NPS is marketed as a way to measure customer experience and predict future growth. Companies put a lot of resources into monitoring and improving their scores, hoping new customers and improved customer retention will grow their business. While it's a widely-accepted tool, one must wonder if it does help increase client engagement; after all it doesn't tell you why a particular client gave you that score. Responders are split into three groups: Promoters, Passives, and Detractors. It then generates a score based on subtracting Detractors from the sum total of your Promoters. Improving your score means increasing the number of Promoters, but how you do this? In a recent survey, Bain reports 68% of B2B executives claim their clients are less loyal than they have previously been, so clearly there is a need for organizations to improve their client feedback strategies.
It May Not Be The Best Metric for B2B
The Marketing Productivity Blog reviewed a recent study from the Social Science Research Network and found the accuracy of predicting retention by NPS varies a lot per industry. NPS can be good at predicting retention if your company is in the right field. Even if you are in the right industry, however it still may not be the best solution. MIT Sloan reported repurchase intention is a better way to predict customer loyalty than recommendation intention. In an attempt to predict the power of customer loyalty, a Harvard Business Journal study compared customer satisfaction (CSAT), the Net Promoter Score (NPS), and the Customer Effort Score (CES). They found when it comes to predicting retention, NPS ranks #2 behind CES. This spurs the question of how good it is at helping your business increase engagement and loyalty, as on it's own NPS is a one question survey and in the B2B world more insight is necessary when measuring customer success.
As previously highlighted, Promoter percentages are a good way to gauge customer retention. Promoters are likely to stay longer and give more money to your company. The issue, though, is your NPS score could be wrong if you dont have enough responses. PR Newswire explained in a ForeSee study that Detractors are often overrepresented by 299%. Overstated detractors could make a company focus time and money in an area that isn’t a large issue.
Every Little Bit Helps
Across all industries, we're seeing a higher demand for client engagement. It's supported by the understanding that even a little increase in retention can generate an immense amount of revenue. NPS can assist in the process of measuring client engagement - it's just not the only solution and has some cons that come along with the pros. While being a helpful asset in your retention strategy, it may not fit everyone in a B2B world. Look for solutions that take a smarter approach to measuring client engagement, take your retention efforts to the next level, and drive actionable insights that show a direct impact on your bottom line.
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