Why customer feedback is important
Customer feedback is important as it assists you in understanding what is and isn’t working well in your business, from your customers’ perspective. It can guide you to make better decisions in the future, and allows you to improve your customer service, your product or service offerings, while also improving your overall business processes.
By seeking customer feedback for your business on a consistent basis, it empowers you to improve many facets of your business, including your profit, which is one of the main driving factors for many business owners.
Customer feedback using a net promoter score
Here at Your Business Momentum, we make it a habit to regularly gather client feedback. One way to obtain customer feedback is using a Net Promoter Score (NPS).
As of June 2021, our client NPS sits at +89. While gathering the NPS after every client engagement is the first step, the focus should be on the insights you learn from your customer feedback, and less on the actual score itself.
I have done several strategy planning sessions prior to experiencing your methodology and I feel this is the first time we have truly discovered our purpose, the values that everyone collectively believes to be current and relative, and the direction we collectively want to take the organisation for the future. There were no preconceived plans, only what we came up with together, a good, solid, foundation for the future.
What is a net promoter score (NPS)?
A net promoter score (NPS) is a tool used to measure customer feedback, satisfaction and loyalty to a brand or business. Essentially, a net promoter score indicates the likelihood that a customer will recommend you to others, together with their level of satisfaction with the service received.
Benefits of using net promoter score
Improving customer satisfaction and loyalty is of benefit to every business. Using net promoter score (NPS) as a tool to measure customer satisfaction makes the process easier, more streamlined and provides consistent data to assist in future decision making.
There are many benefits to using the net promoter score system, including:
- Measuring the likelihood of repeat business
- Providing big picture data
- Simple, user-friendly and easy to understand
- Ability to benchmark against other similar businesses
- Guidance on areas to improve or changing direction
- Practical way to gain insight into customer attitudes and behaviours
Net promoter score is an effective way of using data driven thinking for your business, to make educated and informed decisions in your business.
What makes a good net promoter score?
A good net promoter score is impacted by a series of factors that influence the final result. NPS are measured with a single question survey, with the final result a number from -100 to +100. A higher score is the ultimate goal for businesses.
It is important, however, to remember that when reviewing your net promoter score, that it should be compared to industry average benchmarks. If your business scores higher than the industry average, then that would be considered a ‘good’ net promoter score.
If you need to improve your score, using the customer feedback from the NPS survey will provide valuable information to make improvements in your business.
As outlined in the Harvard Business Review, the one number you need to grow your business is customer loyalty. "Willingness to talk up a company or product to friends, family, and colleagues is one of the best indicators of loyalty because of the customer’s sacrifice in making the recommendation. When customers act as references, they do more than indicate they’ve received good economic value from a company; they put their own reputations on the line. And they will risk their reputations only if they feel intense loyalty."
How to calculate net promoter score (NPS)
To calculate net promoter score (NPS) for your business, it begins with one survey question, “How likely are you to recommend our business to someone you know?”
Customers are asked to answer the question on a scale of 0 (highly unlikely) to 10 (highly likely). After you’ve received your customer responses from the survey, they’re grouped into the following categories:
- Promoters: responses from 9-10.
- Passives: responses from 7-8.
- Detractors: responses from 0-6.
The formula for calculating the net promoter score is then as follows:
Net Promoter Score = Promoter % - Detractor %
For example, if you surveyed 100 customers, had 47 promoters, 32 passives and 15 detractors, then the calculation would be:
47% promoters - 15% detractors = Net promoter score +32
Setting up net promoter score (NPS) for your business
A strong customer feedback process provides objective information on what your customers really want.
If you’re ready to start using net promoter score (NPS) for your business, then download our free 7-step guide to setting up net promoter score for your business.