Any serious business is puzzled by the question of whether its products are popular in the consumer market. And if popularity is present, how stable is it?
Of course, the high popularity will be obvious, as it is read from quantitative indicators. Bulk sales and big profits are the perfect litmus test for the popularity of a company's product. But, not every business can boast of high sales.
Therefore, feedback from consumers is so relevant, clarifying what their attitude to the company's products is.
Measuring the level of loyalty according to the NPS method
There are a number of techniques for obtaining some form of feedback from customers, from direct questions about the quality of a product or service to tracking alternative consumer choices from a line of competitive offerings. Some methods are easier to use, while others are more difficult, but more informative.
Recently, there has been a lot of controversy around the methodology Net Promoter Score (NPS), which is aimed at measuring the level of customer loyalty. The Net Promoter Score methodology was developed by Fred Reichel e. In 2003, it was presented as a very simple and quick way to identify customer loyalty. Before talking about the pros and cons of the declared marketing tool, let's dwell on the very essence of the methodology.
According to Reicheld, customer loyalty is directly related to their willingness to recommend certain company products in their environment.
Therefore, buyer attitude measurements using the Net Promoter Score methodology are based on on a single question:
This question is supposed to be asked to those real customers who have already used the product and were able to assess its strengths and weaknesses. Potential customers are excluded from the sample of respondents.
The client is offered to answer the key question, focusing on a scale from 0 to 10, where an unconditionally positive answer corresponds to the maximum 10 points, and a categorical “I definitely will not recommend” means 0 points.
Further, based on the answers, all respondents are divided into three categories:
Loyal customers, whose answer is expressed by 9 and 10 points, are a group of promoters.
Undecided consumers who put 7 - 8 points - a group of passive customers.
Dissatisfied customers who rated their willingness to recommend this company or its products from 0 to 6 points - a group of critics.
The NPS methodology includes and sub-question, which reveals , “what justifies the assessment”.
This open question involves clarifying problematic issues that hinder the formation of commitment to a particular brand, and also allows you to get information about the strengths of the product and the company.
However, the answers to the auxiliary question do not affect the quantitative measurements of loyalty, but are used only in the qualitative analysis.
Further quantitative analysis involves the simplest calculation of the NPS index - the loyalty index. For this, the severity of the group of promoters and the group of critics is determined as a percentage and the difference is determined by subtracting the second indicator from the first.
The result is limited by limits from +100 to -100. Obviously, the NPS index will be equal to + 100 only if absolutely all respondents turned out to be loyal customers, and there were no passive or critics in the sample. Similarly, the NPS index will take a maximum negative value of -100 if none of the customers is ready to recommend the company's products, and in response to main question methodology, there were no ratings higher than 6.
What information does the NPS index provide?
An index with a plus sign indicates the prevalence of loyal customers over critics. Therefore, it is likely that new clients will contact the company based on recommendations. The higher the index, the greater the guarantee that there will be an influx of customers.
If the index is equal to 0 or takes a negative value, the situation becomes critical, since we expect not so much an influx as an outflow of customers based on possible negative reviews and the choice of competitive products.
Strengths and weaknesses of the NPS methodology
While the NPS methodology has been popular abroad for more than a decade, it has received a lot of criticism in the domestic business environment. Domestic marketing gurus emphasize the artificiality of the NPS index, since it is calculated on the basis of only two categories of respondents - promoters and critics, completely ignoring passive customers.
Another vulnerability is that companies with different shares of detractors and promoters may have the same NPS index.
Let's illustrate this with an example. Company A has 30% loyal customers and 10% detractors. Based on the algorithms of the methodology, its loyalty index is 20. Now, suppose that company B has 20% of the adherents of its products and not a single critic. Obviously, her NPS index will also be 20.
Based on the numbers obtained, it should be assumed that companies A and B have similar prospects. But such a conclusion contradicts the NPS methodology itself, according to which the presence of critics increases the risk of anti-advertising, and therefore the likelihood of customer churn increases. In our example, this risk would be higher for Company A.
Therefore, the loyalty index cannot be considered as an independent characteristic. The NPS index can take on its own interpretations.
criticized domestic marketers and the very wording of the main question of the methodology, emphasizing that people are generally not inclined to give recommendations, so the survey will fail.
