A digital adoption strategy is a plan that ensures the effective implementation of new technologies or processes. Digital adoption strategies are important to sustain and grow business success.
As the number of consumers making their purchases online has grown exponentially in recent years, it is no surprise that over 80% of marketing leaders have chosen to invest their resources in digital channels.
However, as businesses try to adopt digital business strategies, most aren’t finding success. Research shows that 70% of digital deployments fail to meet their goals. This can be because of a lack of strategy, organizational resistance, poor change management, or any other number of reasons.
If your organization is transitioning to a more digital-first approach or is adding a digital channel to your existing operations, you will need a digital adoption strategy to succeed.
What Is A Digital Adoption Strategy?
A digital adoption strategy is a structured plan designed to ensure that new technologies, software, or digital processes are effectively implemented and fully utilized within an organization. This includes helping employees, stakeholders, or customers learn and integrate the technology into their daily workflows.
Benefits of An Effective Digital Adoption Strategy
A well-executed digital adoption strategy can benefit your organization in many ways. These benefits will not only make your organization more profitable, but they will also improve customer metrics such as customer satisfaction. Here are some of the benefits you can expect from a well-planned digital adoption strategy:
Improved Efficiency & Reduced Costs
One of the most significant advantages of a well-executed digital adoption strategy is its ability to boost operational efficiency while reducing costs. When employees fully understand and utilize new technologies, repetitive manual tasks can be automated, workflows streamlined, and decision-making accelerated.
This leads to a reduction in errors, faster completion of tasks, and more effective resource allocation. Additionally, businesses save on overheads like labor and operational expenses as digital solutions take on more responsibilities such as optimizing productivity and trimming excess costs. In the long term, these efficiencies drive down the total cost of ownership for technology investments.
Improved Customer Experience
Another key outcome of digital adoption is a vastly improved customer experience. When digital tools are integrated into customer-facing processes, such as service delivery, communication channels, and support systems, businesses can offer faster, more personalized, and consistent interactions.
Digital adoption enhances the ability to track and anticipate customer needs, resolve issues quickly, and provide seamless omnichannel experiences. This results in increased customer experience metrics and better positioning against competitors.
Increased Regulatory Compliance
Digital tools can also play a critical role in helping organizations maintain compliance with industry regulations and standards. An effective digital adoption strategy ensures that employees are properly trained to use systems that automatically capture, track, and store data in line with regulatory requirements.
Automation of compliance tasks, such as data encryption, audit trails, and reporting, reduces the risk of human error and improves the organization’s ability to demonstrate compliance during audits. This not only mitigates the risk of costly fines and reputational damage but also strengthens trust with customers and partners who value data security and adherence to legal standards.
When To Create A Digital Adoption Strategy
There are many different reasons that your business may undergo digital transformation. You may be changing your business model to accommodate to an increasing number of online consumers, or launching new digital products. Regardless, here are some common problems businesses face that may indicate a need to create a digital adoption strategy:
Scaling Operations
As businesses grow and scale, processes that once worked in a smaller setting may become inefficient. Scaling often requires the introduction of more advanced digital tools to manage larger volumes of data, customers, or tasks. A digital adoption strategy ensures that as new technologies are introduced to support growth, they are adopted smoothly by your team and fit well into your scaled operations without disruptions.
Merging or Acquiring Businesses
Mergers and acquisitions often lead to a consolidation of systems, platforms, and processes. In such cases, a digital adoption strategy is necessary to ensure that teams across the newly formed organization are aligned and comfortable with the adopted tools. The strategy can help bridge gaps between different organizational cultures, technology stacks, and ways of working, leading to a smoother integration.
Experiencing Low Technology Utilization
If you’ve already invested in digital tools but are seeing low utilization rates, it’s time to introduce or revisit a digital adoption strategy. Poor engagement with technology is a clear sign that employees or customers are either unaware of its capabilities or face challenges using it. A strategy focused on training, support, and cultural shifts can reinvigorate interest and ensure that your investment yields better results.
If you are looking to build your digital adoption strategy, consider choosing InMoment as your partner. InMoment’s platform is proven to combine expert services with award-winning technology to provide you with a solution that will give you the fastest ROI, according to the G2 Crowd Report.
How to Implement A Digital Adoption Strategy
Implementing a digital adoption strategy involves several key steps that ensure technology is not only deployed but also embraced and optimized throughout the organization. Here’s an overview of how to effectively implement your strategy:
Opportunity Identification
The first step in implementing a digital adoption strategy is identifying opportunities where digital solutions can create the most impact. This can be done by looking at your customer journey map and identifying any friction points that occur. Starting with a good understanding of the customers’ omnichannel journey is the first step in identifying where to invest in digital solutions.
Prioritization
Not all opportunities are created equal, so once opportunities are identified, prioritize them based on their potential impact and feasibility. This can be done by using impact prediction tools that show you which opportunities will affect your business the most. Additionally, consider the level of change required; initiatives with minimal disruption may be prioritized over more complex projects to gain early wins and build momentum.
UX and Product Testing
User experience (UX) is a critical factor in successful digital adoption. Before fully rolling out new technologies, conduct thorough UX and product testing with actual end users—whether they be employees, customers, or both. During this phase, gather feedback on the usability, interface design, and overall functionality of the digital tools.
By identifying and addressing issues early, you can tailor the technology to better meet users’ needs and reduce resistance to adoption. This testing phase also allows you to optimize workflows, minimize learning curves, and ensure that the technology enhances rather than hinders productivity.
Change Management
Implementing a digital adoption strategy requires more than just rolling out new tools; it demands effective change management to ensure that people are prepared, supported, and engaged throughout the transition. A strong change management plan includes:
Communication: Communicate the goals, benefits, and expected outcomes of the digital initiative. Employees need to understand why the change is happening and how it will benefit them.
Training and Support: Provide tailored training programs that meet the needs of different user groups, ensuring they are comfortable with the new tools. Offer continuous support, such as on-demand help resources, tutorials, or peer networks.
Leadership Buy-In: Engage leadership to act as champions for the initiative. Visible commitment from top management helps drive adoption and reinforce the importance of the changes.
By managing the human side of change effectively, you can increase buy-in, reduce resistance, and smooth the transition to new digital tools.
Ongoing Monitoring
Once your digital adoption strategy has been implemented, it is important to have established mechanisms for customers and employees to provide feedback. Ongoing monitoring allows you to identify and address issues early, optimize the technology’s performance, and make adjustments to training or support as needed.
InMoment’s CX Services ensures that you have a partner every step of the way when implementing your digital adoption strategy. When you utilize InMoment’s platform, you also get access to decades of experience in CX implementation and improvement. Our services, which are never outsourced, will provide you with a deeper understanding of your program for the lowest cost of ownership.
Your Digital Adoption Strategy from InMoment
Do you need to undergo a digital transformation, but aren’t exactly sure where to start? InMoment has created a digital transformation roadmap to help you create successful digital experiences in your organization. If you would like to see more about InMoment’s best-in-class platform and how it can assist your digital transformation, schedule a demo today!
References
Boston Consulting Group. Flipping the Odds of Digital Transformation Success. (https://www.bcg.com/publications/2020/increasing-odds-of-success-in-digital-transformation). Accessed 8/15/2024.
Hostinger. 44 Key Digital Marketing Statistics for Strategic Growth in 2024. (https://www.hostinger.com/tutorials/digital-marketing-statistics). Accessed 8/15/2024.
AI customer feedback encompasses using artificial intelligence to help businesses make sense of customer feedback. Doing so allows business to gain a more holistic view of the customer experience.
Unlock the full potential of your customer feedback with InMoment’s AI-powered solutions. Discover how advanced AI technology can transform raw data into actionable insights, driving informed decisions and improving customer satisfaction.
What Is AI Customer Feedback?
In today’s fast-paced business landscape, understanding customer sentiment and feedback is more critical than ever. AI customer feedback involves leveraging artificial intelligence to collect, analyze, and interpret customer feedback data. By employing advanced algorithms and machine learning models, businesses can gain deeper insights into their customers’ experiences and needs, transforming raw feedback into actionable intelligence.
Example of Using AI in Customer Feedback
One example of using AI in customer feedback is sentiment analysis. By leveraging natural language processing (NLP), AI can analyze customer reviews, social media posts, and support tickets to determine the overall sentiment—positive, negative, or neutral. For instance, a company can use AI to sift through thousands of customer reviews on an e-commerce platform to gauge product satisfaction and identify common complaints.
What are the Benefits of AI for Customer Feedback?
Implementing AI-enhanced customer feedback analysis offers numerous advantages for businesses:
Enhanced Accuracy and Speed: AI algorithms can process vast amounts of data much faster and more accurately than human analysts. This speed and precision ensure that businesses receive timely and reliable insights.
Deeper Insights: AI can uncover hidden trends and patterns in customer feedback that traditional methods might miss. This deeper understanding helps businesses make more informed decisions and tailor their strategies to meet customer needs.
Cost Efficiency: Automating the feedback analysis process reduces the need for manual labor, resulting in cost savings for businesses. AI tools can handle repetitive tasks, allowing human employees to focus on more strategic initiatives.
Scalability: AI systems can handle growing amounts of data without compromising performance.
How Does Using AI Work for Customer Feedback?
The process of using AI for customer feedback typically involves these steps:
Data Collection: Gathering structured and unstructured feedback from various channels, including surveys, social media, emails, and more using customer feedback AI tools.
Natural Language Processing (NLP): Using NLP to understand and interpret text data, detecting sentiment, intent, and key themes.
Predictive Analytics: Employing predictive models to identify potential future trends and outcomes based on historical data.
Generative AI: Utilizing AI to generate meaningful responses and prompts, encouraging richer customer feedback.
Integration: Combining feedback with other data sources for a comprehensive view of the customer journey.
Use Cases of AI Customer Feedback
AI-driven feedback analysis helps companies understand customer preferences and pain points, informing product development and enhancement. This can be particularly beneficial across various industries, leading to more customer-centric products and services.
Restaurants
Restaurants can leverage AI to analyze customer feedback from review sites, social media, and direct feedback forms. For example, a restaurant chain might use AI to identify that customers frequently mention slow service during peak hours. By addressing this feedback, perhaps by hiring more staff or improving kitchen processes, the restaurant can boost customer satisfaction and increase repeat business. Generative AI Prompts, like our Active Listening™ bot, can elicit more valuable responses, while AI-generated responses simplify the task of closing the feedback loop.
