Sunday, March 19, 2023
9 Mistakes businesses make when measuring NPS
Net Promoter Score (NPS) is one of the most popular business metrics used to measure customer loyalty and satisfaction.
The goal of the NPS survey is to collect data from your customers on how likely they are to recommend your product or service to their friends, family, and peers. The score is then calculated using the NPS formula.
While Net Promoter Score (NPS) is a simple and easy-to-understand metric, many businesses make mistakes when facing NPS.
In this article, we will look into the most common mistakes made when measuring their NPS and how to avoid them:
- Focus on score
- Asking wrong questions
- Not segmenting data
- Not following up
- Not benchmarking your score
- Not taking action on feedback
- Not knowing the limitations of NPS
- Choosing the wrong NPS software
- Not communicating with all customer segments
Focus on score instead of feedback
One of the most popular mistakes businesses make when measuring their NPS is focusing on the score rather than the feedback they receive from customers.
Net Promoter Score is just an indicator and not a solution. It won't tell you what you should do to improve your customer loyalty and satisfaction. Plus, the score alone lacks the context of why your customers feel the way they feel.
Some businesses accept low NPS as a failure while it should be a trigger to dig into the feedback to understand the cause. Use it to identify areas of your customer experience that need to be improved to convert detractors into advocates.
Another important part is that NPS is just one metric and won't answer all your questions. There is a lot more behind customer satisfaction than Net Promoter Score.
Asking wrong questions
Another common mistake made by businesses is not asking the right questions.
Net Promoter Score has one simple question - “How likely are you to recommend our business to a friend or colleague?”. However, this question alone is simply not enough to give you enough insights.
At this point businesses often ask about what should they do with their NPS. The answer is simple, you need to extend the NPS survey with additional follow-up questions to understand why your customers gave you such a score.
It is important to know what to ask as the next step. The questions must be unbiased and not lead your customers to a certain answer. Plus, different scores need to be followed by different follow-up questions.
A good example of follow-up questions would include asking customers about specific features they like, the value they receive, the problems they face, and what they would like you to improve.
Not segmenting data
Your NPS can be high overall but a certain customer group can still be unhappy with your product or service.
It is important to keep customer segments in mind when conducting NPS surveys. Knowing the score of a certain customer group can help you to address issues that are specific to that group and improve their loyalty and satisfaction.
As you think about segmentation, consider different dimensions - demographic, customer type, product usage, and so on. It is important to carefully consider what segments are relevant to your business.
Not following up with your customers
It is an essential part of the NPS process to follow up with your customers who participated in the survey.
A simple email can show your customers that you take their feedback seriously and value the time they spent to help you to improve your business.
While following up is an important part of the customer feedback loop, many businesses fail to connect with their customers after they completed NPS surveys.
Among other benefits, connecting with your customers can help you to build closer relationships to get additional feedback, reduce churn rate, and convert them into advocates.
Not benchmarking your score
What is a good NPS?
Many businesses fail to answer such a simple question. And even if they do, they tend to use an overall score rather than the one that is relevant to their industry and regions.
As a business, you may have a score of 30 but it won't mean anything if all your competitors are at 60.
Benchmarking your score is important because it will help you understand your performance compared to other businesses.
Here, you can use publicly available data or do your own research. With the public data, be aware that competitors may hide their NPS or play dirty.
Not taking action on feedback
What are you doing with the feedback you receive?
Many businesses fail to take any action to improve their products and services based on the feedback they receive from their customers. Even if documented, the feedback finds a spot in their Icebox and is left there till the general cleaning.
If you want to succeed, it is important to plan and take action based on the feedback you are getting. It is also important to communicate your intentions with the customers who gave you that feedback.
A public roadmap is a good idea for how to be transparent about your future plans. Including feedback can give your customers satisfaction and increase loyalty.
As you plan to take actions based on feedback, make sure they are aligned with your business strategy.
Not knowing the limitations of NPS
Net Promoter Score is just a simple metric that has limitations.
While it is important to measure your NPS to understand customer loyalty and satisfaction, it won't give you all the answers.
NPS will not provide you with insights about customer retention or revenue growth. For that, you will need to use other tools and methods.
For a business without any metrics in place, it is a good and easy way to start. However, more metrics are in place to give you a full picture of your business performance.
Choosing the wrong NPS software
Many businesses fail to benefit from NPS because of the tools they choose to measure and analyze their score.
As a business, you need to use tools that go beyond the simple survey. A good NPS tool will offer you an easy way to analyze data and collect additional feedback based on user responses.
There are many tools available to collect and measure NPS with free and premium versions available. Check the features and options they offer to see if they fit your needs.
Not communicating with all customer segments
Should a business collect NPS for all customers?
Yes. This is one of the most important and common mistakes businesses make about NPS. Some businesses think that they need to collect NPS only from satisfied customers. This will lead them into a trap of seeing the score that does not reflect the real situation.
You need to collect NPS from all of your customers no matter how happy or dissatisfied they are. If you collect data from satisfied customers only, you will not get feedback about what problems your customers are facing.
Net Promoter Score is easy-to-use and understand. Nevertheless, businesses often make mistakes related to how they think and approach NPS. That results in wrong data and bad business decisions.
Keeping several simple rules can help businesses to avoid making mistakes and make the most out of the NPS data.
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