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Given the popularity of Net Promoter Score (NPS), maybe you are wondering if you should too adopt it too. As you consider whether NPS is right for your business, it might help to understand some of the reasons why it has become so popular in the first place.  

In this guest post, Melinda Gonzalez outlines the reasons and her philosophy for success with NPS. Melinda is CEO of Melinda Gonzalez Advisors,  a customer experience consultant, and a contributing author in SaaS Startup Founder’s Guide.

NPS was introduced nearly 15 years ago by Fred Reicheld and the global management consulting firm Bain & Company as a C-suite metric that is intended to measure customer loyalty and satisfaction by asking a single “what is the likelihood you would recommend…” question. At the outset, enterprise companies and major brands like Costco, USAA, Apple, and Amazon.com used it, and they have long held leadership rankings in the industry. NPS has since grown tremendously in popularity, and it is often used by small and mid-size businesses as a tool to drive profitability and growth.

So much has been written about NPS. Yet I still come across businesses that are struggling to make it work. Until the time comes when that no longer happens, I’ll continue to share my experiences and advice to help others.

Increased Popularity of NPS

First, companies are becoming more customer-centric out of necessity. The traditional sales and marketing funnel is dead, particularly with the “as a service” revolution. Whether you view it as flipped funnel, an hourglass, or something else, most companies realize they’re missing the boat if they’re not working towards creating an army of customer marketers and cultivating increased profitability through follow on deals and word of mouth within their customer base.

Second, there is an ever increasing and intensified need for companies to make more data driven decisions. Companies now have exponentially more data at their fingertips, particularly with the explosion of the cloud industry. This has completely revolutionized the ability for companies to be more informed and targeted in how they evolve business strategy. NPS indulges this appetite handily.

Third, NPS enables companies to “metricize” the customer experience. Companies are making significant investments to collect customer feedback in real time. NPS and other types of experiential data are often used to measure customer loyalty-related sentiment and behaviors. Connecting this data with operational and CRM data can enable more powerful and predictive insights. This can be a game changer for companies trying to create personalized interactions to differentiate their brand and increase customer engagement.

Last, the perceived simplicity of having a single metric is very attractive. This has been both the blessing and the curse of NPS. Executive leaders are constantly barraged with highly complex data and information. So, I get it. Here comes a single number that is supposed to provide an immediate gauge of how loyal customers really are. Only, it doesn’t actually do that on its own. The score informs little about how to drive improvements or where to double down on things that are working well. This level of insight only comes from digging deeply into the respondent segments, reviewing qualitative feedback, understanding root cause issues and key themes, and ideally analyzing the data in conjunction with operational data such as (re)purchase behavior.

Focusing on the System over the Score

Is it a “score” or a “system?” Focusing on the score by itself short-changes the investment of implementing NPS in the first place. Understanding and taking action on the insights is equally if not more important and impactful. Fred Reichheld and Bain & Company did a great thing for the industry by renaming it to Net Promoter System^SM. There are many who seek to entirely debunk NPS as a metric. That’s not my goal. If you’ve implemented NPS that shows some desire to improve services for your customers, which is a great start. I prefer to treat NPS more as a change agent to collectively focus the business on improving the customer experience. I advocate against myopically focusing on the score and recommend using NPS as a “north star” metric, much like Airbnb views it.

Two Aspects of Net Promoter Success

That being said, I do have two basic philosophies about NPS.

First, if you’re going to focus on the NPS score, know that it is a relationship level metric. Not everything can or should be measured by the “likelihood to recommend.” Do not NPS your customers to death. Consider implementing the NPS question as part of a broader voice of the customer ecosystem. This could include measuring transactional interactions, product adoption indicators, behavioral or purchasing patterns, etc. This allows you to build a comprehensive picture of overall customer health, position the business to take action as needed, and inform changes that increase customer engagement. Sorry, there’s no single, magical metric. That said, measuring NPS is a great place to start.

Second, it’s critical to be transparent with customers about the steps you’ve taken to improve products and services based on their feedback. This presumes feedback is actually being used to do so. The easiest and fastest way to lose customer trust and damage the relationship is to spend an enormous amount of effort collecting the feedback then doing nothing with it. NPS can be an impactful change agent to drive innovation, but it does not happen organically. It must be indoctrinated as a core value at all levels of the business. An understanding of root cause issues is also required to drive necessary changes. While one person often owns NPS as a program, it is not one person’s job to drive change from NPS – nor is that in his/her power.

Next week, Melinda will share Eight Principles for Driving Change with NPS.