Retail
Retailers can leverage AI to analyze customer feedback from multiple channels, including online reviews, social media, and in-store surveys. For instance, a retail chain might discover that customers are frustrated with long checkout lines. By addressing this issue, perhaps through self-checkout options, the retailer can enhance the shopping experience. InMoment Conversational Intelligence feature helps understand customer interactions to improve agent performance and customer satisfaction. Additionally, AI-generated responses can address customer concerns promptly.
Manufacturing
Manufacturers can employ AI to analyze feedback from customers about their products. For example, an electronics manufacturer might use AI to find out that customers often mention battery life issues in their reviews. The company can then focus on improving battery technology in future product iterations. Predictive Analytics can guide these enhancements by highlighting key areas of concern, while our Smart Summary feature transforms detailed feedback into concise, actionable insights.
Finance
AI can analyze customer feedback from banking apps, online banking services, and customer service interactions to identify common issues such as transaction errors or poor user experiences. For example, a bank might use AI to discover that customers frequently complain about the complexity of their online loan application process. By addressing this issue, the bank can improve customer satisfaction and increase loan approvals. InMoment’s emotion and effort detection feature automatically identifies the intentions and emotions behind feedback, providing deeper insights for improvements.
Healthcare
In healthcare, AI can process patient feedback from surveys, online reviews, and social media to identify areas needing improvement. For example, a hospital might use AI to detect recurring complaints about long waiting times or the quality of care. This insight can lead to operational changes that enhance patient experience and care quality. Generative AI prompts can elicit more valuable patient feedback for better analysis.
Hospitality
Hotels and resorts can use AI to analyze guest reviews and feedback forms to identify strengths and weaknesses in their services. A hotel chain might discover through AI that guests frequently mention the need for better room cleanliness. By addressing this feedback, the hotel can improve guest satisfaction and loyalty. AI customer feedback analysis can provide detailed insights into guest experiences, allowing for targeted improvements.
What to Look for in a Customer Feedback AI Tool?
When selecting an AI customer feedback analysis tool, consider the following factors:
Data integration capabilities: Ensure the tool can process data from multiple sources.
Customizability: Look for a solution that offers flexible data input and customizable reporting options.
Accuracy and reliability: Evaluate the tool’s performance in sentiment analysis and trend detection.
Real-Time Analytics: The ability to provide immediate insights and actionable recommendations.
User-friendly interface: Choose a tool that presents insights in an easily understandable format.
Scalability: Ensure the tool can grow with your business and handle increasing data volumes.
Security and compliance: Verify that the tool adheres to data protection regulations.
Reporting features: Look for robust reporting capabilities to share insights across your organization.
How to Get Started with a Customer Feedback AI Tool?
Getting started with a customer feedback AI tool involves:
Assessing Your Needs: Identify your specific goals and requirements for customer feedback analysis.
Choosing the Right Tool: Select a tool that aligns with your needs and offers the features you require.
Implementing the Tool: Integrate the tool with your existing systems and begin collecting feedback.
Training Your Team: Ensure your team is well-versed in using the tool and interpreting the insights it provides.
Monitoring and Adjusting: Continuously monitor the tool’s performance and make adjustments as needed to optimize results.
Partner with InMoment for AI Customer Feedback Needs
InMoment offers a comprehensive suite of AI-powered customer feedback solutions designed to enhance your CX program. Our predictive customer analytics capabilities take the guesswork out of understanding your customers’ needs, allowing you to focus on driving meaningful change. Key Features of InMoment’s AI Customer Feedback Solutions:
Generative AI Prompts: Our Active Listening™ bot uses real-time text analytics and generative AI to elicit more valuable responses from customers.
Conversational Analytics: Understand interactions between service agents and customers to improve agent performance and customer satisfaction.
Smart Summary: Our generative AI Large Language Model technology transforms individual feedback into concise, actionable insights.
Image Analysis: Convert images into qualitative insights for product, service, and CX improvements.
Predictive Analytics: Analyze the impact of key drivers on metrics like NPS, CSAT, and CES to inform strategic decisions.
Emotion and Effort Detection: Automatically detect intentions, effort, and emotions behind every piece of feedback.
Machine Learning: Discover new trends and topics as they emerge in customer feedback.
AI-Generated Responses: Simplify responses with AI-generated replies, saving time and effort.
Automated Actions: Close the feedback loop with automated actions based on AI-driven categorization.
Learn more about our customer experience platform and how our AI-based customer feedback solutions can transform your business and help you stay ahead of the competition.
The Net Promoter Score is a customer experience metric that measures customer satisfaction and loyalty. A Net Promoter Score can be calculated after categorizing how customers respond to the question “On a scale of 1 to 10, how likely are you to recommend our product/service to a friend or coworker?”
What is Net Promoter Score (NPS)?
Net Promoter Score (NPS) is a trademarked metric between -100 and 100 that measures the likelihood of a company’s customers promoting the brand through new customer references and repeat business. The higher the score the more likely your customers will promote your brand.
NPS also stands for the Net Promoter System®, a trademarked system and framework that was built around the Net Promoter Score. It is a model that tries to tie a corporation’s bottom line with its customer’s happiness and satisfaction with its products and services. This system aims at managing corporate profits and sustainability through a customer experience lens.
Before you calculate your Net Promoter Score, you need to understand the three segments your customers will be divided into: detractors, passives, and promoters.
Detractors: These customers respond to surveys in a way that indicates they would not recommend your product or service to others. They are usually grouped as anyone responded who responded 0-6 on the scale.
Passives: Passive customers represent customers who responded neutral to a survey about your product or service, indicating that they would not recommend it nor would they advise against it. They are generally categorized as responding either 7 or 8 on the scale.
Promoters: Promoters represent your most loyal customers, and answer either 9 or 10 on the scale. These customers are extremely likely to recommend your product or service to others
Transactional vs Relational Net Promoter Scores
When implementing Net Promoter Scores (NPS), businesses can choose between two primary approaches: Transactional NPS and Relational NPS. Understanding the differences between these two types is crucial for leveraging NPS effectively to enhance customer satisfaction and loyalty.
Transactional NPS
Transactional NPS measures customer satisfaction and loyalty based on specific interactions or transactions with the company. It is typically collected shortly after a customer completes a particular transaction, such as a purchase, a customer service interaction, or a product delivery.
For example, a retail brand might send an NPS survey to customers shortly after they make a purchase online or visit a store. The feedback received helps the company understand the effectiveness of their checkout process, delivery service, or in-store experience.
Relational NPS
Relational NPS, on the other hand, measures overall customer loyalty and satisfaction with the brand or company over a longer period. It assesses the customer’s broader relationship with the business rather than focusing on individual transactions.
For example, the same retail brand might send an NPS survey to their entire customer base once a year to assess the general satisfaction and loyalty of their customers. This feedback helps the company understand their position in the market and identify areas for strategic improvement.
The choice between Transactional and Relational NPS depends on the business’s goals and the specific insights they seek to gain. Many companies find value in using both approaches in tandem, as they provide complementary insights. Transactional NPS offers immediate, actionable feedback on specific interactions, while relational NPS delivers a broader view of overall customer loyalty and brand perception.
Why NPS Score is Important
The Net Promoter Score (NPS) has become a crucial metric for businesses seeking to understand and improve customer satisfaction. This single number, derived from a simple question, holds significant value for several reasons:
1. Customer Loyalty Indicator
The primary purpose of NPS is to gauge customer loyalty. By asking customers how likely they are to recommend a product or service to others, businesses can identify their most loyal advocates. A high NPS indicates satisfied customers who are not only likely to make repeat purchases but also to actively promote the brand.
2. Word-of-Mouth Marketing
Customers who give high NPS ratings are more likely to engage in positive word-of-mouth marketing. The increased importance of social media marketing has made it more crucial than ever for loyal customers to be brand ambassadors. A high NPS score is reflective of your customers’ willingness to use those channels to promote your brand and bring in new customers.
3. Identifying Areas for Improvement
While a high NPS is desirable, a low score can be equally valuable. It serves as an alert that something may be amiss in the customer experience. Businesses can use this feedback to identify specific pain points and address issues that might be hindering customer satisfaction and loyalty.
4. Benchmarking Against Competitors
NPS allows businesses to benchmark themselves against industry competitors. Understanding where your NPS stands in comparison to others in the market provides valuable context. It can inspire a drive for continuous improvement and innovation to stay ahead in the competitive landscape.
5. Predictive Business Growth
Research has shown a strong correlation between high NPS and business growth. A recent study showed that a company with the highest Net Promoter Score in its industry outgrew its competitors by more than two times.
Satisfied customers not only tend to make more purchases themselves but also contribute to the growth of the customer base through referrals. NPS, therefore, becomes a leading indicator of future business success.
What Are the Benefits of Net Promoter Score?
The Net Promoter Score is one of the most popular customer experience metrics for a reason. The benefits of regularly utilizing it can improve your customer experience and business performance. Here are some of the most common benefits of the Net Promoter Score:
1. Simplicity
The Net Promoter Score is a simple and direct question. Because of its simplicity, it is easy to implement and analyze. Perhaps most importantly, your customers will have no problem understanding it. Regardless of industry or demographic, every customer will be able to answer the Net Promoter Score question.
2. Cost-Effective
NPS surveys are relatively low-cost to administer compared to more comprehensive market research methods. They can be easily integrated into regular customer touchpoints like post-purchase emails or service follow-ups.
3. Increased Employee Engagement
In the workplace, the importance of employee loyalty and engagement cannot be understated. When your business uses the Net Promoter Score as a measure of customer experience, it is easy to get employees on board. Regardless of their position within the company, employees will have an easier time focusing on the performance of one number as opposed to multiple metrics.
Sharing NPS results with employees can foster a culture of continuous improvement and customer focus. It can also help in aligning the organization towards common goals of enhancing customer satisfaction and loyalty.
How to Calculate Net Promoter Score
In order to calculate your Net Promoter Score, you first need results from a Net Promoter Score Survey. Once you have the results from that survey or series of surveys, you will be able to categorize your respondents into promoters, passives, and detractors.
Once those two steps are completed, the actual calculation is very simple: subtract the percentage of detractors from the percentage of promoters. To visualize it, it should look like:
For example, consider a retail brand that was interested in finding out their Net Promoter Score.
They conducted a survey of 1,000 of their recent customers. The responses were categorized into promoters (those who rated 9-10), passives (those who rated 7-8), and detractors (those who rated 0-6).
The survey results showed that 200 customers were promoters, 300 were passives, and 500 were Detractors. To calculate the NPS, this brand determined the percentages of Promoters and Detractors, which were 20% and 50%, respectively. The NPS was then calculated by subtracting the percentage of Detractors from the rate of Promoters, resulting in an NPS of -30. This negative score indicated that a significant number of customers were dissatisfied and unlikely to recommend the brand.
