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As per a recent research, 64.5% of SMBs and enterprises run NPS surveys today. While the NPS formula is quite ubiquitous there are inherent problems. Results are incomplete due to low response, skewed due to biases and lagging since the surveys are typically run on a quarterly basis at best.
Before diving into the specifics, let’s understand what the NPS formula is all about.
NPS is a single question survey that attempts to derive customer satisfaction from the product and service that was sold. The essence of the question asked is “how likely are you to recommend this product/service to others?” The response is a figure between 1 to 10, 1 being unlikely to recommend and 10 being highly likely to recommend.
The thought behind this approach is very smart – ask a single question vs a long and tedious survey with the expectation that people will be more inclined to respond. The question itself is intelligent and can help uncover a lot of insights about customer experience. If a responder is willing to refer the vendor to others, that naturally implies that they are getting value and are overall satisfied with the product/service. If they are not willing to refer to others then clearly we have an issue that needs further investigation, but it is bad news either way.
Now, subtract the % of detractors from the % of promoters to get your NPS.
It’s time for a quick example. Let’s assume that you have 100 responses, out of which 30 customers are promoters and 50 are detractors. So your Net Promoter Score is going to be 30%-50% = (-20).
The score categorization goes as follows:
While the NPS formula calculation is a straightforward one, you need to decide if you are going the Relational or Transactional way before getting started. Both serve a different purpose:
Now that you know the ins and outs of the NPS formula, what should you aim for?
Generally speaking, the NPS score can be anywhere between -100 and 100. So the higher your score, the better. However, your ideal score can vary from industry to industry. For example, Bain and Co. state that being in the 50 range means that your retail business is in a healthy state of growth with good upselling and cross-selling. Top percentile of successful businesses can see scores above 70.
Here is a more detailed breakdown of NPS score ranges:
All in all, NPS has been a very popular way of identifying promoters and detractors. But today’s fluctuating and demanding markets are exposing its flaws. The next section will cover the top blind spots B2B businesses have to cope with.
Related: Top Customer Feedback Tools for 2023
Before continuing any further, I must clarify that NPS is still an important tool in your playbook, but it simply cannot serve as a stand-alone CS tactic anymore. There are too many variables and inconsistencies in play.
Let’s dive into the main blind spots.
While NPS surveys are pretty easy to send out, they become time-consuming when CS professionals start breaking down the fragmented, skewed and siloed data. You are actually looking at data from the past and using it to make decisions about the present and future. Pinpointing promoters and growth opportunities requires a real-time, proactive and unbiased approach in today’s economic climate.
Related: CS Strategy: Identifying the Blind Spots
Now that we have established that the NPS is not a silver bullet, how can you get the job done? Besides the “how likely are you to recommend our product to a friend?” question, NPS is also supposed to find answers to the following questions – loyalty, risk, opportunity – which it simply can’t. How can you supplement this reactive indicator to achieve sustainable growth?
The answer is simple – AI.
The real shifts happen under the hood – The real feedback is already there in the communication – sentiment in emails, tickets, chats, calls and more can provide a real time indication and equivalent to the survey response. This analysis is not constrained by response rates (every message is analyzed), accuracy or frequency.
AI-driven customer intelligence solutions take out the guesswork from understanding stakeholders. They can break down and analyze customer interactions in real-time to help CS teams understand sentiment fluctuations, stakeholder relationship trends and eliminate the aforementioned blind spots. Simply put, detecting early signals is the name of the game today.
Then come the added benefits. The unbiased and accurate insights help create a better customer experience, while also automating cumbersome CS tasks and improving responsiveness for better relationship management. Everything becomes more efficient with the harvesting of communication data and AI-generated insights, both of which help businesses grow faster even with limited resources.
With AI-powered scoring, you can achieve sustainable growth by analyzing 100% of your customers’ sentiment, relationship and engagement, compared to the common 15% average NPS response rate today.
Surveys and NPS in particular are a useful tool for actively probing the customer base. However, in this day and age, relying only on this approach, and not adopting the capabilities AI and passive probing provide, is analogous to burying your head in the sand. Todays’ competitive advantage is determined by how quickly and accurately a company can respond to their customer’s experience. Sticking with the old-way of doing things is equivalent to letting your competitors take the lead.
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