As you can see, the critics make strong arguments weaknesses NPS methods. But is everything so clear? We will present our arguments not for the sake of arguing with venerable marketing specialists, but for the sake of benefiting from the methodology popular in the West.
What advantages do we see in using Net Promoter Score:
1. The wording of the question asked to clients.
The same question that is criticized has a positive psychological aspect. Namely, the words "What is the probability that you ..." removes unnecessary responsibility from the respondent. The client mentally weighs whether he could recommend this product to someone, and quite sincerely answers, because “could” is not the same as “I will recommend”. Therefore, the array of responses received using the NPS methodology is information that is very valuable for business.
2. The NPS index, with all its superficial calculations, shows a trend, which develops in the market for a particular product. A kind of thermometer that records the state. Yes, knowledge of the business loyalty index will not improve, just as determining the temperature will not cure the patient. This is just a diagnostic step that motivates the search for effective treatment. But without this step, treatment can be unforgivably late.
3. Ease of implementation of the NPS methodology.
You can look for the most effective tool to measure the same customer loyalty, or you can use the NPS methodology, which is not perfect, but it does cut off certain aspects of the business. As you know, the best can turn out to be the enemy of the good, because in the pursuit of the best, the chances of correcting the situation in a timely manner are often missed.
The listed pluses, whether other positive aspects are appreciated in this technique by foreign companies, however, the NPS index is actively used in various fields. For example, in the banking sector, +11 is considered the norm of the loyalty index. If we consider different markets, then the standard customer loyalty standard ranges from +5 to +15.
As an example to follow, Apple is called, the loyalty index of which reaches +50.
Can collection be automated? feedback from clients? Automation of collecting their opinions from customers (for NPS calculation) .
Analogue of NPS in domestic marketing
A similar technology for identifying customer loyalty is used by some domestic companies. This is most often observed in banks and the service sector. At customer service points, stacks of pictures are placed on the racks, which depict a cheerful or sad smiley. It is assumed that a satisfied customer will take a picture with a funny smiley face and put it in a special box. Well, the visitor dissatisfied with the service will act accordingly. This is nothing more than identifying loyal customers and critics.
Such a method could be useful to any company focused on services. By determining the difference between the number of satisfied and disappointed customers with a given frequency, a company can track customer attitudes towards its product and the dynamics of this relationship.
If there is a trend towards an increase in critics, the next step will be effective: invite customers to answer the question “What do you not like about the service?” or “What would you like to improve in the company?”. The responses received are the key to the direction in which the company should move in order to increase customer loyalty.
In conclusion, we note that the NPS methodology can be an effective basis for developing your own exclusive tool for measuring customer loyalty, as demonstrated by domestic banks. But in order to develop your own version, it makes sense to use the NPS standard, feel the good points of this technique and replace those that are unsuitable for your business.
I will also add important nuance Whatever you use, the dynamics of the indicator and its connection with business results are important. Any loyalty program should be evaluated in this way - by the dynamics of indicators (for example, NPS) and the growth of sales, the flow of requests, and the change in the outflow of customers.
The NPS customer loyalty index shows the degree of satisfaction of your customers: how satisfied they are that they will recommend you to their surroundings. The calculation of the NPS index must be done constantly with some frequency in order to have an idea of the mood of customers. We will analyze this issue in more detail in our article.
NPS consumer loyalty index
This is a metric that tells an entrepreneur how strongly his customers are loyal to his product or his trademark. More precisely, this indicator characterizes their willingness to make repeat purchases in your store (use your services again if you are engaged in the provision of services).
Moreover, it shows not only how willingly customers will come to your store again, but how willingly they will recommend it to their surroundings - friends, relatives, colleagues, etc.
NPS Loyalty Index stands for NetPromoterScore. If translated from English literally, it means "Net Support Rate", meaning, of course, customer support for your product, brand.
Adapted into Russian, this term is translated as "NPS Loyalty Index".
Clients for life. How to build a long-term relationship with a buyer. Video
Calculation of the NPS index
Calculating the loyalty of your customers to you, your business or your product is quite simple. This is done in three stages.
1. First, you need to conduct a survey of customers, asking them one single question: "With what probability from 0 to 10 are they ready to recommend your company (product, brand, brand) to their environment?"