What is a Good Net Promoter Score?
Understanding what constitutes a “good” Net Promoter Score can be crucial for businesses aiming to gauge customer loyalty and satisfaction effectively. However, interpreting NPS results isn’t always straightforward, as a “good” score can vary widely across industries and contexts. Here are key considerations to help determine what a good NPS might look like for your business:
Net Promoter Score Benchmarks by Industries
A good NPS often depends on the industry in which a business operates. Different sectors have varying average scores due to the nature of their products, services, and customer expectations. For example:
Auto dealers have an average NPS score of 39
Hotels have an average NPS score of 33
Banks have an average NPS score of 21
Department and specialty stores have an average NPS score of 62
Pharmacies and Drug Stores
Walmart pharmacies have an NPS score of +32. Given that the highest possible score is +100, this score may seem just average. However, the customer experience team at Walmart is likely thrilled, as this is one of the highest NPS scores in the drug store and pharmacy industry.
Technology and Software
Comparing the software industry, where the average NPS is +34. Leading companies in this sector, like Salesforce (+66) and Adobe (+62), have NPS scores in the +60 range.
For the laptop computer industry, where the average NPS is +43. Considering Apple’s strong brand reputation and customer loyalty, can you guess their NPS for their popular MacBook?
Apple’s MacBook has been reported to have an NPS of +62. You likely guessed close to this figure, knowing the industry average. This illustrates why comparing scores within industries is more insightful than using an absolute scale.
Competitor Analysis
A good NPS should also be assessed relative to competitors. Knowing where your business stands in comparison to industry peers can provide a more accurate picture of performance. If your NPS is above the industry average, it typically indicates strong customer loyalty and satisfaction. For instance, if the industry average is 25 and your score is 35, you’re likely outperforming competitors in customer satisfaction.
Company Goals
A good NPS should align with your company’s specific goals and customer expectations. Businesses with high customer service standards might aim for scores above 50, while others might set more modest goals based on realistic assessments of their current situation. For instance, a company known for exceptional service might consider an NPS below 50 as a sign of needing improvement, whereas a business in a challenging market might be satisfied with a score around 20.
Ultimately, setting realistic NPS targets based on historical data, industry standards, and business goals is essential. Companies should aim for steady improvement rather than focusing solely on achieving a specific score. For example, if your current NPS is 10, setting a goal to reach 20 in the next year can be both challenging and achievable, motivating your team to implement effective customer experience enhancements.
How to Improve Your Net Promoter Score
There is no shortcut to improving your Net Promoter Score. To improve your net promoter score, you need an effective customer experience strategy, proactive measures, and a commitment to continuous improvement. Here are five things you can start doing to improve your NPS:
1. Understand Customer Feedback
Start by thoroughly analyzing customer feedback. Whether positive or negative, every comment holds valuable insights into what customers appreciate and where improvements can be made. Use this understanding as the foundation for your improvement initiatives.
2. Address Detractor Feedback Promptly
Detractors, customers who give low scores, are an immediate priority. Identify common issues raised by Detractors and develop strategies to address them promptly. Demonstrating a commitment to resolving customer concerns can turn Detractors into satisfied customers.
3. Celebrate and Amplify Promoters
Promoters are your brand advocates, and their positive feedback is invaluable. Acknowledge and appreciate Promoters by amplifying their testimonials, featuring them in marketing materials, and expressing gratitude. This not only strengthens customer relationships but also attracts new customers through positive word-of-mouth.
4. Implement Customer Suggestions
Act on actionable suggestions provided by customers. If multiple customers highlight a specific area for improvement, consider it a strategic opportunity to enhance your offerings. Implementing customer-driven changes demonstrates responsiveness and a commitment to delivering what your audience truly values.
5. Personalize Customer Experiences
Tailor your interactions to individual customer preferences and needs. Leverage data and analytics to understand customer behavior, history, and preferences. Personalized experiences contribute to a positive perception of your brand, fostering loyalty and increasing the likelihood of receiving higher NPS scores.
How to Create a Net Promoter Score Survey
There are multiple ways to craft a Net Promoter Score survey. The survey itself is simple, but in order to get effective feedback from your customers you will need to make sure that your survey design is executed in a way that sets your business up for success.
1. Define the Purpose
Before designing your survey, clearly define its purpose. Determine what you aim to learn from your customers and how the feedback will be used to improve your business. For example, are you building a transactional NPS survey? Or a relational one? This helps in crafting relevant questions and analyzing results effectively.
2. Craft the Core NPS Question
The core of any NPS survey is the primary question: “On a scale of 0-10, how likely are you to recommend our product/service to a friend or colleague?”
This question should be simple, direct, and focused on gauging customer loyalty and the likelihood of recommending your brand.
3. Add a Follow-Up Question
To gain deeper insights, include an open-ended follow-up question such as: “What is the primary reason for your score?”
This question allows customers to provide specific, qualitative feedback and elaborate on their rating. This offers valuable context that can highlight strengths and areas for improvement.
4. Choose the Right Timing
Timing is crucial for obtaining accurate feedback. For transactional NPS surveys, send the survey shortly after a customer interaction, such as a purchase or service call. For relational NPS surveys, conduct the survey at regular intervals, such as quarterly or annually, to gauge overall satisfaction and loyalty over time.
5. Deploy the Survey
Send the survey across the appropriate channels, and then monitor feedback and response rates. Based on the answers to the survey, you may realize there are cases that require immediate attention. For example, a customer may rate you as a 0 and then in the follow-up question explain how they were overcharged for an item. Below is an example of what an NPS survey may look like when sent via email:
How Often Should I Send Net Promoter Score Surveys?
Determining the frequency of NPS surveys is a crucial aspect of maximizing the utility of this valuable metric while respecting your customers’ time and attention. Striking the right balance ensures that you receive timely feedback without causing survey fatigue. Consider the following factors when deciding how often to send NPS surveys:
1. Transaction Frequency
Align the frequency of NPS surveys with the frequency of customer transactions. For businesses with frequent customer interactions, such as e-commerce platforms or subscription services, more regular surveys may be appropriate. Conversely, for businesses with less frequent transactions, a less frequent survey schedule may be sufficient.
2. Customer Lifecycle Events
Tie NPS surveys to key events in the customer lifecycle. Sending surveys after significant touchpoints, such as a purchase, customer support interaction, or product usage milestone, provides contextual feedback. This targeted approach allows you to capture insights when the customer’s experience is most relevant.
3. Product or Service Changes
Introduce NPS surveys when there are substantial changes to your product or service. This could include the launch of new features, updates, or modifications to existing offerings. Monitoring NPS during these periods can help gauge customer reactions and identify areas that may require further attention.
4. Seasonal Considerations
Take into account seasonal variations in your business. Some industries experience peak seasons or specific periods of increased customer activity. Adjust your survey frequency to align with these patterns, ensuring that you capture feedback when it is most representative of customer experiences.
5. Strategic Planning Cycles
Incorporate NPS surveys into your strategic planning cycles. Conduct surveys at intervals that align with your business planning and decision-making processes. This allows you to use NPS data to inform strategic decisions and track the impact of initiatives over time.
There is no one-size-fits-all answer to how often you should send NPS surveys. It depends on your specific business context, customer interactions, and strategic objectives. By thoughtfully considering these factors, you can establish a survey cadence that maximizes the benefits of NPS while respecting your customers’ experience.
What are the Disadvantages of Net Promoter Score?
While the Net Promoter Score can have many benefits for companies, it is not without potential drawbacks. These drawbacks can be alleviated by implementing an integrated customer experience and going beyond the survey feedback received from your customers. Regardless, these are the disadvantages of the Net Promoter Score that you need to be aware of:
1. Oversimplification & Lack of Context
The Net Promoter Score reduces customer sentiment to a single number, which can oversimplify complex customer experiences and motivations. It may not capture the full breadth of customer opinions and feelings.
The NPS score alone doesn’t provide detailed reasons behind customer ratings. Without follow-up questions or additional qualitative feedback, it can be challenging to understand the specific factors influencing customer satisfaction or dissatisfaction.
2. Response Bias
Net Promoter Score surveys have the potential to suffer from response bias. This may happen because only extremely happy or unhappy customers are most likely to respond, which can lead to a skewed representation of your customer base. Because of this, your passive customers are likely to be underrepresented.
3. Survey Fatigue
Frequently administered NPS surveys can result in survey fatigue. If your customers suffer from survey fatigue, this will diminish your response rates and the quality of your customer feedback. Over-surveying can also negatively impact the customer experience.
How to Analyze NPS Scores
Analyzing Net Promoter Scores (NPS) goes beyond simply calculating the number; it involves a thoughtful examination of customer sentiments and the factors influencing their experiences. Here’s a step-by-step guide on how to effectively analyze NPS scores:
1. Segment for Deeper Insights
Using NPS software, you can segment your NPS data by customer demographics, product or service usage, or even the customer sentiment associated with the score itself. This segmentation allows you to identify specific areas for improvement and tailor strategies to different customer groups.
2. Understand the Distribution
Analyze the distribution of promoters, passives, and detractors within your customer base. A skewed distribution towards promoters is positive, while an overrepresentation of detractors signals potential issues. Understanding the balance provides context for interpreting the overall score.
3. Focus on Detractors
Prioritize the analysis of detractors as their feedback indicates areas that need urgent attention. Identify recurring issues, address them systematically, and use the feedback as a roadmap for improvement. Turning Detractors into satisfied customers can have a significant positive impact on your NPS.
4. Analyze Verbatim Feedback
Dive into the qualitative feedback provided by customers alongside their NPS scores. Pay attention to common themes and specific comments. This qualitative data provides context for the numerical scores and helps identify specific pain points or areas of excellence.
5. Link NPS to Operational Metrics
Connect NPS data with operational metrics such as customer retention, conversion rates, and revenue. Analyzing these correlations helps establish a direct link between customer satisfaction and key business outcomes, reinforcing the importance of customer-centric strategies.
The more data that can be developed along with the NPS score, the more you’ll be able to understand your customer and what influences their opinions and feelings.
When reading NPS graph results, you’ll typically break each variable into promoters, detractors, and neutral units, then monitor how they change over time.
