Looking for the advantages and disadvantages of Net Promoter Score..?
You have certainly been putting a lot of hours into building your brand and product. This mainly reflects in your ability to gain customers. However, the main challenge isn’t just having a customer visit your website or shop. It is ensuring that they keep coming back, again and again. Customer retention is an important part of your business. So your aim should be to find out what factors make them want to come back or make them avoid you.
To do so, the Net Promoter Score (NPS) is your answer. It can be viewed both as a customer loyalty metric or a strategy to build loyalty over time. So before delving into its primary functionalities, let’s make it clear what NPS actually stands for.
What is Net Promoter Score (NPS) ?
NPS or Net Promoter Score or System is generally just a single question which goes like, “How likely are you to recommend our company or product to your friends or colleagues?”. In this survey, a scale of 1-10 is provided. Your customers can select a number based on how likely they are to do so. With this, you will mostly be clear on which customers adore your company and would love to come back. Also, you would be clear about those who don’t.
So is giving an NPS after every purchase the ultimate and perfect solution? Or are there some factors of it that do not make it sufficient as a customer loyalty metric? Well, this is why I have jotted down some advantages and disadvantages of Net Promoter Score. You can consider them before implementing the same.
Advantages of Net Promoter Score:
- This is a highly recognized metric across industries. There is no reason to doubt its credibility.
- It is a simple number that makes it easy to tell at a glance, exactly what percentage of your customers are satisfied with your brand’s performance.
- You get an overall insight into your brand’s performance affecting customer retention rates.
- Derive an insight about where you stand with respect to your competition. The established companies can obtain and share their high customer retention rates which would create a benchmark for the overall industry.
- You will not require any additional expert to analyze your performance. Your staff will be able to interpret the NPS without requiring any special analytical skills.
- NPS ratings have a strong correlation with the revenue generated by your company. So once you can successfully implement this it will motivate your teammates and all your employees to strive for customer satisfaction better than before. This will help to increase your NPS and thus your revenue
- You can use NPS as a progress score as well. With this, you can notice the growth your company underwent and how much it matured over time. Maybe as a startup if you are not that well known, you may get a low NPS in the beginning. But as time passes, and you spend years understanding the industry, your NPS score can improve.
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Disadvantages of Net Promoter Score:
- One of its most noticeable drawbacks is the difficulty it poses in quantifying customer loyalty.
- Its answer is not absolute. The question talks about how likely customers are to recommend their brand. However, it does not always mean that those customers who give a top review, are the most likely to go ahead and promote your brand. They may have been in a hurry and didn’t want to take up time thinking deeply before giving the rating. So blindly going by it doesn’t have much value.
- It is not quite logical to be breaking down an 11-point scale into 3 components. We seldom pay attention to the exact details for those who answer in the middle range. A detractor is someone who gives a score of 6 or less and a promoter is someone assigning a 9 or a 10. So we do not focus on the people giving a score in the middle range. Changing them into promoters is more likely and easier than getting a detractor to be loyal to your brand.
- NPS is a good customer loyalty measurement metric but it is not the best option either. Its effectiveness would increase if the metric was associated with a detailed questionnaire. It would be easier to derive more answers from the customer. A question like “What is the reason for your score?” will help you exactly understand what your customer service team needs to improve in order to retain customers.
However, it has been proven effective to use an NPS in businesses especially if you do not want to burden your customers with a heap of questions. So it will help your business understand your customer retention capacity and can draw effective insights on what changes can be brought about to improve the service. Also, NPS is a good source of advertising, and having a well-planned approach to using it won’t fail your business in spite of its disadvantages.
Thank you for reading! Please let us know your thoughts in the comment section.