"From 0 to 10" is a ten-point scale, where the extreme values are:
- 10 - “I will definitely recommend your store (brand, brand) to all my friends, relatives, colleagues!”;
- 0 - "Never, for anything, under no circumstances will I recommend you to my surroundings!";
- From 0 to 10 - variations from "Never" to "Always, necessarily."
- Those who rated the likelihood that they would recommend your business to their surroundings at 9-10 points. In the terminology of the developers of the loyalty indicator, this category of customers is called "Promoters", literally "Promoters", that is, those who will definitely support and recommend your business to others;
- The second group - those who rated this probability at 7-8 points. These are the so-called neutral buyers;
- The third group - those who rated the support of your brand with a probability of 0-6. In business terminology, this category of buyers is called "Detractors". Literally translated from of English language this term means "Defamers" or "Those who distract", that is, opponents of your brand, those who do not like what you sell.
When calculating the NPS index, you can not pay attention to the exact translation of terms, the essence and importance of the loyalty indicator do not depend on them, they are given for general information.
3. The third stage is, in fact, the calculation of the NPS index, which is found as the difference between those who will definitely support you and those who will not do this in any case.
Calculation formula:
NPS index = Share of supporters - Share of critics
Let's say you surveyed 100 customers.
Of these, 55 people (55%) answered that they would definitely recommend you to their surroundings.
Another 30 people (30%) said that everything is absolutely unimportant to them, they are not interested in anything, they are neutral about everything.
And the third group, 15 people (15%) - these are those who did not like you, who will not recommend you, your opponents.
NPS indicator - calculation:
Index NPS = 55 – 15 = 40
The survey itself to identify loyalty of your customers can be done in the following ways:
- Inquire directly at trading floor by writing down the answers;
- By offering the buyer a questionnaire, for example, at the checkout;
- By phone;
- Online on the company's website (not only concerns online stores).
The latter method, by the way, is the most convenient for both the entrepreneur and the client, when you do not have to spend time filling out questionnaires and communicating with store employees, you can evaluate your attitude towards the company at any convenient time.
Advantages and disadvantages of the NPS index
The main advantage of measuring the loyalty index of your customers is that it is simple and accessible to any entrepreneur. The question asked to buyers is extremely specific, it does not require time to think, search for solutions and answers.
Despite its simplicity, this method is quite informative. It shows quite accurately how your business satisfies your buyers and customers.
disadvantage this method, according to experts in the field of marketing, is that it is still somewhat one-sided, so-and-so the assessment is made on the basis of two categories - supporting the brand and criticizing it, when a large number of customers do not belong to either the first or the second category.
In addition, the calculation of the NPS index is one of the methods for assessing business performance. When developing important management decisions experts and specialists recommend not only relying on this method, but also on the results of wider and more thorough studies.
At the same time, it is necessary to calculate the loyalty indicator, it must be done constantly, with some frequency, in order to know how the attitude of customers towards your business is changing so that, if necessary, promptly make the right management decisions.
Increase customer loyalty with the Business.Ru CRM system. In the program, you can save all information about communication with the client: phone calls, correspondence, execution of contracts.
How to increase the NPS index
There are no recommended values for this index, it all depends on the type of business and on current situation in him.
Some of the experts say that it should be no less than "50" and, if it is lower, it's time to do something. For someone, more precisely, for some business and for some situation, the value of "30" can be satisfactory.
General rule: the index must not be negative. In this case, it will turn out that there will be more of those who are unequivocally negative towards you than those who are unequivocally positive.
In this case, urgent action needs to be taken. This means that it is necessary to come up with and implement one or another or several customer loyalty programs, loyalty programs. There are many ways to do this:
1. Discount program loyalty. These are various discounts, discount cards, including those with the so-called CashBack, that is, cash back. This is when from each purchase a small part of its value, this is usually about 3-5%, is returned to the card holder (buyer);
The resource NPSBenchmarks.com - a repository of data on the indices of global companies Net Promoter Score (consumer loyalty index) - published information about best practices in the field of service. According to the results of calculations, high NPS values in industries: technology - 61%, consumer goods- 46%, hospitality - 52%. World retail leaders Amazon and Costco (industry leaders in the top 100 international companies by market cap) NPS is 69% and 79% respectively.