How to Report and Share Net Promoter Score
After analyzing, you’ll want to regularly report numbers to the rest of your CX team. Share NPS alongside other monthly or quarterly metrics such as revenue, new customers, and customer churn. To make the most out of your analysis and be able to share the store with your team and executives, here are some best practices to report your net promoter score:
Focus on Improving Your NPS Score Over Time
Rather than fixating on your score in the absolute sense, view NPS as a trend over several periods as if you were looking at stock prices. NPS scores cannot be fixed overnight, it takes time to improve.
Identify Business Goals of your NPS Program
To properly measure and align your NPS program, you’ll want to determine the business goals you want to achieve with your NPS strategy and report your net promoter score in relation to those goals. A good example is if your business is trying to improve retention, then you’ll want to report NPS alongside with churn data.
Focus on Trending Topics in Verbatim Responses
Discussing these topics will provide valuable insights into what matters most to your customers and the challenges they face. Share both the positive and negative feedback from customers with your internal stakeholders. This will enable you to address these issues and improve the overall customer experience. For startups, it’s recommended to read and respond to every single comment.
Segment Your Net Promoter Score by Relevant Customer Groups
Segmenting your customers will help you pay close attention to groups that are critical to your business success. You can segment groups by geography, size or frequency of purchase or any other attributes that drives your business. For example, a SaaS company may segment their customers by user roles and dive deeper into their experience by each group.
Use Industry Leader NPS as Benchmark for Comparison Aiming for a perfect 100 Net Promoter Score is an admirable goal, but it can be extremely challenging to achieve. Even well-known companies with highly loyal customers rarely reach this level, and good NPS scores can vary by industry. Therefore, when setting an NPS goal for your business, choose a company within your industry that you admire and use their score as an aspirational benchmark. This will make your goals realistic and attainable within your own industry. Many companies share their NPS scores in research and reports, such as those from the Fortune 500, providing a useful resource for setting your benchmark.
Improve Your NPS with InMoment
InMoment’s XI platform gives you the ability to measure and analyze your Net Promoter Score, as well as any other metric you might use. This approach gives you the ability to create dashboards so what you see is most important to you, design and send surveys, and close the loop with customers. Schedule a demo to see what InMoment can do for you!
References
Bain & Company. How the Net Promoter Score℠ Relates to Growth. (https://www.netpromotersystem.com/about/how-net-promoter-score-relates-to-growth/). Accessed 7/9/2024.
NICE. Net Promoter Benchmarcks. (https://info.nice.com/rs/338-EJP-431/images/NICE-Satmetrix-infographic-2018-b2c-nps-benchmarks-050418.pdf) Accessed 7/30/24.
Quora. What are the best NPS (Net Promoter Score®) results for B2B SaaS companies? (https://www.quora.com/What-are-the-best-NPS-Net-Promoter-Score%C2%AE-results-for-B2B-SaaS-companies) Accessed 7/30/24.
Experience Benchmarks. 7 Apple NPS Benchmarks in 2023. (https://customergauge.com/benchmarks/blog/4-key-ingredients-fuelling-apples-high-net-promoter-score) Accessed 7/30/24.
The ability to track customer happiness with one number can almost sound too good to be true. However, the CSAT score is used by businesses across the world to track their customers’ happiness and make strategic decisions.
What Does CSAT Stand For?
Customer Satisfaction score, commonly referred to as CSAT, is an attempt at capturing how satisfied customers are with a company’s goods and services. A survey asks a customer to rate their satisfaction, typically on a scale from 1 to 5.
Why CSAT Is Important
What’s most important about customer experience metrics such as NPS, CES, and CSAT is their predictive power. While financial metrics are past indicators of a company’s performance, customer satisfaction metrics are leading indicators. After all, if your customers are not happy with what you have to offer today, one can predict it will reflect in the financial statements later in the form of churn, decreasing share of wallet, etc.
Knowing and monitoring your company’s CSAT score is one reason to implement a CSAT program. The score can be segmented, benchmarked, and tracked over time. More importantly, setting up a CSAT program is an opportunity for a systematic solicitation and collection of actual customer feedback that can be used across the organization for continuous improvement. Product teams can use it to plan their product roadmap. Account executives who become aware of problems with one client can remedy, or conversely, fully realize the value another customer is getting from the product, price accordingly, or cross-sell; engineering teams can design better products, and fix problems if they have access to that feedback, and service teams can improve on the service they provide.
In brief, CSAT is an easy to understand metric, versatile enough that it can be used in many scenarios and touchpoints–and low CSAT can predict churn.
How to Measure Customer Satisfaction?
Measuring Customer Satisfaction is done through surveys. It sounds simple and straightforward enough, however getting to an accurate number involves some statistical science.The main question asked in the customer satisfaction survey is how satisfied are they with the business or product, along with a rating scale.
The most common customer survey questions all have different rating scales which can become easily confusing: the CSAT is a simple 1 to 5, the Customer Effort Score (CES) question is from 1 to 7, and the NPS question is from 1 to 10. In the end, the scale does not quite matter as much and some organizations create their own custom metrics. However, having a standard helps professionals have a consistent frame of reference when measuring customer satisfaction against CSAT, NPS, and CES.
How to Calculate CSAT Score?
Calculating the CSAT score involves interpreting the responses gathered from a standardized CSAT survey. Below are the steps to determine the CSAT score:
1. Choose a Scale:
CSAT surveys typically use a scale, commonly ranging from 1 to 5 or 1 to 10, with higher values indicating greater satisfaction. Ensure that the scale used in your survey is clearly communicated to respondents.
2. Collect Survey Responses:
Gather responses from your CSAT survey. Each respondent will provide a numerical rating based on their satisfaction level.
3. Count Positive Responses:
Identify the number of positive responses, typically represented by the highest rating on your scale. For example, if you are using a 1 to 5 scale, responses of 4 and 5 are considered positive.
4. Total Number of Responses:
Determine the total number of survey responses received. This is the sum of positive and non-positive (neutral or negative) responses.
5. Calculate CSAT Score:
Use the formula below to calculate the CSAT score as a percentage:
CSAT Score = (Number of Positive Responses/Total Number of Responses)×100
For example, if you had 20 responses and out of the 20 there were only 8 that rated your business or product a 4 or a 5. Then you would take 8 divided by 20 and multiply that by 100, your CSAT score would be 40%.
What is a Good CSAT Score?
Customer Satisfaction (CSAT) scores play a pivotal role in understanding how well a business meets its customers’ expectations. Determining what constitutes a “good” CSAT score is not a one-size-fits-all endeavor; it involves considering various factors specific to the industry, company goals, and customer base.
1. Benchmarking for Context:
CSAT scores gain significance when viewed in the context of industry benchmarks. Industry standards and best practices can serve as a yardstick for what is considered a good CSAT score. These benchmarks provide a reference point for businesses to gauge their performance relative to competitors or similar service providers. A good CSAT score should not only meet industry standards but ideally surpass them.
For example, the American Customer Satisfaction Index reported that full-service restaurants had an average score of 81 in 2023. Finding the average score in your industry will be an important metric on which to compare your organization’s customer satisfaction performance. As a general rule, here are the overall statistics regarding CSAT scores:
A CSAT score of 80% and above is generally considered excellent.
Scores between 70% and 79% are considered good.
Scores between 50% and 69% may indicate room for improvement.
Scores below 50% may signal significant issues requiring urgent attention.
2. Interpreting the Scale:
The scale used to measure CSAT scores varies across businesses, commonly ranging from 1 to 5, 1 to 10, or 1 to 100. Understanding the nuances of the scale is crucial; what might be considered a good score on a 1 to 5 scale may differ from what’s considered good on a 1 to 10 scale.
3. Aligning with Customer Expectations:
The essence of customer satisfaction lies in meeting or exceeding customer expectations. A good CSAT score reflects a positive alignment with the expectations of your specific customer base. Knowing your customers and their needs is necessary for interpreting the significance of your CSAT scores.
4. Consistency Over Time:
It is essential to monitor the trend of CSAT scores over time. A consistent upward trend suggests improving customer satisfaction, while a decline may signal the need for closer attention to customer concerns.
5. Qualitative Feedback Analysis:
Numbers only tell part of the story. Beyond the numerical score, businesses should delve into the qualitative feedback provided by customers. Understanding the reasons behind the scores provides valuable insights into areas that require improvement.
The Advantages and Disadvantages of CSAT
While the CSAT score is a valuable tool for measuring customer satisfaction and can provide actionable insights for improving customer experience, it should be used in conjunction with other feedback mechanisms to ensure a holistic understanding of customer sentiment.
Balancing the simplicity and immediacy of CSAT with deeper, more comprehensive feedback methods can help businesses achieve a more accurate and effective approach to customer satisfaction. Regardless, the CSAT score is very useful and comes with its own set of pros and cons.
Advantages of CSAT
Simplicity and Ease of Implementation: CSAT surveys are straightforward to create and administer. They typically consist of a few questions that can be quickly answered by customers, making it easy to gather feedback without overwhelming them.
Immediate Feedback: CSAT surveys are often conducted immediately after an interaction or transaction, providing timely insights into customer satisfaction. This allows businesses to quickly address any issues and improve their services.
Quantifiable Results: The results from CSAT surveys are easy to quantify and analyze. Businesses can track changes in satisfaction over time and identify trends, making it easier to measure the impact of any changes implemented.
Actionable Insights: Since CSAT surveys focus on specific interactions or transactions, the feedback is often highly relevant and actionable. Businesses can use this information to make targeted improvements in their customer service or product offerings.
Benchmarking: CSAT scores can be benchmarked against industry standards or competitors, providing a clear picture of where a business stands in terms of customer satisfaction. This can be a valuable tool for strategic planning and competitive analysis.
Disadvantages of CSAT
Limited Scope: CSAT surveys typically focus on recent interactions and may not capture the overall customer experience or long-term satisfaction. This can result in a narrow view of customer sentiment.
Subjectivity: Customer satisfaction is inherently subjective, and responses can be influenced by factors outside of the business’s control, such as the customer’s mood or external circumstances. This can sometimes lead to skewed results.
Lack of Depth: While CSAT surveys are great for capturing immediate feedback, they often lack the depth needed to fully understand the reasons behind customer dissatisfaction. Additional qualitative methods may be necessary to gain a complete understanding.
Survey Fatigue: Frequent CSAT surveys can lead to survey fatigue, where customers become less likely to respond or provide thoughtful feedback. This can reduce the effectiveness of the survey and the quality of the data collected.
Overemphasis on Scores: Relying too heavily on CSAT scores can lead businesses to focus on improving the score itself rather than addressing the underlying issues that impact customer satisfaction. It’s important to use CSAT as one of many tools in a comprehensive customer feedback strategy.
