How do you measure your customers' happiness?
What's the first metric that pops into your mind? If your answer was Net Promoter Score (or NPS), congratulations! You are among 80 percent of people who know how to gauge customer satisfaction. As most marketers have come to realize, though, NPS is only the first half of the answer. Where is the second half, you ask? AI has it!
Net Promoter Score is a metric that able professionals across the globe rely on to judge their brand's health. NPS should definitely be the go-to number if you want to judge your organization's health. However, the devil is in the details. AI is revolutionizing everything from marketing and feedback analysis to gaming and entertainment. Let me show you how NLP techniques have transformed Net Promoter Score or NPS.
If you are already comfortable with the concept of Net Promoter Score or NPS click here to read the next part of the article.
Whats on the agenda?
- What in the world is Net Promoter Score (or NPS)?
- What value does NPS add to your life as a marketer?
- What are the hazards of depending solely on NPS?
- What are the gaping holes in the insights generated through a pure NPS analysis?
- What is the correct way of carrying out an NPS survey analysis?
What in the world is Net Promoter Score (or NPS)?
How often do you come across the question - How likely are you to recommend *the restaurant that you recently went to* to your friends? I am 100 percent sure that your memories are rushing back to you. Well, this question is a brand's way of calculating its net promoter score.
NPS is basically a single question survey with which a brand judges its consumers' loyalty. An NPS question may look like:
"How Likely are you to recommend xyz to your friends and family?"
followed by a number scale as show in the image above.
Based on your answer, you are categorized in one of the following categories:
- Detractors: 0-6
- Passives: 7-8
- Promoters: 9-10
Promoters are an organization's greatest asset. These customers are more than likely to not only come back with more business but also generate valuable referrals.
On the other end of the scale lie the Detractors. These are the ones who are definitely not impressed. They actively discourage people in their circle against your offering.
Passives lie between the other two categories and are not likely to discourage other people but will not promote your brand either.
Let's take a look at the benefits of NPS. After all, there are some very pertinent reasons for its widespread popularity.
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What value does NPS add to your life as a marketer?
There are plenty of reasons for the popularity of Net Promoter Score. First, NPS surveys have a great response rate. This is because it lets customers bring out their opinion quickly.
Second, NPS can be compared across time frames. An organization can effectively use these numbers to find patterns and carry out efficient predictive analysis.
Third, Net Promoter Score or NPS can track the health of, say, your product's features, the performance of your field agents, the quality of customer service at your franchise, etc.
Net Promoter Score or NPS is also very useful in predicting Customer Lifetime Value (CLV). A promoter's CLV is going to be much larger than that of a detractor.
Lastly, NPS is great for competitor analysis. You can compare your Net Promoter Score with that of a direct competitor to get a clear picture of your relative stand. For example, if Uber has a Net Promoter Score of 90 and Lyft achieves a score of 60. This is a definite red flag for Lyft and calls for a deeper analysis on their part. Click here to read a great NPS based competitor analysis of Amazon and Uber.
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What are the hazards of depending solely on NPS?
Net Promoter Score is a classic case of oversimplification. The greatest benefit and the major driver of popularity for the NPS system is the large number of responses it generates. It has been observed that NPS surveys generate more responses than any other form of customer surveys. A large number of respondents means more data to work with. More data means more accurate analysis. That's pretty simple, isn't it? What could possibly go wrong? Let me enlighten you me, amigo!
A High Net Promoter Score or NPS Alone Does Not Always Mean A Healthy Brand
So, without beating around the bush let me get to the point. Customers do not care about your Net Promoter Score. They might not even know what it means! All they truly care about is the value you bring to them.
An NPS rating will not communicate the reason behind the opinion. Unless you listen to this reason in your users' own words, you will never truly know how they felt interacting with your brand's offerings. NPS is the definition of half knowledge and based on this incomplete information thousands of professionals make ineffective strategies that can do more harm than good.
The solution is open-ended survey but as they say if it was going to be easy everyone would have done it. The greatest problem is analyzing these responses manually. Here is where things get interesting. Enter Natural Language Processing.
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What are the gaping holes in the insights generated through a pure NPS analysis?
Let's meet Stan.
So, Stan just returned home from a trip to the windy city of Chicago. He stayed at the Holiday Inn chain of hotels. On the last day of his stay Stan was asked if he would recommend a stay at Holiday Inn to his friends and family. Stan was pretty satisfied with his stay and responded to the NPS survey with a resounding 9.
That makes him a promoter and a valued guest of Holiday Inn. So far so good? Let's take a closer look.
Along with the score Stan also wrote a feedback which went like this:
"So my stay at Holiday Inn was awesome. I loved the super friendly staff they have recruited. There are so many activities you can do Kudos to Holiday Inn, I mean I loved the horse riding totally brilliant experience. A couple of issues I would like to raise are:
a) Breakfast was really average.
b) The room service sent me cold tea on the first day. However, the hotel promptly replaced it.
All things considered the stay was golden."
While Stan seems really satisfied with his stay his feedback is not all rainbows and butterflies. This is the problem with NPS scores they completely ignore the nuances. In this case, the two issues raised by Stan go completely under the radar.
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We will look at the pitfalls of Net Promoter Score or NPS in the next part of this article.