TLDR: If you want to be successful with any customer feedback program – NPS ® or otherwise – you need to think of it as a catalyst for change first and foremost. Which means you need to pay attention to the impediments to change, lest all that customer feedback is ignored. Continue reading
TLDR: Net Promoter Score℠ surveys can hold valuable clues for how to improve your product and better manage your product roadmap. You’ll need a structured approach to turning those clues into actionable insights and changes that result in improved customer retention. Here’s a 4-step guide to getting the most out of NPS surveys. Continue reading
As they described it, the “inner loop” relates to a person or team who initiates Net Promoter Score surveys for their own use. In other words, to gather customer feedback that they themselves have the ability to address and resolve.
The “outer loop” pertains to enterprise-wide adoption of NPS, including all of the departments that might be called upon to make improvements in response to Net Promoter Scores and customer feedback. I’d equate the “outer loop” to enterprise-wide adoption.
The challenge is that enterprise-wide adoption of the Net Promoter System is both the source of the biggest gains and the biggest challenges.
What does it take to reach enterprise-wide adoption? Consider three things.
Much has been written about this already, but it bears repeating: Leadership must embrace Net Promoter and mean it.
First, executive commitment to the Net Promoter System does not mean a commitment to sending customer feedback surveys. Rather, it means a commitment to respond to the feedback with operational improvements. No matter where or why they originate.
Second, it means a long-term commitment. Truly meaningful changes to drive improved Net Promoter Scores require many operational improvements delivered over a period of time. It’s a marathon not a sprint.
Third, it means avoiding Net Promoter Score infatuation – the mistake of executives using NPS as a single metric by which to run the business. Many other metrics are relevant, especially financial ones such as Lifetime Value, Customer Acquisition Cost, Retention Rate, Churn Rate, etc.
Departmental buy-in and alignment
The beauty of NPS is that it’s capable of surfacing opportunities to improve across many areas of your business; including sales, support, product and account management / customer success.
However, this is where most NPS programs get bogged down. One team is enthusiastic about measuring Net Promoter Scores, but another seems uninterested, uninvested or even uncooperative.
Why is this?
Anytime I encounter resistance from another team, I start by asking questions about their incentives. What are they being asked to do that takes higher priority? What are the measures of that team’s success? How are their goals set and accordingly compensated?
When there is misalignment with the NPS program, then the executive team needs to decide if they are going to change the goals and incentives of the team that’s not cooperating, or live with the mis-alignment. In some respects, ensuring goal alignment is a test of executive commitment to the Net Promoter initiate itself.
Customer follow through
Engagement with survey respondents is critical. It’s the start of a conversation, not the end.
For example, knowing that somebody is a proponent isn’t enough. A customer like this is a tremendous asset. You want to know why they are happy, and other ways they might help your business grow. For example, a proponent might:
- buy more from you
- serve as a customer reference
- join your advocacy program
- refer friends to you
- tell you why they’re a promoter in the first place
However, a promoter won’t do any of these things – until you ask. So, it’s your response that matters most.
Passives are another interesting audience. What would it take for them to become proponents? The answers to that question can surprise you, and sometimes it’s trivial things to do on your part. Again, the follow-up to the survey response is how you discover and address those needs.
Last, we tend to focus on detractors, and for obvious reasons. Getting to the root cause of what made somebody so unhappy is important. People have a greater propensity to complain than praise, so negative word-of-mouth is a real business risk.
One of the most interesting insights that comes from engaging detractors is spotting product mismatch. In other words, customers with needs that your product wasn’t designed to fulfill.
The term “Subscription Economy®” (as coined by Zuora) refers to a business model that is dependent on your customers making repeat purchases. Loyal, happy, high value customers.
In this business model, the cost of customer acquisition is offset by those repeat purchases until – ideally – the customer stays around long enough to become profitable.
Imagine your customer base as falling into three buckets:
- Customers who leave before they are profitable to you (net-loss customers)
- Customers who stay long enough to be profitable (break-even customers)
- Customers who stay AND who cause others to purchase your product too (hyper-profitable customers)
With so much revenue at stake, it’s vital to know which customer is which. And, it’s vital to know what drives customers into those buckets.
Net Promoter Score℠ to measure each customer’s mindset and engage them appropriately
Taking stock of each customer relationship and where they fall among the 3 buckets requires a combination of “what they say” and “what they do”.
I’ve written about measuring “what they do” – as in product usage. It’s also important to measure your customers’ mindsets, i.e. “what they say”. This is where Net Promoter Scores (NPS®) come in.
Consider the fact that customers’ mindsets are never fixed. There’s anecdotal evidence to suggest that overcoming an unhappy customer with an excellent recovery experience can often build loyalty. And at the same time, previously loyal customers that are neglected can become unhappy in time.
So, making continuous measurements of NPS scores is important. It allows for timely, targeted engagement on the basis of a customer’s current mindset.
Net Promoter Score to identify the drivers of outcomes like retention, churn and referrals.
Net Promoter isn’t just about scoring each customer’s health. The composition of proponents, passives and detractors and how they change over time will help you confirm key trends in customer base health. The qualitative comments they provide on their NPS survey responses can also reveal great clues into underlying drivers for churn risk and renewal likelihood.
Finally, NPS gets even more powerful when combined with other customer data to perform segmentation analysis. For example, ask yourself if your customers are equally happy across:
- Sales channels
- Product lines
- Lifecycle stages
In all likelihood, there are “hot spot” segments living in these dimensions where NPS scores are especially high or low. This, coupled with analysis on qualitative response comments, can help pinpoint systemic issues that can be fixed.
“Subscription Economy”® is the registered trademark of Zuora, Inc.