Why Sample Size Is Important When Measuring Customer Satisfaction
Another consideration in measuring customer satisfaction is how many surveys need to be sent out, and how many responses need to be received to obtain a reliable score? If you’ve ever taken a statistics class, you might remember that the survey sample size n to reach is:
n = (z*𝜎/𝜀)^2
Where 𝜀 is the margin of error, z is the z-score for a given confidence level and 𝜎 the standard deviation.
Interestingly, the number of survey responses you’d have to reach does not depend on how many customers you have in the first place. More customers do not mean you have to poll more of them. How many customers you need to poll has more to do with how much variance (standard deviation 𝜎 is the square root of the variance) there is in between their answers to the CSAT question. It somewhat intuitively makes sense. If the first responses that come in are all 4’s and 5’s, you’ll expect future responses to be in the same ballpark. If you sometimes get 1s, sometimes 4s, you’ll want to continue polling to narrow in on a score. In summary, when measuring customer satisfaction, variability requires larger samples.
The second factor that impacts sample size is the margin of error. For a CSAT scale of 1 to 5, let’s say you’d be comfortable with +/- 0.5 points from the mean, a 10% margin of error.
Taking a common 95% confidence interval, z = 1.96, and let’s say a previous survey showed a 1.4 point standard deviation, then the sample size would be n = (1.96*(1.4/0.5))^2 = 30 responses. Now, if a margin of error of +/- 0.25 points was required, it would drive up the sample size to 120.
The Type of Survey Matters When You Measure Customer Satisfaction
The old-fashioned way for a company to measure customer satisfaction would be to mass email, and/or direct mail a subset of customers twice a year. They’d use a formula like this one to calculate the sample size needed to reach statistical significance.
However, by the time the survey is conducted and results compiled, the company’s products, services, and processes will have evolved a bit, and the CSAT score would already be obsolete. And closing the loop on any negative feedback would be less than timely and not as effective in reducing customer churn.
Finally, email or direct mail could be two useful types of surveys if that is the best way to engage with your customers, but often requires higher samples given the low response rates of those channels.
Measuring Customer Satisfaction in a Timely Way
The demand for more accurate and timely customer insights has created a niche for software vendors to develop tools that can handle the surveying, the sampling, computation, and measuring of standard customer experience metrics such as CSAT, CES, and NPS. As more and more companies have moved their products and services online, some of these vendors offer the ability to survey customers directly during the customer’s web or mobile experience. Measuring customer satisfaction about their experience right as they’re engaging with the brand at key journey points generates more contextual feedback and a chance to remediate.
Measuring customer satisfaction twice a year is not enough to manage a business proactively. Tools are now available to get a real-time CSAT for anyone in the company to see and rally around.
Customer Satisfaction Use Cases
By far, the most common use case of CSAT is as a departmental metric in managing contact centers, with customer service and support teams. A CSAT survey is triggered after an interaction with a support or service representative or agent. Modern CSAT tools will have an integration with common helpdesk and CRM software so that the survey can get triggered upon a case closure or issue resolution. These departments might track other metrics: the volume of low CSAT ratings (3 or lower) (if the survey is triggered after each interaction), or the time it took to respond to the opening of an issue, and the percentage of issues successfully resolved.
Product teams also use CSAT to understand what makes the customer tick, or where the product might fall short. They might have heard anecdotes and qualitative feedback from front-line employees, but CSAT surveys are a great way for product teams to get access to first-hand feedback right at their fingertips.
How to Improve Customer Satisfaction
Start measuring. Invest in a survey tool that can quickly and simply get that CSAT metric right into your hands in real time, and provides the ability to track the metric over time.
Measure CSAT at various touchpoints along the buyer journey.
Tag issues as they come in. Some tools will have auto-tagging, and even natural language processing to interpret and classify the feedback.
Take action. Route the issues, customer insights, and feedback themes to the appropriate teams for resolution.
Monitor CSAT trends, in aggregate, at various touchpoints, product lines, or any segments relevant to the business, and build a plan for making systemic change.
Focusing on efforts to improve your organization’s customer satisfaction can help you increase loyalty and even grow your bottom line. Check out the potential ROI your organization could see from investing in CX with our handy calculator!
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Improve Your Customer Satisfaction with InMoment
At InMoment, we specialize in survey software for customer experience. We have helped across multiple industries take the necessary steps to improve their customer satisfaction. Whether you’ve got 10 locations or 1000 locations, we can help you too. Schedule a demo today to see our platform in action!
All types of businesses leverage customer surveys, and they’re as important for small, growing businesses as they are for established corporations. When you’re creating a customer survey, whether it’s for the first time, or something you do each year, it’s helpful to understand what to expect. What is a good survey response rate? What are best practices for customer surveys? What is the competition encountering?
As businesses continue to evolve their customer listening channels as a part of their Integrated CX strategy, one source of feedback will always be around – customer surveys.
All types of businesses leverage customer surveys, and they’re as important for small, growing businesses as they are for established corporations. When you’re creating a customer survey, whether it’s for the first time, or something you do each year, it’s helpful to understand what to expect. What is a good survey response rate? What are best practices for customer surveys? What is the competition encountering?
We’ve collected customer survey statistics to help you understand the customer survey landscape. Whether you send out a standard survey via email or leverage the Net Promoter Score question in-app, knowing some statistics and trends can help you ensure that you get adequate feedback that helps build your business.
Customer Survey Statistics You Need to Know About…
Hearing from Customers
The average business hears from 4% of its dissatisfied customers. (Source: “Understanding Customers” by Ruby Newell-Legner via Help Scout)
For every customer who complains to a business, 26 other customers don’t voice their feelings. (Source: White House Office of Consumer Affairs via Help Scout)
95% of customers share bad experiences with others. (Source: Zendesk)
Asking for Feedback via Customer Surveys Statistics
Monday is the best day to get the highest amount of complete email surveys for B2B businesses. (Source: CheckMarket).
For B2C companies, there is not a best day to send surveys: Tuesdays, Wednesdays and Fridays all lead to a relative high response rates and Thursdays and Sundays can better be avoided. (Source: CheckMarket and SurveyMonkey)
The average response rate for email surveys is roughly 24.8%, according to a calculation by FluidSurveys.
The average response rate for telephone surveys are in the 8-12% range (Source: FluidSurveys)
Response rates can soar past85% when the respondent population is motivated and the survey is well-executed. (Source: People Pulse)
Response rates can also fall below 2% when the respondent population is less-targeted, when contact information is unreliable, or where there is less incentive or little motivation to respond. (Source: People Pulse)
Best practice is to keep your survey as short as possible. Data suggests that if a respondent begins answering a survey, there is a sharp increase in drop-off rate that occurs with each additional question up to 15 questions. (Source: SurveyMonkey)
Responding to Feedback Statistics
It takes 12 positive experiences to make up for one unresolved negative experience. (Source: “Understanding Customers” by Ruby Newell-Legner via Help Scout)
Resolve a complaint in the customer’s favor and they will do business with you again 70% of the time. (Source: Lee Resources)
Net Promoter Score (NPS) Survey Statistics & Benchmarks
Entelo saw 2x response rate using in-app NPS surveys versus email. For example, when Entelo, a recruiting software, first began to use in-app NPS survey, their response rate quickly jumped from around 24 percent to around 60 percent, before leveling off at about 50 percent. (Source: InMoment)
The top 10 NPS leaders (those with the highest NPS scores) are USAA Insurance (80%), USAA Banking (78%), Costco (78%), Apple – Laptop (76%), Dillards (75%), and Nordstrom (75%). (Source: Customer Guru)
Fortune 500 companies such as Delta Air Lines, General Motors, Zappos, Lego, and Procter & Gamble all use NPS to help gauge customer happiness. (Source: Net Promoter System)
Thinking Beyond Customer Surveys
While surveys remain a great way to learn about the experiences you are providing your customers, you are more than likely only hearing from 10% of them. To understand the other 90% companies are moving to a more integrated feedback signal approach to their customer listening. With InMoment’s Integrated CX, companies are now able to easily combine, analyze and act on multiple signals (i.e. surveys, phone/chat transcriptions, social, CRM notes, etc..) to improve CX.
WHITE PAPER
The Art and Science of Email Survey Invitations
The problem with your survey response rate may not be the survey itself. In fact, most non-responses are due to people not participating in the survey at all. Hence the question: what is in an invitation?
If you are looking for technical and non-technical solutions to create the ultimate e-mail survey invitation, look no further. Take a step towards higher response rates by downloading the document below!
By Simon Fraser, InMoment + Kirstin Simons, NPSx by Bain & Company
NPSx by Bain & Company and InMoment recently released the State of CX: UK Consumer Trends Report, an in-depth analysis of customer perceptions on brand experiences across multiple industries. Based on responses from over 32,000 consumers, we have uncovered invaluable insights that reveal how certain brands are performing.
In this blog, we take a look at the findings specific to the retail industry and delve into the secrets of CX leaders and the key net promoter score drivers that propel them to the top of the leaderboard!
The Challenge of Our Times
It’s no secret that retailers today operate in a challenging environment. In the ever-evolving landscape of retail customer experience (CX), businesses face a multitude of challenges and trends that shape their strategies. Record inflation, supply shortfalls, labour constraints, rising capital costs, and material shortages have created a perfect storm. To add to the complexity, an increasing number of customers are demanding that companies take meaningful steps toward sustainability, reflected in their ESG (Environmental, Social, and Governance) commitments.
Exceptional Brands in the Spotlight
Among the wide range of retail and grocery brands, two stand out in their dedication to delivering on their promises: John Lewis in the retail sector and Aldi in the grocery sector. These brands couldn’t be more different, yet both have mastered the art of aligning their brand identity with their customer experience, and they’ve done so with resounding success.
Clear and distinct brand identity is a common thread between successful retail brands. It’s the beacon that guides their actions and decisions, ensuring that every interaction with customers reflects their core values and promises.
Retail’s NPS Drivers
When we scrutinise the net promoter score (NPS) data by sector, a pattern emerges: product quality and great value consistently stand out as the primary drivers of customer loyalty. Today’s consumers want their money to stretch further, and they value brands that save them time and effort by offering trustworthy products. Making it easy for customers to access help, both online and offline, is another critical factor in building loyalty.
Retail, in particular, shines when it comes to providing great value to customers. This is a testament to the industry’s commitment to delivering products and services that meet customers’ needs without breaking the bank.
The Era of Personalisation
In an age where consumers are inundated with marketing messages, personalisation has become a key factor for success. A staggering 72% of consumers now engage only with messages tailored to their interests. While customers appreciate this approach, marketers acknowledge that achieving true personalisation requires substantial investment.