Net Promoter Score (NPS) is the popular metric that shows you how well your company is doing at the job of keeping customers happy. A high score means that the folks who really love your service or product vastly outnumber those who’ve had a negative experience.

That’s valuable information, but a single number doesn’t tell the whole story. In fact, just relying on your company’s NPS could be limiting your ability to attract and retain customers. We’ll explain how segmenting NPS data can be easy, and why it is important to a successful Net Promoter Score program.

What Is NPS Segmentation?

Even if your company provides only one service or product, your customers are not the same. Categories of users have different needs and are bound to experience your company in a slightly different way.

Segmentation lets you slice and dice and see the NPS for particular user groups of your business and determine how you’re faring quantitatively. You’re able to figure out whether everyone feels equally or if the big number is being driven up by one segment and down by another. You then have the ability to make your product or service better for users in those precise segments that lag behind the curve. Thus, it is a very efficient tool for improving customer satisfaction.

Historically, NPS segmentation has required the laborious process of sorting NPS data and qualitative responses in Excel spreadsheets. Using a modern NPS platform like Wootric automates this process, providing segmented customer data in real-time on a dashboard.

Need a Place to Start with Segmenting your NPS?

You can segment by any property that you have on your users – if you’ve dreamed it up as a segment, you’re probably already capturing that data somewhere in your system. (Note: Segment.com users can capture and segment NPS data automatically with this integration.)

Typical customer properties you may already be collecting include:

• Account creation or purchase date.
• The type of product or service that your customers use or pay for.
• Revenue associated with the customer.
• Size or type of business, such as Small Business or Enterprise.
• Customer Persona or other profile info such as Role/Title, Age, etc.
• Location

Take Into Account Your Business Model

The Wootric platform doesn’t have any default segments set up for our customers; we know that every company is going to define for themselves the segments that will provide the best insight into their business. That said, in the course of coaching our customers to set up successful NPS programs, we have seen that various business models tend to want to analyze their data in similar ways. For deeper insight into your overall NPS, use these ways of segmenting users as a starting point:

Software as Service (SaaS)

• Pricing plans, product plans, and cohorts (customer longevity). Does customer satisfaction grow the longer users are with the company? Is there a difference in the NPS of an enterprise customer versus a pro plan user?
• Account-level NPS is particularly useful for Customer Success and Sales Teams that need to monitor the health of large accounts with multiple users. Problems can be quickly identified and proactively addressed to prevent churn.

Marketplace

• User Personas. It makes sense to segment marketplace customers into different “buyer/seller” user personas. For instance, you might have both employers and employees using a recruiting platform and want to isolate the NPS of each group to find out their level of user satisfaction.

E-commerce

• Stage of Engagement. For our e-commerce customers, segmenting feedback from the time of purchase to the moment of delivery produces useful results.
• Purchasing patterns are another valuable way to segment customers in this industry. For example, what is your NPS for customers who spend more than $1000 a year as opposed to those who spend less than $200? Are you drawing in people who purchase shoes than purchase apparel?

Website Visitors

• Device, Geographic Location, Browser. While you don’t have personal information for your NPS survey respondents, you still have information that may be useful to you. For example, what is your NPS for site visitors on mobile versus those that experience your site on their desktop?

Try an Innovative Way to Segment Your NPS: A/B Happiness Testing

Another valuable use of segmentation is to perform A/B testing on different versions of your product or website to see which one yields a higher level of customer happiness. Likewise, you can test a new product or feature on a small subset of customers, using the tool to track their satisfaction until you’ve achieved a high enough level to warrant the product’s general release.

What are the Benefits of Segmenting NPS Data?

When you isolate NPS score by segment, you get a far more meaningful measure of customer satisfaction than you do by looking at a single number — it’s unlikely, after all, that promoters and detractors will be evenly dispersed among all the segments, or that they will have the same desires or delights. This approach lets you know which group of users are your happiest. It also helps you to prioritize your challenge areas so that you know how to take meaningful action to remedy the situation.

The analytical ability to drill down and answer the “why” is much easier with segmentation. It gives you demonstrable evidence of where the key drivers of your business are, which is something that the CEO will want to know off the top.

Segmenting your NPS score also helps you deploy your resources efficiently. Ideally, you can make all user segments happier. But since most businesses need to make trade-offs, segmentation lets you prioritize improvements that boost NPS among user groups that drive the most revenue.