Unfortunately, in Russian practice there are no consolidated data on loyalty, and NPS as a method of assessing loyalty is far from being used everywhere. UBS Evidence Lab has published figures for Russian retailers: of the 14 largest players, five have positive values. The highest NPS was received by Lenta - 7% and Okay - 3%. In the banking sector, Sberbank's loyalty reaches 59%, in telecommunications Tele2 - 35%, Megafon - 17%, Beeline - 25% . And if more and more companies appear in the West, for which the connection between the level of service and staff motivation is obvious, then in Russia business still rarely thinks about it. In a HeadHunter survey, 96% of participants answered that HR should not be engaged in internal and external customer focus at all.
The main problem Russian companies there is still a gap between plans and deeds. In particular, the study, which involved 419 Russian companies from 39 regions of Russia, revealed a dissonance between real business processes and declared values. Another contradiction, according to a study in which 313 Russian companies took part, was the fact that managers willingly declare the primacy of the client's interests, but do not take any action to assess their satisfaction. A common problem for companies in low-competitive markets is that the first ones to enter set records for profits and growth rates, assuming business building is the secret to success. As a result, an extremely small number of players pay serious attention to service and the struggle for customers. Why do something if everything is fine anyway? And this is the main trap for owners. No one thinks that the reason for success is simply the lack of competition.
In the West, in a saturated market, more and more companies are building their strategy on customer service. If we compare the dynamics of consumer opinion and company value, the connection is obvious. Thus, the capitalization of Amazon in 2000 amounted to $16.62 billion, in 2010 - $58.76 billion, in 2016 - $422.83 billion. Thus, an increase of more than 25 times with an NPS of 69%. At the same time, Walmart, which became famous for a large number of negative reviews from buyers, dropped from $239.44 billion in 2000 to $222.02 billion in 2016. The most successful example is Apple, whose market value exceeds the total capitalization of public Russian companies. The company was the first to raise customer experience to the rank of corporate strategy. Building a sales system at Apple, top management removed revenue from sellers' KPIs, leaving them with NPS indicators and time spent on customer service. Steve Jobs believed that if you start working at the level of emotions, turning every stage of interaction into pleasure for both customers and employees, they will repay with their loyalty. As a result, Apple's customer satisfaction reached 89%, profit per employee exceeded $110,000, and revenue was $500,000 for the year.
The focus on service is the prerogative of not only companies focused on the above-average segment. An example of this is the American low-cost carrier Costco, the world's largest chain of club-type self-service stores. Annual membership in the Costco club system in the US and Canada costs from $55 to $110, in Spain from €25 to €30, and in the UK £20. Costco stores have hearing aid sales centers, opticians, gas stations, and many other related services. At the entrance to the hypermarket there are greeters, whose task is to greet the guest. Capitalization of Costco in 2000 was $18.03 billion; in 2010 - $25.7 billion, in 2016 - $73.91 billion. The value of the company has quadrupled with an NPS of 79%, and profit is $2.35 billion.
Few in Russia have yet realized that loyalty is as important as EBITDA. Some major players are making efforts to change the structure towards a customer-centric approach. Aeroflot's NPS, which has seriously changed the approach to service since the arrival of Vitaly Savelyev, has grown from 44% in 2010 to 72% in 2017. In 2016, the company's capitalization for the first time reached a maximum of 116 billion rubles. Alas, this is more the exception than the rule. For many, the NPS remains a formal indicator: the NPS of the Pobeda airline, which only the lazy did not scold, was 72% against 67% of Aeroflot in 2015.
At the same time, young Russian companies find interesting solutions, using the service as the main competitive advantage. Oleg Tinkov returned to the Forbes rating this year, in particular due to the fact that he approached the creation of the Tinkoff Bank service in a completely new way, which took second place in the popular vote of banki.ru. There are no queues in the bank, all documents are delivered to customers by "representatives". The office space is an open open-space, and the atmosphere resembles a democratic IT company rather than a strict bank. Clients receive prompt service and a user-friendly interface, and Tinkov receives a highly motivated and dedicated team.