Effective personalisation begins with a deep understanding of customer needs. To organise around customer goals rather than organisational silos, businesses must dissect customer behaviour. This involves identifying what products customers are buying, their interests, preferred communication channels, and the right timing for engagement.
NPSx by Bain & Company states that connected customer experiences, powered by AI, are the future of CX. Predictive personalisation and hyper-personalisation are emerging as game-changers. These tools leverage data and algorithms to anticipate customer needs and provide tailored experiences that delight customers.
Promoters, Passives and Detractors in Retail:
Over 50% of John Lewis and Ikea customers are enthusiastic Promoters, setting a high standard for customer satisfaction.
Brands like Amazon and Shein tend to polarise opinions, evoking strong reactions from both Promoters and Detractors.
Many retailers, including Matalan, The Range, and Boohoo, have a significant number of Passives among their customer base. This presents an opportunity for growth and improvement through targeted investments.
Retail in the Bigger Picture
Taking a step back and comparing the retail industry to the broader UK context, we see that retail is one of the top-performing industries in the study. It consistently outperforms the average across all NPS drivers. Retail’s strengths lie in its ability to provide great value and adapt to challenging market conditions.
In a rapidly changing retail landscape, understanding NPS trends and adapting to meet evolving customer expectations is crucial. Brands that can navigate these challenges while staying true to their core identity and delivering exceptional value and personalisation will undoubtedly excel in the dynamic world of retail CX.
If you’d like to find out more about the study and how you compare to others in the retail sector, book your meeting here!
Customer experience (CX) surveys are foundational to soliciting the customer feedback you need to power your CX program, and many of these surveys are sent via email. However, the first step to receiving that survey feedback can be one of the most difficult: getting your customer to open your email.
When it comes to open rates, your email’s subject line is more important than you might think it is. Two helpful email stats drive this point home:
69% of recipients will look only at the subject line before flagging an email as spam.
47% of recipients decide to open an email based only on the subject line.
If you’re trying to figure out all the possible reasons why your survey emails aren’t getting decent open rates, it makes sense to start with your subject lines.
5 Tips to Help You Write Engaging Email Survey Subject Lines
Tip #1: Establish the Right Tone
Effective customer interaction is super dependent on speaking your audience’s language. This doesn’t just refer to the words and terms you use in your emails, even though that is obviously also extremely important.
No, we’re referring to your “voice” here – where you pitch the subject line on the “familiarity” spectrum. On the one side of this spectrum is “ultra conversational,” and on the other side, “ultra professional.”
On the conversational side, you’ll use language that makes your recipients feel like they’re being asked a question by a friend or a trusted colleague. These subject lines should make the recipient feel comfortable because they have an approachable tone.
Here are some examples:
“A quick question for you”
“Leslie, got a sec? ”
On the professional side of the spectrum, you’re using language that builds trust in your brand’s ability to take your service seriously. You don’t have to come off pompous or like you’ve swallowed a thesaurus. Stick to the point, and treat the recipient like someone who appreciates professionalism in the workplace.
“We’d genuinely appreciate feedback on our performance.”
“Leslie, how can we make you more productive?”
There are quite a few things to consider when choosing the tone of your survey email subject lines. Your brand image is arguably the most important, but things like recipient demographics and the industry you’re playing in should also play a role.
Building buyer personas is a standard practice in digital marketing. Many successful businesses go through this process to understand exactly who they’re selling to. This data is invaluable when deciding on the tone of your survey email subject lines.
What you use to customize the subject line will obviously depend on the data you have on the customer. Using their name is an obvious starting point. However, you can also reference their most recent purchase if your CRM has logged it. Or a virtual event they attended. A modern CX platform can grab this info and personalize the subject line.
If you’re online mattress retailer Zoma and you’re sending out a customer satisfaction (CSAT) survey email to find out how a support query was handled, if the shipping went well, or if the customer is satisfied with the quality of a recent purchase, you could take one of the following approaches:
“How did we do on your support query [#66456]?”
“James, how was the webinar with DocuSign?”
“How’s that Zoma mattress working out?”
Showing evidence that the email comes from a reputable origin (i.e., the actual company they interacted with) is critical if you want to maximize that open rate.
By using their name and referencing their purchase, you’re landing a one-two punch of credibility and massively increasing the chances of a response.
Tip #3: Talk About Benefits
Let’s be frank here. When you send out a Net Promoter Score (NPS) survey email, you’re basically asking an established customer to take time out of their day to reveal their feelings about your brand despite there being no immediate reward in it for them.
But that shouldn’t stop you from letting your recipients know that their feedback will result in long-term benefits for you and them.
Good feedback — both positive and negative — means improved service for everyone. A large number of honest responses will help you get better at designing new product features. Let your recipients know! Make them feel like their voice is important and that it benefits them to be heard.
Here’s an example. If you’re an energy services company like Ecopreneurist, and you’re sending out an NPS survey, you may want to try subject lines like these:
“Help us get even better at saving you energy.”
“Leslie, your feedback helps us save you money.”
Even though the email content will ask them a typical NPS question like “How likely are you to recommend Ecopreneurist to a friend?” the subject line can illustrate the eventual reward customers will experience by responding.
There’s a genuine correlation between improved service and receiving this type of information from customers. There’s no reason you can’t creatively leverage this relationship to create highly engaging subject lines.
Tip #4: Ask Your Recipients a Question
A good subject line engages the recipient. You’ll want the subject line to make them think and feel something. Trigger their thoughts and their emotions.
A great way to do this is by asking a question.
The right question can trigger introspection. It can make the recipient think about something they want to share with you.
A SaaS company like ShowMojo might employ a customer effort score (CES) survey to help them spot inefficiencies and/or improve in two areas:
Onboarding. Good onboarding helps ensure “trial subscribers” see the product’s value and eventually become paying customers, and it’s a critical step in maximizing a subscriber’s lifetime value (LTV).
Product features. A CES survey can gauge how easily customers are adopting a new product feature and help you optimize for improved adoption.
In both cases, positioning the survey in question form is a great way to maximize open rates. For example:
“How hard was the migration to ShowMojo?”
“How easy was it to create a new rental dashboard?”
You can see in the above examples that the subject lines don’t even mention the survey. The two questions are directed at the customer and their experience.
Tip #5: Keep It Simple and Short
You should keep your survey email subject lines to under 50 characters to be sure everyone sees it. The number of people opening emails using their mobile phones is increasing every year. And the limited amount of real estate on a mobile device means that subject lines are often truncated.
Yes, it’s hard to make a compelling case for someone to open an unsolicited email using so few words, so take your time writing. Constantly try whittling the number of characters and words down to an absolute minimum without compromising your core message.
Let’s take a look at some concise and effective customer survey subject line examples:
“Are we doing a good job, Leslie?”
“Where can we improve?”
“We’re always looking for honest feedback.”
“Give it to us straight; we can take it.”
A Quick Word on Open Rate Benchmarks
What kind of open rates should you expect from your survey emails? Having a sense of benchmarks is critical if you intend to measure how effective your new subject lines are.
According to our customers’ results, an open rate over 20% is solid, with only a small number of emails achieving a 30% open rate. If you see this level of engagement, you’re probably doing multiple things right. If it’s below this figure, realize there’s room for improvement and review your subject line copy against our recommendations.
Some Final Thoughts
Regardless of what industry you’re operating in, certain best practices will always be relevant when crafting email subject lines.
Here’s a summary of the most important things to bear in mind (along with a fifth bonus tip):
Personalize as much as possible.
Tell recipients about the benefits of completing the survey.
Ask a question.
Keep it short and to the point.
Try to keep your subject lines under 50 characters.
Avoid spammy words like “opportunity,” “offer,” “cash,” “discount,” or “click here.”
There’s little point in rethinking your subject line strategy if you’re not backing up your efforts with data on the success or failure of a new approach.
You’ll want to A/B test your survey emails. A simple way to do this is:
Split your email recipients into two groups (Group A and Group B).
Target Group A with subject line A. “Welcome! How was the sign-up process?
Target Group B with subject line B. “Answer one question and help us improve.”
Measure each email’s open rate. If Group A gets a higher open, a post-onboarding greeting works well for your new customers.
By A/B testing your email subject lines over time, you gain valuable knowledge about the subject lines that resonate with your customer base. Not only will that information help you with your specific survey, but it can also help other CX-focused teams optimize their customer communications as well.
Want to learn more about best practices for surveys? Check out this white paper from the experts! And if you want to learn more about how you can listen to your customers not only via surveys, but by leveraging data from social media, online reviews, and more, let’s chat!
There are a lot of ways to learn about your customers. You can pick up the phone, send out a survey, invite them to a customer event, or use a well-known method to learn more about who they are.
Net Promoter Score (NPS) is a simple and highly effective way to determine the happiness of your customers. This one rating — how likely are you to recommend <company> — gives you valuable business insights from the need to fix specific issues quickly, to long-term trends. But what about the NPS follow-up question?
That’s where the more actionable insight comes from, because the customer is able to explain the “why” behind their rating with an open-text answer that gives you the good, bad, and the ugly of their experience.
By customizing your NPS follow-up question, you’re better able to gain the insight you need to improve your customer experience (CX) and increase Customer Lifetime Value (CLV). We have four simple ways you can approach creating the optimal follow-up question for your specific needs.
You don’t just want to appeal to new customers—you also want to keep your current ones coming back again and again. Not only do returning customers require less introduction to your products and services, but they also tend to spend more than first-time customers, too.
One user engagement strategy you can use to boost your customer retention is to make use of the Net Promoter Score (NPS) system. Simple to understand, this powerful metric can give you a wealth of information that you can use to improve your brand.
What Is Net Promoter Score?
NPS is a metric designed to measure customer experience. First, you ask your customers a simple question:
“On a scale of 0-10, how likely is it that you would recommend my brand/product/service to a friend or colleague?”
Then, customers are asked to explain in their own words why they chose the score they did.
From this, you can place your customers on a scale, where anyone who answered between 0-6 is a detractor, 7-8 is passive, and 9-10 are promoters.
In order to get your Net Promoter Score, you take the detractors away from the promoters.
Let’s say you’ve surveyed 100 people. Of these 100 people, 30 are detractors, 40 are promoters, and 30 are passive. That leaves you with:
40 – 30 = 10
Promoters – Detractors = NPS
Determining your NPS is important, of course, but analyzing the open-ended responses to the follow-up question is what will help you understand the “why” behind your score and make NPS feedback actionable.
What Do These Categories Mean?
