This post intends to bring and raise awareness of one of the metrics of Customer Satisfaction more globally accepted, the Net Promoter Score, or as we usually call it, the NPS. This measure, combined with the traditional C-Sat (Customer Satisfaction), is used by the Panda Technical Support Teams.
People often talk about Customer Satisfaction, but few talk about the results it achieves. It has been shown that satisfied customers bring economic results. Sounds simple, but it’s true! Between 60% and 80% of Customer Loyalty is explained by their satisfaction and between 50% and 80% of Recurrent Customers is explained by their loyalty. And we just have to remember that on average 80% of revenues come from existing customers and just the other 20% from new customers. This means that to have satisfied customers has an enormous impact on the economic performance of a company.
The Net Promoter Score is a methodology to understand and manage customer feedback and to measure their degree of loyalty to a company, a brand or a service. Customer experience solves in part the scarce differentiation in companies’ supply and the struggle focused on the price war.
The index segments our users into three groups: promoters, neutrals and detractors.
- Promoters buy more, more often and recommend the brand to others.
- Neutrals buy today but probably tomorrow will buy from another vendor, they are fickle.
- Detractors will not buy from us again and will speak ill of us in all areas, including Social Media.
The NPS ratio indicates the level of customer loyalty.
Although it may seem over simplistic, as the book that explains the method “The Ultimate Question” has 267 pages, I think the foundations of NPS are perfectly summarized in this napkin:
Panda Security and NPS
In 2013 we have implemented NPS in the Technical Support and Customer Service Panda teams of Spain, Germany, Sweden, UK, Benelux and the USA with the aim of increasing the number of promoters and decrease the number of detractors. This is not just about getting a good score, but to establish a satisfying and long term relationship with our customer that for sure will translate into more sales.
In 2014 we have already added Canada, Brazil, Mexico and Portugal to the list.
Currently, most companies complain about the effectiveness of surveys to our final customers. Mainly because the information we collect is irrelevant, since the questions are not adequate, and most of the time, are neither quantifiable. This is solved by applying the NPS.
The NPS is a simple way to get information using only a simple question:
Would you recommend this company / this service to a friend or relative?
The system is very simple:
- Those who scored with 9 and 10 are Promoters.
- Those who are between 7 and 8 are Neutrals.
- Those at 6 or below are Detractors.
NPS is calculated as follows:
NPS = % Promoters – % Detractors
The NPS involves part of the emotional loyalty of the customer, and offers a great capacity for benchmarking as it is a standard used by a large number of companies. This together with its simplicity makes it a very useful metric widely deployed in the industry.