Escape from Excel: How to Automate NPS Segmentation

An NPS survey platform can automate data segmentation, maximizing efficiency. Here are the three steps to do this in Wootric:

1. Determine which segments are the most valuable measures of your business’s customers.
2. Include customer properties in your Wootric installation (instructions here). Note: If you use Segment.io to collect customer data, you may not need to involve a developer. Marketers, customer success, or other non-technical employees can pass user properties to Wootric themselves with a few clicks.
3. Log into your Wootric dashboard to view:
   • NPS by user segment – daily, monthly and by custom period and trends overtime.
   • See Promoters, Detractors and Passives by segment.
   • Sort and respond to user feedback by segment.

Once set up, all NPS survey responses will include your customer properties. It’s a fully automated survey process that gives you NPS data and qualitative feedback you can view through filters you control on your Wootric dashboard. No more excel sheets, no more number crunching after the fact.

And of course, Wootric is always available to consult with our customers. We’re happy to provide extra guidance to help you get set up with segments that are optimal for your business. Everyday, we see how well-executed NPS programs are helping businesses to grow, and we want yours to be successful too!

The most successful companies are those that take NPS data and use it to fuel and direct their marketing methods and even product development.

But while obtaining your NPS is easy, knowing how best to use the information is anything but. Ask any rocket scientist. Many of the highest-tech rockets don’t make it to orbit; they fall ‘clunk’ on the launch mat.

To help provide some clarity, we’d like to introduce you to four companies using NPS data in very interesting ways. Check them out below. Read More…

• Segmenting customers by NPS score makes it easy to identify and empower promoters.

• “Always on” survey insights give 15Five a constant pulse of customer sentiment.

• Promoters create a defensible base of customer love.

  Read More…

We all know mobile apps live and die by user engagement. What’s the best way to understand why some app users love you, and why others disappear?  What actions should you prioritize to boost user engagement? Many young companies choose the Net Promoter Score process. NPS surveys offer a lean way to gather meaningful feedback, and align a team around user happiness.

We built Pearl-Plaza‘s native iOS and Android SDKs to measure Net Promoter Score inside your mobile app.  With our mParticle integration, it is easier than ever to get started.
Read More…

In 1853, U.S. Commodore Matthew Perry (no, not the Friends actor) sailed to the shores of Japan to strongly suggest (with several gun-laden vessels) that the ruling shogunate open Japan’s ports to outside trade. For 200 years, Japan had embraced a policy of near total isolation from the West, but with the Industrial Revolution fresh out of the oven, even isolationist Japan couldn’t ignore the benefits of trade. What does this history lesson have to do with Product Managers and Customer Success?

Read More…

Morgan is 15-year startup marketing vet, who is passionate about helping great ideas and companies grow. He’s currently the COO of Inman, a real estate media company that covers the residential real estate space in the U.S. He’s also married to an awesome woman and has two kids that remind him of how lucky he is every day.

He loves to study what makes online companies grow, what makes some brands successful and others not, consumer behavior and all things business. He reads a ton, with his favorite reads being business books and biographies of famous leaders. His latest read, Leadership BS, is a great book on how most of the leadership advice is misguided and harmful to leaders and their teams.

You can follow Morgan on Twitter at @morganb.

1. How have you used qualitative research in your career as a growth marketer?

Qualitative research for me really lies at the heart of what it means to be a marketer.

Talking to customers, listening to people, peeling back the onion with the right questions to really assess their needs, wants and motivations is incredibly powerful. Running growth at Qualaroo certainly meant a lot of time studying and using qualitative research. It really helped me see first hand how powerful it can be when deployed properly.

I’ve used it in my career in all sorts of ways: conversion rate optimization, product development, marketing campaigns, website and email copy, and software package and pricing. It’s helped me learn what matters most to people, what concerns people have, and the words they use when they talk about a product and solution.

2. What are the differences between qualitative and quantitative research?

Analytics tells you what’s happening, but voice of customer research tells you why. It’s that contextual layer that helps put data into perspective. You can stare at numbers and guess at what’s happening, or you can ask your customers and get feedback about what’s really going on.

3. What is the importance of qualitative research for online businesses?

The beauty of qualitative feedback is that it helps you define the problem space better when you’re looking to improve the performance of your business. For example, you can see a really high cart abandonment rate and guess at all the potential issues preventing someone from purchasing or subscribing, or you can talk to some people and narrow your set of potential hypotheses and experiments. It’s a great way to shorten your experimentation process and find higher quality tests that are more likely to be wins.

4. What methodologies can be used to conduct qualitative research? How can a business make sense of all the feedback they get ? We think some people inherently distrust qualitative, don’t know what to do when they get A LOT of it.