Promoters
This category (people who selected 9 and 10) are your loyal fans. They’re likely to be repeat customers, often spending more on subsequent purchases. They generally have a positive view of your brand (meaning if they do contact you with a complaints, they’re often more forgiving).
As well as this, they tend to refer new customers to you – accounting for more than 80% of referrals for many businesses – and talk about you on social media/in person. You may see effusive praise, with descriptions like ‘we’ve been able to achieve our goals’ or ‘this is the only software I’ll use’, along with thoughtful suggestions for improvement.
Passives
This group (people who chose 7 or 8) tends to be satisfied, but not in the same way as promoters. They’re happy with their purchase, and they might buy from you again, though not nearly as reliably.
They are unlikely to complain about you to colleagues, but won’t necessarily spend their time singing your praises or talking about you on social media either. They’re also likely to evaluate competitors if they see an interesting advertisement or offer, rather than being wholly loyal to your brand.
Detractors
You might think that a 6 is a high score to count as a detractor, but generally, this group are unhappy customers. Encompassing everyone who chose between 0 and 6, they’re likely to talk badly about you. At the higher end, there might be some positives mentioned, but they’re still going to have complaints. This is where a lot of customer churn and defection comes in.
Sometimes these customers may seem profitable, as many of them may be spending a lot of money with you. However, an NPS program isn’t about the initial revenue generated by a customer or account, it’s about customer lifetime value. Detractors are at risk of leaving your business and can even give your brand a bad reputation (and the lower scorers are likely to be difficult for your staff to deal with at times).
Bain & Company, the originators of the score, consider between +30 and +40 to be a favorable score. (Why are we using +30, not just 30? Because it’s possible to have a negative score if you have more detractors than promoters). As you head up to +50, you’re looking at an outstanding result. If you’re at +80? That’s world class.
However, this will vary based on your industry and your location. Europe and Asia generally mark things more conservatively than the US. So, if you’re comparing your scores to your competitors, make sure you’re looking in the same place rather than at a global average. If your industry is one generally viewed negatively – think debt collection, or property management – then you’re generally going to have lower scores, too.
For this reason, it’s worth investigating NPS benchmarks for your industry, and your location, rather than relying on a general global average. It’s also worth focusing on improving your own score per quarter. If you go from 5 to 15, you may still be below the average, but a jump of 10 points is respectable and means you’re doing the right things.
5 Ways to Use NPS to Boost Customer Retention
Now you know what NPS is, it’s time to take a look at how you can use it to improve your customer retention.
#1: Make Sure It’s Accurate
Firstly, you need to make sure you’re starting off with an accurate assessment. There are a few common mistakes companies make, including:
Asking leading questions on the survey
Promising rewards for higher scores
Using methods that increase bias (like face-to-face rather than anonymous online surveys)
Only surveying happy customers
Asking too many questions at once
Using “set and forget” NPS microsurveys can help you avoid these pitfalls. By starting with an accurate assessment, you can take the right steps. Having a false image of customer success can be harmful, as issues will go unrecognized and unresolved.
#2: Reach Out to Detractors
Responding to the customers who gave you lower marks is beneficial – both for finding out why they gave lower marks, and saving their business.
Contact detractors right away. If you can address their issue right away, you have a shot at keeping them as a customer.
Even if you can’t meet their needs, it is important that their feedback be acknowledged.
If you lack the time to personally reach out to each detractor, you can still mitigate negative feelings by automating your survey response. Send an email right away to thank them for their response, and ask for more feedback.
Reading through detractor feedback, you’ll gain insights into why they wouldn’t recommend you and be able to adjust accordingly. For example, if half of the detractors respond with ‘processing time is far too long’, then you have something to work toward.
Sometimes negative reviews are based on service factors, like the delivery company you used or customer support that is slow to respond. Sometimes, complaints won’t be directly about your business. For instance, if you provide companies with a virtual phone number, you might get complaints about it not working. Changing this can instantly boost results. Create the experience consumers expect by prioritizing improvements, drawn from their direct feedback.
Feed this data back into your product roadmap and to your sales team. Designing new products with these criticisms in mind can avoid the same issues in the future. Meanwhile, it also gives your sales team some leeway on what they can offer in response to these criticisms to overcome them at the point of sale or renewal. It’s an extra handy thing to add to their sales playbook.
For instance, if a customer is concerned about delivery times, give your customer success managers permission to upgrade them to expedited shipping at no extra cost. If they’ve had issues with subscription software, offer them a feature upgrade. All of these solutions can turn your detractors into passive customers – and potentially even promoters.
#3: Learn from Passives
Don’t ignore this group of customers. While detractors are clearly telling you their business is at risk, passives are more likely to silently churn. It is your job to find out why and whether you should focus attention on this group.
Segmenting your NPS feedback by business size or other factors will help you decide how important passive feedback is. If passives reside in important accounts or user groups, you may want to understand the “why” behind their lack of enthusiasm.
One way to do this is to customize the NPS follow-up question. If a customer scores you a 5 or a 6, ask them “What’s one thing we could do better?”
#4: Engage Your Promoters
Not all of your effort should focus on your unhappy customers, however. You know that this category of people has positive things to say about you – so why not turn that into something official?
Reach out to them and ask for reviews or personal testimonials you can use on your website. You might want to automate asking for a review. That way you ask at the right time — moments after a promoter scores you a 9 or a 10!
If you don’t already have referral marketing in place, it’s time to implement it. Roll it out by targeting these promoters, who you know are likely to make use of it.
This encourages customer retention by giving them special offers, but it also boosts acquisition at the same time. For B2B companies, this is especially helpful if some of your customers are well-known in their field, as businesses are likely to respect their opinion.
Referral and loyalty schemes aren’t always well suited to B2B brands, but customer marketing or a VIP program can work instead. Customer marketing seeks to deepen relationships by providing customers with multiple benefits. One such example might be providing access to your product roadmap as part of an advisory council. Alternatively, you could create a VIP ‘space’, where exclusive content and in-person events are offered.
#5: Thank Respondents
Reach out to your loyal customers, and thank them for being so.
Getting an email that says ‘thank you!’ is a great boost and encourages them to remain loyal. Video can improve customer experience, so having a thank you video may be worth the investment – especially if it is personalized or includes some behind the scenes content.
While most of these efforts should target your promoters, some of them can be sent out to your passive base, too – potentially converting those 7 or 8 scores into 9s and 10s. Add value to your initial product through a higher tier service, exclusive access to industry information, or trade-in offers. These methods can tempt passive customers into a deeper relationship with you.
Keep Going
Net Promoter Score shouldn’t be used as a one-off metric, but a regular measurement. To retain more customers, continue to listen to them, learn from their feedback, and take action. NPS is especially helpful for tracking if your tactics are working. You should see an improvement in retention as you begin to implement those suggestions above.
Equally, you might see a drop if something changes, like an operating system update or switching to an IVR system to route customer service calls. By regularly tracking NPS, you’ll spot improvements and problems quickly. You’ll know if something is working or not, and be able to mitigate negative effects as soon as possible.
NPS will help you improve the customer experience you’re providing and that’s the best route to customer loyalty.
Retain more customers with InMoment, the #1 Net Promoter Score platform for SaaS
Investor Blake Bartlett coined the term “End User Era” to capture an important shift that is happening on an organizational level across industries: “Today, software just shows up in the workplace unannounced. End users are finding products on their own and telling their bosses which ones to buy. And it’s all happening at lightning speed.”
Companies like DocuSign, Slack, Zoom, and Hubspot are examples of SaaS companies that are thriving in the End User Era. Their success is rooted in products that end-users love. Product Led Growth codifies this end user-focused growth model. PLG relies on the product itself as the primary driver of customer acquisition, conversion and expansion. This approach goes all-in on end user ease and productivity to drive growth, and is a radical shift away from the acquisition growth model so familiar in the software industry.
Customers Will Tell You Where Your Product Led Growth Bottlenecks Are
Metrics are essential to understanding progress on the product led growth curve. Typically the PLG model evaluates business and pipeline health based on user actions (clicks) and subscription revenue.
This is where CX metrics are so valuable. Voice of customer data illuminates the “why” behind the clicks and the cash. Classic CX surveys like NPS, PSAT, CSAT, and Customer Effort Score(CES) monitor customer sentiment—providing critical insight into behavioral and revenue metrics.
By analyzing the open-ended comments that accompany the rating-scale questions you can identify positive and negative themes in what customers are saying. Based on what you learn, you can confidently prioritize improvements to your product that will remove bottlenecks, the enemy of PLG success.
At the core, product led growth is about taking tasks that would traditionally be done manually and putting them into the product to create efficiency and a better customer experience. Step back and map out all of the steps in your funnel from acquiring an initial lead all the way through to turning that lead into a paying customer who sees value in the product. Where are the bottlenecks?
How do you know where your bottlenecks are, and whether you are eliminating them?
Let’s explore each metric to understand how it can help you identify and address bottlenecks, with real-world examples from our customers.
Net Promoter Score (NPS): Loyalty and More
Net Promoter Score (NPS) surveys ask customers to evaluate how likely they are to recommend your product or company to a friend or colleague, this “propensity to refer” is an excellent predictor of future growth.
Unlike the other metrics covered here, which are flexible and easily customizable, true NPS surveys follow a very specific format when it comes to asking the first (of two) questions. By asking that first question in a specific way, using a standard scale, companies can compare their NPS scores to industry benchmarks. The second question, which gathers qualitative data regarding improvement opportunities, can (and often should) be customized.
NPS Surveys ask two questions…
Question #1: “How likely are you to recommend this product or company to a friend or colleague on a scale of 0-10?”
Question #2: “What can we improve about this experience?” (if they rated you 0-8) or “What did you love about this experience” (if they rated you a 9 or 10).
The first question allows you to calculate your Net Promoter Score, which is a number between -100 and +100 and serves as a benchmark for progress. For detailed information on how to calculate NPS, and what the number really means, take a look at our Net Promoter Score post.
The second NPS survey question is just as important, if not more so, than the score itself because this qualitative data tells you what you need to do to improve end user experience.
Why is NPS key to Product Led Growth? Traditionally viewed as an indicator of growth (as mentioned above), NPS is also a crystal ball when it comes to retention. NPS gives you a glimpse into the minds and hearts of your end users. It can provide a constant stream of feedback about bottlenecks and that will help you create products that enable the ease and productivity you are going for.
In short, NPS captures what’s most important to users, whether it’s documentation, training, or aspects of the product itself. NPS is typically the foundation of any CX program, and since you don’t want to get overwhelmed in the beginning, there’s nothing wrong with making NPS your sole CX metric at this stage.
