This week, we will explore one very useful technique used by many of the biggest companies out there (AT&T, Apple, CenturyLink, and many more). It’s called NPS.
For years, NPS or "Net Promoter Score"" was a tool that only big companies and well-funded startups could afford to use because it took a staff of people to run these surveys and collect the data.
Has this ever happened? You spend weeks or even months programming an awesome piece of open-source software or a cool startup idea. Then you release it to the world trying to muster as much fan-fair as possible, only to find… nobody cares?
Even worse, has the fear of nobody caring stopped you from even trying?
I know what that’s like because I have created dozens of pieces of open source software in my life. Many of them went no where.
Nobody ever cared about them or downloaded them. These startup ideas went nowhere.
But then for some reason, a few of my Ruby libraries went viral and were downloaded over 793,000+ times. Recently, Panamax.io launched to great fan-fair being covered in over 30 blogs and all the major tech press. Before that, I started a PaaS company called AppFog which signed up over 100,000+ developers.
So, what’s the difference? How do you create fans of what you are doing? This weekl I'll discuss this and more with Chad.
Chad Keck, Founder of Promoter.io
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[3:31] What is NPS?
Net Promoter Score or NPS is a methodology for measuring customer loyalty and true customer sentiment. How strongly do people feel about your brand or service, and are they likely or willing to recommend it to others. Companies that have successfully implemented NPS include Apple, Neiman Marcus, RackSpace, Southwest Airlines, Zappos, and many others.
[5:58] So with NPS there is only one question?
There is one core question, then there is a follow-up question which is where the bulk of the value come from.
[6:08] What's the core question?
How likely are you to recommend our brand, our service, or our product to a friend or colleague? The question is rated on a 0-10 scale; "promoters" are those who answer 9 or 10, "passives" score you 7 or 8, and "detractors" are those that give you 0 to 6.
[7:40] If somebody scored an 8 that wouldn't be good enough in Net Promoter Score?
An 8 is OK, but it is not good enough. The "passives" group are good to have, but can be lured away easily. You want to find the one or two issues that are stopping this group from being "promoters". It is relatively easy to create brand promoters from this group.
[8:50] What is the score range?
The way the NPS "score" is derived is by taking the percentage of your "promoters" and subtract the percentage of your "detractors". This means your NPS "score" will fall on a 200 point scale; from -100 to +100.
[9:00] What is the worst score you can get and what is the best score you can get?
The range from -100 to 0 is called the "Danger Zone". A score from 0 to +50 is considered "Good", the average score for US companies in 2013 was in the mid +20's. +50 to +75 is considered an "Excellent" score, and +75 to +100 is considered "World Class". Examples of "World Class" NPS companies are Zappos, USAA, and Nordstrom.
[10:29] How does NPS help build a community?
Many communities are spread through recommendations and word-of-mouth. We want to find out what is resonating with people, what is making them loyal, and what is making them want to recommend your product or service. The art and the value from Net Promoter is engaging and having deep, meaningful conversations with your customers.
[15:12] What use cases make sense for NPS? What kinds of products and services can NPS be applied to?
NPS can apply to practically everything. All products, all services, all communities, can have an emotional appeal to the value being delivered. NPS is a methodology to quantify this aspect of human interaction.
[16:30] Doing NPS at AppFog was a manual process. How long did it take to have an effective NPS campaign at that time?
AppFog took dozens of hours per week. Most of the time was not in the Net Promoter aspects, but rather in the tooling and processes for data collection and other aspects required. This was the motivation for Promoter.io. There were no easy to use or SaaS products that allowed small to medium (and some larger) businesses to effectively implement a Net Promoter process. In lieu of having an NPS "service" businesses would have to a) hire full-time staff, or b) engage an enterprise consulting firm to own the NPS process.
[18:40] What does Promoter.io do?
Promoter.io facilitates the front-end customer survey process, including custom branding. This survey has 2 questions; the "ultimate question" i.e. How likely are you to recommend us? and a very targeted question (this is where the bulk of the value comes from): “What is the most important reason for your score?” The results of the second question will drive analytics to help formulate new or different customer engagements in order to create more "promoters".
[21:51] Where do most implementations of NPS go wrong?
The most common mistake is thinking that you can add the "ultimate question" to your existing customer satisfaction/transactional survey. This is probably the worst thing you can do, if you want an accurate and actionable NPS result. The problem is that these surveys have less than 3% response rates, making the data virtually useless.
[23:24] Promoter.io asks 1 question, some other surveys have many more questions. Why is your approach better?
Short answer, is that no-one will answer the long survey. You need a lot of response data to have an accurate and representative sample, having the questionnaire be too long or take too much time presents a barrier to response. Having the one follow-up question in Promoter.io covers the majority of the intent of traditional surveys with many questions. Promoter.io are seeing 70-80% response rates on the second question, even though it is optional. This helps provide actionable insights.
[28:33] What's the hardest part about doing NPS?
It depends on the organization. Initially getting an organization into the process of reaching out to their customers, asking for feedback, and then doing the follow-up is sometimes a challenge. Promoter.io suggests running a small pilot on a subset of the customers just to get used to the process and start to build a more "NPS-centric" culture.
[30:08] Can you talk about why Promoter.io has specific recommendations for follow-ups and follow-up wording?
There isn't necessarily a "right way" to do this, but experience shows some best practices. First, make sure you are actually doing follow-ups. Second, tailor the follow-up to the segment ("promoter", "passive", "detractor") you are addressing.
[34:50] How much does Promoter.io it cost?
Plans start as low as $49 a month and scale up according to the number of surveys you want to send out on a monthly basis. No matter what, it is a fraction of what traditionally NPS campaigns cost an organization.
[35:27] Do you have any more NPS hacks to share?
Not necessarily a hack but a best practice is to make sure you are doing the NPS processes on a consistent and rolling basis. Waiting too long to survey your customers gives you an isolated point-in-time score, making it more difficult to do continuous and meaningful engagements with your customers. Later this year, Promoter.io will be adding functions to the platform to make this even easier. [h3red]Quick Links[/h3red]