It should be obvious to business that external loyalty never comes before internal. The return of employees also depends on it, because labor productivity is the main point of growth. The revenue per employee of the Western low-cost airline Costco exceeds $610,000 per year. For comparison: a good result in Russia in retail hardly exceeds $100,000. It is worth looking for a solution in working with the motivation and involvement of employees. In 2014, economists at the University of Warwick proved that employee productivity increases by 12% or more when they are happy.
AT Russian system HR management practically does not pay attention to this issue, however, market experience shows that the mood of the team is directly proportional to labor productivity. A few years ago, at Uyuterra, we fundamentally changed the way we manage our field employees, transforming the manager from a "boss" into a leader and mentor. We launched large motivational programs based on gamification (the use of games in training and staff rallying). Made a bet on non-material motivation, included the mood of employees in the list of KPI managers, began to cultivate a feat for the sake of the client. As a result, productivity growth more than doubled in two years. Last year, we launched a similar project with the Far Eastern hypermarket chain Samberi, collecting more than 2,000 examples of outstanding service in a few months, when employees did more for the client than required by the standards. At the end of the year, more than 60% reached NPS, which is almost impossible for hypermarkets. Now the company is approaching revenue of 50 billion rubles.
Literally 2-3 days ago, I was simply indignant at the incompetence of a journalist from the Irkutsk branch of Komsomolskaya Pravda when placing ads on their website.
And now, when I have calmed down, my emotions have subsided, I understand that I will never again turn to them myself, but I will not advise my friends either. But maybe that's a good thing!
Because I am writing this article about the nps customer loyalty index, which should save you from stupid mistakes of your employees and help you make money.
The tool is extremely cunning, atypical for the Russian market and therefore no less interesting. After all, whoever uses new technologies first wins the competition.
I understood you
Brief background
We have in marketing consulting there is a coffee shop. The owner has money and we are slowly investing it in advertising and marketing.
Recently, a journalist from the Irkutsk branch of Komsomolskaya Pravda called the manager and offered to place an advertising article on their website in the section “Where to go on February 14th”.
The cost was only 3,000 rubles, and almost 50,000 people a month. We considered that this profitable investment and gladly agreed.
Declaration example A journalist came, we talked about the coffee shop, its advantages, showed everything we could, gave all the contacts, pictures and everything you need to create a professional and selling article.
Problems began immediately after receiving the money. The apotheosis of all this was the release of our article without any contacts, links to the site and other things (for the sake of which, in fact, everything was started).
When I pointed out all these oversights, they didn’t even ask for forgiveness, but simply said that it was the site’s editor’s fault and “if possible, we will fix everything.” Believe it or not, they fixed it as soon as I demanded the money back.
Why am I all this?
To the fact that the unprofessional actions of one journalist reduced the index loyalty nps to this edition for a couple of paragraphs. And this despite the fact that advertising market now and so falls, and they would cling to each client.
But, most likely, you have not even come across such a concept as the nps index, how it is considered, what it shows and how much it affects your money. However, many of you have seen similar pictures on websites or in.
Collecting Feedback Remember the last time you called your customers a month or even 2 after the purchase (when the emotions from the purchase had already subsided) with one question:
It is necessary to answer on a 10-point scale, where 0 is “I will never recommend it to anyone”, and 10 is a Definitely recommend”.
Most likely never. But this is a very important index, but, unfortunately, very rarely used in Russia. As long as they only resort to it large companies who understand that there are no trifles in business.
WE ARE ALREADY MORE THAN 29,000 people.
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Calculation instruction
So, let's move on to the very steps of calculating the NPS index (Net Promoter Score / Customer Satisfaction Index).
Step 1 - Conduct a Survey
The first step is to interview at least 30-50 customers. There are many options for conducting a survey. I will now describe a few of them.
Telephone survey. You are already doing well and are collecting contacts of your customers? And form them into a single client base?
For those who are still “in the tank” and are just gathering their thoughts, I wrote an article about and about what is most important in it and how not to miss anything.
Important. The survey must be conducted by a completely independent person. Or "Service Director". I don't know why, but as soon as people hear this phrase, the truth starts pouring out of them.
Questionnaires for clients. Here, as an example, the basics for the questionnaire -. Use it as terms of reference for a designer, decorate in your corporate style.
Online survey. Alternatively, you can use special services that create online surveys with answers that you simply fill out.