There are lots of ways you can collect qualitative feedback, from interviewing people in person or on the phone, surveying users via an onsite survey, using Net Promoter Surveys via companies, to marketing panels where you survey people who are in your target market. The key to effective user surveys is to ask the right questions to the right people, so that you’re eliciting valuable feedback.

If you use a Net Promoter Score survey, you’ll get a numeric representation of your overall customer happiness or satisfaction with your service. You can benchmark yourself over time and also to other companies who publish their NPS online. It gives you some context to the results you’re getting and helps you gain some understanding of the feedback you’re getting.

You don’t necessarily need a ton of feedback from qualitative research to find answers that can help your business. Jakob Nielsen, one of the foremost user experience experts, wrote an article 15 years ago that showed that getting feedback from just five users uncovered 85% of usability problems. So you don’t need a ton of feedback to uncover important learning that can improve your growth, conversion rates, etc.

5. What are some of the common mistakes people make (or fears? resistance?) when conducting qualitative research and how can they be avoided?

The two biggest mistakes are: not doing qualitative research in the first place and then not putting it to use. People are afraid that they’re going to ask the wrong questions, get a non-representative sample, hurt their conversion rate and more. The third big mistake is asking the wrong people for feedback.

These are all easily avoided. The first is to just do it. Qualitative feedback doesn’t have to be hard. Just start by talking to customers, on the phone, via email, onsite, in surveys, etc. Getting over the fear of doing it is the hard part. Then, once you have data flowing in, it’s important to share it with your team.

Finally, asking the wrong people is a big issue. You want to ask people who are potential customers, not just random people who never have any intent or landed on your site by accident. Just like you wouldn’t do customer development interviews with someone outside of your target audience, don’t waste your time getting feedback from people who will never buy.

To do this, filter out unqualified traffic, users, etc. For example, at Inman we don’t run onsite surveys to older content which gets great SEO traffic but is written for a different audience. Those readers are not the people we’re trying to build our business with.

6. How can qualitative research be used to find language-market fit, problem-solution fit, and product-market fit?

This is where qualitative research really shines. For language-market fit it gives you insight into the exact words and positioning they use to describe your product. You can use their words to help with copy and positioning that is relatable and intuitive to your target audience.

For problem-solution and product-market fit you can ask questions like ‘What product would you use if you didn’t use ours?’ or ‘How disappointed would you be if our product was no longer available?’ or ‘What’s the one thing that would make this product indispensable?’ and more to gauge how important your product is to your users and how to make it a must-have.

One of the best ways to improve retention is to ask people who leave why they left and then work backwards to solve those issues and keep people engaged and happy with your product.

7. How can it be used to help scale a startup once product-market fit has been established?

Qualitative feedback is essential to conversion rate optimization. If you have PMF, then you want to maximize your growth through improved conversion rates, messaging, acquisition, retention and more. Qualitative research can give you the insights you need to improve all of those things.

One of the best qualitative questions to ask as part of conversion optimization is to ask people who just successfully purchased or signed up this question, ‘What almost stopped you from signing up/purchasing?’ 

The answers you get from your new customers will point you directly to the moments of confusion and hesitation that almost derailed them. If you go back to those spots in the funnel, you’ll likely find many more people who couldn’t get over that hurdle. That intelligence gives you great insight on where to start experimenting to improve your overall conversion rate.

I joined Wootric last spring as the first full-time engineering hire. When I’m not busy scaling out our infrastructure, designing APIs or squashing bugs, I enjoy writing about our technology.

Read More…

When it comes to using Net Promoter Score surveys to gain insights from your customers, you probably have questions about sampling.

How do you decide how many customers to survey? When should you first survey a customer? What about after that? These are three important questions to think about in advance of getting started.

In this post, I’ll discuss best practices for survey sampling for NPS. While these practices apply to many types of businesses, I’ll relate them to gathering customer feedback in the online world — inside web and mobile applications, and on websites.

Read More…

As a startup founder, you were probably on a first name basis with many of your early users.  Some became cheerleaders and champions, others churned. And, in those early weeks and months, everyone’s detailed, anecdotal feedback was critical. Those first 5, 10, or 50 customers helped you hone your product into something that hundreds or even thousands of customers now rely on.

As more and more users come on board, you can no longer develop personal relationships with each and every one. Plus, your attention is pulled to hiring, infrastructure and funding.  Now, more than ever though, you need to know what customers think of your product and stay connected.  You need a solution that scales.

What do you do when you can’t talk to every customer any more?

Homebase, a startup that offers free employee scheduling and timekeeping software, has thousands of customers, uses Net Promoter Score to continue its personal response to customer feedback and to shape the product roadmap as the company grows.
Read More…