Most marketers already understand the power of word-of-mouth marketing; studies have shown that people are 90 percent more likely to buy from a brand when it’s recommended to them by a friend.
However, the one thing that still remains tricky is the act of measuring word-of-mouth marketing. Tracking word-of-mouth referrals effectively will always be next to impossible, but the Net Promoter Score (NPS) is the closest you can get.
So what is the NPS, anyway?
The NPS is a scale from -100 to 100 that measures the willingness of existing customers to recommend a company’s products or services to others. NPS was introduced in a 2003 Harvard Business Review article and is a registered trademark of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.
Companies perform the survey by asking customers, “on a scale of 0 to 10, how likely are you to recommend our product/services to a friend?”
Based on their score, respondents are categorized into three buckets:
Promoters are respondents who scored 9–10.
Passives are respondents who scored 7–8.
Detractors are respondents who scored 0–6.
To determine the company’s overall NPS, they then subtract the percentage of detractors from the percentage of promoters. Because the industry benchmark for B2B companies is highly varied — as low as 8 percent for HR services to as high as 32 percent for architecture companies — many companies base their NPS benchmarks on the previous year’s score.
Generally, companies send out the NPS survey every three to six months. Sending the score at set, regular intervals (rather than lining it up to occur directly after a good customer experience) is key to getting accurate data.
Why is the NPS important?
As we mentioned earlier, the NPS loosely quantifies word-of-mouth marketing, which is a powerful driver in business growth. Beyond that, the NPS allows you to gauge your customers’ overall satisfaction with your product or service, as well as their loyalty to your brand.
In that way, the NPS is a staple of the inbound flywheel. Marketing, sales and service should revolve around the customer, and understanding customer sentiment regarding your product or service is key to understanding how to delight them. You can use the data you collect from the NPS to fuel your flywheel and provide better, more holistic experiences to your customers.
That feedback loop is so important, and it can be applied to every aspect of your business, from customer service to individual product features. HubSpot, for example, sends out NPS scores not only on their product as a whole but also on the individual Marketing, Sales and Service Hubs, as well as each of the features within that. Drilling down into each feature set like this allows you to gain a deeper understanding of your overall score.
Lastly, but certainly not least, the NPS has been proven to directly correlate with revenue growth. By measuring the likelihood of your customers who love and trust your brand enough to recommend it to a friend, you can get a rough idea of your business trajectory moving forward.
However, the NPS is useless without a follow-up plan…
It’s important to note that the NPS should not be the be-all-end-all of your customer delight strategy.
More often than not, customers will respond to the survey, but they won’t give a reason behind the score they provided. After you hear that initial quantitative feedback, you need to do some research to understand the qualitative reasoning behind your score.
Generally, this research is done through a follow-up question for customers who responded to the initial survey. In HubSpot’s out-of-the-box NPS feature, users can create canned responses to automatically follow up with respondents. For example:
If a customer provides a 0–6 NPS score, you could respond: “We’re sorry we let you down. How can we get it right next time?”
If a customer provides a 7–8 NPS score, you could respond: “What can we do to bump that score up to a 10?”
If a customer provides a 9–10 NPS score, you could respond: “Thank you! Why did you choose to score us so highly?”
Along with follow-up surveys, crowdsourced review platforms can inform your score and help you understand where you need to optimize your product or service. If the feedback is negative, you need to make a change. If it’s positive, double-down on what you’re doing — the important thing is that you’re continuously working to improve customer sentiment across the board.
Of course, there will likely be disparities across different data sources, so it’s never a good idea to react heavily to a small sample size. Look for bigger trends across different datasets before making wholesale changes to your product or service.
Many companies swear by the NPS survey — because it works.
The NPS is an effective, neutral tool for measuring word-of-mouth marketing, brand loyalty and customer delight. It can give you important insight into how your product or service is performing in the eyes of your customers and how your company is growing over time.
Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.
Tag(s): Reporting & ROI
Guido is Head of Product and Growth Strategy for New Breed. He specializes in running in-depth demand generation programs internally while assisting account managers in running them for our clients.