging. Engaged customers are already assets to your business, so the offers you send them should be focused on upsells, renewals, and referrals. To win back disengaged customers, you should design personalized offers they can’t refuse—encouraging them to resume the relationship. With these tips in mind, you’ll want to dedicate the majority of your attention to the following 6 segments:

  • High-value, engaged promoters
  • High-value, disengaged promoters
  • High-value, engaged detractors
  • High-value, disengaged detractors
  • Low-value, engaged promoters
  • Low-value, disengaged promoters

What kind of emails could I send to engage?

Here are 3 great examples of how you could engage with these segments:

Example #1. “Share your love of travel” – Airbnb

Airbnb email example This email from Airbnb absolutely nails it. Designing a similar email will help you reward promoters (increasing their commitment to your brand), while giving them an incentive to refer your company to a friend. Because there’s no need to send a financial incentive to high-value, engaged promoters, this email is ideal for low-value, engaged or high-value, disengaged promoters.

Example #2. “Build Business Mastery with 3 Months for $0.99” – Skillshare

Skillshare email example With this email, Skillshare presents an offer few can refuse—three months of premium service for less than $1. The copy motivates the customer to accept the offer by conveying a sense of urgency (“4 days left!”) and implying the customer can “master” important business skills. Emails like this one are super effective at winning back disengaged promoters and passives.

3. “Could you please help us with GetApp?” – TradeGecko

Tradegecko email example This email from TradeGecko does a great job of explaining why they’re asking for a review: “Reviews help us…help those stuck in spreadsheet hell to make the right inventory management choice”. After all, who doesn’t want to help others avoid unpleasant experiences? If you’re skeptical about whether your customers will take the time, think again. LiveChat used Autopilot to send a similar email to its promoters—and got 123 reviews (and a 4.85 star rating) on GetApp as a result. That’s pretty amazing! At what points during the customer journey do you send NPS® surveys? How do you combine NPS® data with purchase data to create meaningful customer segments? Share your experiences in the comments.

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