An introduction to key customer metrics and Net Promoter Score

By Richard Knight of Insight6

Business decisions without insight can lead to costly diversions or mistakes. Customer data is a critical part of any business strategy. What do you measure and when? In this series of articles, I will be looking at the three main customer metrics that will enable your business to find more customers, retain the ones you have and use them for referral.

The three key measures for any business are Customer Satisfaction (CSAT), Customer Effort Score (CES) and Net Promoter Score (NPS). This month we look at NPS and find out where Dorset Chamber sits on the NPS ratings. Firstly, what is NPS? NPS measures customer loyalty and will help you to understand how likely a customer is to recommend your product or service.

NPS is one question: ‘On a scale of 0-10 how likely would it be for you to recommend Company X to a friend or colleague?’

Respondents give a rating between 0 (not at all likely) and 10 (extremely likely) and, depending on their response, fall into one of 3 categories to establish an NPS score: • Promoters respond with a score of 9 or 10 and are typically loyal and enthusiastic customers and would advocate that other people use the company. • Passives respond with a score of 7 or 8. They are satisfied with your service but not happy enough to be considered promoters. • Detractors respond with a score of 0 to 6. These are unhappy customers who are unlikely to buy from you again and may even discourage others from buying from you. The final score, from -100 to +100, is then calculated (see fig.1)

Members of Dorset Chamber will have seen the NPS question asked in the quarterly survey sent via ‘instant insight’, the insight6 feedback system. Dorset Chamber is using a ‘relational NPS’ question; this provides a periodic ‘temperature check’ to understand how members feel about the chamber overall.

The NPS question can also be ‘transactional’; which gives organisations insight into specific ‘touchpoints’ at a granular level and can provide feedback about a very specific topic. It’s best to use both types to understand your customer at macro and micro levels and gain insight into what may be influencing their behaviour. Comments can then be asked for in subsequent questions to substantiate the scoring from the customer.

When you have collected your data using a feedback system like instant insight, you need to analyse the data. Figure 2 shows what good looks like in terms of NPS. The key with NPS is not to take it in isolation. Benchmarking scores with other businesses in your sector gives you a clear comparison for your industry. For example, consultancy businesses have higher average scores due to the prolonged relationship building whilst medical sectors, such as dentists, have lower average scores due to a negative customer mindset from the outset. Don’t forget, the best business to benchmark against is your own. Gather the insight, set a baseline and measure regularly to track progress.

Dorset Chamber has been collecting NPS from members and it currently sits at a score of 41. How does this compare I hear you ask? Unfortunately, there is currently no published NPS data for chambers of commerce (Dorset Chamber are leading the field when it comes to seeking the feedback) but data from Survey Monkey indicates that the chamber compares favourably to both B2B and B2C sectors.

So, how can your business improve NPS and stand out in your sector? 1. Measure NPS regularly – use transactional and relationship measures in automated feedback tools 2. Respond quickly to detractors – when things go wrong, deal with it in the moment 3. Leverage your promoters – they are your strongest allies and will shout about your business; a marketers dream! If you would like to learn more about NPS and other feedback metrics, please do get in touch with me at richard.knight@insight6.com

Finally we ask all members to look out for the next Dorset Chamber quarterly feedback request including NPS which will be landing in your inbox on 3 October 2022. www.insight6.com