Leave the calculations to the service, it will do it automatically. It is very convenient and saves a lot of time.
For example, SurveyMonkey can help you with this.
Online survey service And all because now you can conduct such surveys (the functionality now allows) right on the sites social networks where people feel much more comfortable and are more willing to answer you.
How exactly you will conduct the survey is up to you. Choose the method that is most convenient for you and suitable for your niche.
Important. In no case do not give any clues to the respondents, otherwise you will simply kill the entire survey.
Step 2 - Record Results
No matter how good your memory is, record all the results. It's one thing when you call 5 clients and remember everything in detail, another when there are already more than 100 of them.
Ideally, if you add all this information to the client card in your CRM system, but excel or notepad will also work.
Step 3 - Divide the interviewees
All customers you interview should be divided into 3 categories. Very soon you will find out why this is necessary, but for now, ruthlessly share:
- 9-10 - promoters or supporters, that is, people who like your product / company / brand and are ready to recommend it to their friends and acquaintances;
- 7-8 are neutrals, in other words, your passive clients. They are satisfied with everything, but they are not ready to recommend you;
- 0-6 - critics, that is, those people who are not satisfied with your product or company and will not recommend it to their friends.
Poll results Each promoter is guaranteed to bring one to your business additional client. You can be completely sure of this.
A critic, on the contrary, will take up to 4 clients out of your business. Moreover, it does not matter at all what he answered in the survey (0 or 6), if he fell into the category of critics - this is very, very bad for your business.
Especially in the era of the Internet, when news, and even more so complaints, scatter faster than the speed of light.
Step 5 - Calculate NPS
The final stage is the calculation of the loyalty index itself. There is a simple formula for this:
NPS formulaThat's all. Now you know the nps customer loyalty index in your company. And as I already wrote, in Russia, few people measure this index. And very in vain.
For example, in the USA this is done by any more or less self-respecting company. And it’s no coincidence, because according to Stanford University research, the higher the company’s NPS (that is, the closer it is to 100), the more successfully it will develop.
And this is quite logical - the success of any company directly depends on the loyalty of its customers, or, to use the Russian proverb: “Do it right, it will be fine!”.
The best part is that it doesn't matter who your customer is to calculate this index. Whether you sell him shawarma at the train station or supply equipment for rockets for $15 million.
The system is completely universal and works for any company, be it b2b or services, and maybe even b2c.
Bonus
I think you know such a person as. Of course, because in Russia Igor Mann has long been associated with the word “marketing”.
And not so long ago, we interviewed the number 1 marketer in Russia (although the Federal Antimonopoly Service forbade him to be called that). Among the first free ways to increase sales, Igor named the consumer loyalty index.
What is most surprising, it turned out that the measurement of this indicator has a positive effect on sales not in a delayed moment, but what is called here and now.
That is, people begin to remember you and, accordingly, make repeated purchases.
Now for the shocking details. Imagine a car service. Pretty good and clean. There are 10 boxes, which measures the NPS index. Nonsense? It can not be? What for!?
But our client from Komsomolsk-on-Amur does not consider this nonsense and unnecessary action. What's more, he found that after each phone survey, they sign up about 7-8 clients for their services.
Here's a free tool to increase sales that you've obviously never used.
Briefly about the main
In order for the information to be fixed for you better, I suggest you watch a short video on this topic.
Summing up, what can I advise you? Conduct a survey to find out the consumer loyalty index in your company,
- If it is above 50, then, in principle, everything is not bad in your company, but there is always room for growth;
- If it is below 50, then urgently start investing in customer focus.
And here is an example: Vimpelcom (aka Beeline) systematically monitors the level of NPS.
So why am I, in 2014, the customer loyalty index in the company turned out to be the lowest in their entire history.
But, thanks to the timely measures taken, they were able not only to restore the level of NPS, but also to make it the highest among the big three players cellular communication(“Megafon”, “MTS” and “Beeline”).
P.s. And by the way, since I am now in the category of critics of the Irkutsk branch of Komsomolskaya Pravda, I should, in theory, steal 4 clients (present or future) from them.
You see, the management will see this article and come to their senses that it does not matter how much money the client brings in the first transaction, 3,000 or 30,000 rubles. The only thing that matters is whether he becomes loyal after that or not.
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