NPS Example: DocuSign
DocuSign uses NPS to gather feedback on product features and pinpoint any bottlenecks in the experience. They achieve this by customizing their NPS follow-up question (the one that asks users to explain their score). In the in-app survey pictured below, Docusign asks “Tell us about your experience sending an envelope.”
Guneet Singh, Director of CX at DocuSign, believes that regardless of which metric you use, it’s vital to understand how customers feel about your product at key points in their journey. In other words, don’t wait to conduct an annual survey—gather continuous data and refine your product based on that feedback.
Customer Satisfaction (CSAT): Because Support Is a Bottleneck
Customer Satisfaction (CSAT), like NPS, is another metric you can use at various points in the customer journey. The classic use case for CSAT is following up on a support interaction, where you can ask customers about their experience:
Solving their specific problem
Working with a particular CS agent
Working with your company in general
CSAT surveys can use a scale ranging from “very satisfied” or “very dissatisfied,” often followed by a question that asks the user to share the reason behind their score.
What makes this touchpoint so vital from a PLG perspective? Support calls, by definition, are a point of friction—nobody contacts customer support when things are going right.
Product Led Growth endeavors to eliminate support interactions altogether. When was the last time you reached out to customer support at Slack or DocuSign? Chances are, it’s never happened. That’s the seamlessness you’re going for.
This touchpoint is a rich source of insight into frustrations that customers face. Product teams that prioritize end user experience pay close attention to feedback from support as they improve product and design new features.
CSAT Example: Glassdoor Glassdoor, the popular site for job listings and anonymous employer reviews, uses Customer Satisfaction surveys to gather feedback on support interactions. When a support case is closed in Salesforce, end users receive a personalized CSAT survey via email.
Carmen Woo, Salesforce Solution Architect and Senior Application Engineer, holds the cross-functional CX technology vision at Glassdoor. “What is intriguing about our use case is that we use machine learning to analyze feedback. Comments are tagged by topic themes and are assigned sentiment to capture the emotion behind the user’s words.
“The [InMoment] platform allows our Support team to segment feedback by agent and other relevant business drivers to uncover insights that contribute to optimizing our support function, and it can also reveal bottlenecks that are best addressed by improving product features or design,” says Carmen.
Product Satisfaction (PSAT): Adoption and Engagement Bottlenecks
PSAT surveys are highly flexible, and they can be structured the same way you structure Customer Satisfaction survey questions—asking customers to rate their level of satisfaction with a product using a scale from “very satisfied” to “very dissatisfied” (e.g., 1-3 or 1-5) or through a binary response (e.g., “happy face” or “sad face”).
PSAT surveys are best delivered within an app, when customers are using your product and can give you fresh, timely feedback. The customer sentiment derived from PSAT surveys is the necessary complement to behavioral metrics. Sure, you can see in the clicks that users are not adopting a feature, but why? PSAT helps to answer that question and guides optimization efforts.
PSAT Example: HubSpot
Marketers that use HubSpot, the popular CRM software, may recall responding to a Product Satisfaction survey when using a new feature for the first time. PSAT gives Hubspot immediate feedback on whether a new feature is delivering value to the end-user.
Even if you’ve done extensive user testing, getting feedback on a feature within the context of a user’s experience of the whole product is valuable. Is there friction? Should the feature be tweaked in some way?
This approach, which is a key aspect of lean UX design, ensures you don’t go too far down the rabbit hole with a product feature that sounded great in theory but didn’t serve your end-users in the real world. New features can bring complexity — the bain of end user ease. By continually asking for feedback in-product, you can better calibrate that balance and maintain a frictionless, easeful end-user experience.
Example InMoment PSAT survey in a mobile app.
Customer Effort Score (CES): Identify Bottlenecks in Onboarding
A seamless onboarding experience is key to widespread adoption. If end-users have to work too hard to get up and running, they’ll give up and try a competitor’s product. Even if you have an enthusiastic champion within a company, if they have to prod others to adopt or spend time convincing them of your value, their own enthusiasm will wane. As such, it’s important to evaluate how much effort end users must put into getting started.
Customer Effort Score (CES) asks how difficult it was to accomplish a given task using a predefined scale (e.g., 1-7 or 1-5). Here is an example of a CES survey:
CES surveys are frequently used to follow up on support calls, but they’re also extremely valuable when evaluating the onboarding experience. Success teams know that the seeds of churn can be sown in the onboarding phase. They have been using feedback from CES surveys to both (1) follow up with that customer to fix the problem and (2) develop tasks and processes that will prevent future customers from experiencing the same bottlenecks.
However, in the context of PLG, addressing onboarding feedback isn’t just the domain of the Success or Support team. It is vital input to UX teams that seek to eliminate tasks that would traditionally be done manually and put them into the product to create efficiency and a better customer experience.
CES Example: Watermark
Watermark is in the EdTech space, and they’ve taken a comprehensive approach to optimizing user experience. Here’s how they do it, starting with Customer Effort Score surveys.
Watermark has a complex onboarding and training process, so they gather data at the end of each of three phases of training using CES surveys. The feedback goes to the implementation and training teams to both (1) improve the process and (2) identify customers who may need extra support. Then, of course, they look for larger trends and modify their onboarding experience accordingly.
Watermark also measures NPS & CSAT. NPS is measured across six product lines, and Watermark studies the correlation between NPS and renewals. Higher NPS scores predict a greater likelihood for renewal, and improving products based on NPS survey results is key to Watermark’s customer retention strategy. CSAT surveys, triggered from Salesforce Service Cloud when a case is closed, help to evaluate and improve Customer Support.
And as Dave Hansen, the CX champion at Watermark, points out, they dig into the data to identify points of friction. “The feedback we’re getting tells us that there isn’t necessarily an issue with our overall solutions,” says Dave. “You may have issues running a certain report, or you may have issues with the way you have to click through to something.”
Product Led Growth Strategy Is About End User Experience
The four CX metrics covered in this post (NPS, CSAT, PSAT, and CES) offer insight into end user experience and augment behavioral data with the voice of your customer.
Remember, don’t allow scores to be your sole focus. There is gold in the open-ended feedback you receive. Without analyzing the open-ended feedback you receive, the metrics are just benchmarks that you’ll aimlessly try to identify bottlenecks through guesswork. In the end, that won’t get you very far.
Product Led Growth is all about creating a smoother experience in the moments that matter. CX metrics and voice of the customer comments help technology companies do just that.
You hear the term tossed around in most any meeting focused on customers: “What’s the NPS? How many Promoters do we have? How many Detractors?” You may be asking yourself “What is NPS and what should we be doing with it?”
Net Promoter Score (NPS) is a simple, powerful measure of customer loyalty. By asking customers to rate their likelihood to recommend a product or service on a 1-10 scale, you can gain actionable insights to guide decisions across your business.
Let’s break down NPS calculation and see how it works.
The survey then logs the response and gives the responder a chance to explain their answer in an open-text format.
That’s it! Because the survey is short, sweet, and to the point, customers are more likely to respond. And you’ve just gained valuable information ready to be turned into insights and used to improve your offerings.
Many NPS surveys offer this text box at the bottom of the questionnaire asking for reasoning behind their responses. This is also a valuable tool to gain better insight into your customer’s specific experiences.
Collect NPS Data with a Survey
Make sure that during the process of NPS calculation you are determining what specific information you are looking for from your audience. Make sure you know what you need feedback on, where you have the bandwidth to improve, and how you want to segment your customers in order to get the most specific results.
InMoment can help you get instant NPS analytics when you download the NPS software. Want to try it out? Get a free 30-day trial here.
How to Calculate NPS: The NPS Calculation Process
Once you have the customer feedback (step one), the fun part begins with NPS calculation.
Respondents are classified into three groups based on their answers:
Promoters: Rating 9 or 10. Loyal customers who are a great source of referrals.
Passives: Rating 7 or 8. Customers who are satisfied with the service but are susceptible to competitors.
Detractors: Rating 0 – 6. Unhappy customers who can damage your brand.
What is the NPS Formula, and How Does it Work NPS Calculations?
NPS Calculation gives you a clear indication from one moment to the next of how happy your customers are. Real-time tracking can alert you to threats to your business, allowing you to take quick action. Tracked over time, it gives you insight into which of the company’s actions have resulted in the most customer value. Step three is to find the percentage of promoters and detractors. Lastly, step four is to calculate the NPS score using the information you have acquired so far.
To do the actual NPS calculation, subtract the % of respondents who are Detractors from the % of respondents who are Promoters.
NPS = ((# of Promoters – # of Detractors)/Total Survey Participants) x 100
Interpreting Your NPS Score
Now that you’ve calculated your net promoter score, of course you want to know what the number you ended up with actually means. Net promoter scores are expressed as a number ranging from -100 to +100. Any score above 50 is typically a good NPS. This would be because at least 50% of your company is a promoter, while less than 50% would fall under detractor. The most important thing you can do with your net promoter score is acknowledge it, and try to improve it.
Utilizing Customer Feedback
The answer to the open-ended NPS follow-up question tells you the “why” behind the rating. Mining this text for insights is what makes NPS calculation so powerful – because it gives you rich information on the customer experience you’re providing. Analyze the text answers and use them to guide the actions you take.
Don’t forget to follow up with the customer and close the feedback loop. Imagine immediately responding to a Detractor’s complaint, targeting your Passives with an information campaign, or asking a Promoter to review your product online.
Creating Additional Questions for Your NPS Survey
When you create an NPS survey, you typically do so with the sole purpose of measuring NPS. However, sometimes you need to measure NPS and acquire additional information that can help you to improve after you’ve learned your NPS score. This is where you need some key driver analysis. While it’s usually used for Customer Acquisition, key driver analysis can help you identify what your strengths and weaknesses are specifically and how you should address them in the future.
Ongoing Voice of the Customer
Repeat the NPS survey at regular intervals. Segment your NPS by types of customers to understand the “why” behind your score and how your decisions impact customer loyalty.
Once you have NPS calculation down, you’ll be ready to add in additional metrics over time at key customer journey touchpoints. When you combine the feedback from your NPS survey with feedback from CSAT (customer satisfaction) and CES (customer effort) surveys, these 3 core CX metrics give you a great foundation for making business decisions based on the authentic voice of the customer feedback.
Build end-user loyalty. Sign up today for free in-app NPS calculation feedback with InMoment.
The technical definition of Customer Lifetime Value (CLV) is the revenue earned from a single customer over time. It’s an equation that subtracts the cost to acquire a new customer (CAC) from the total revenue from that customer. The goal is to make the revenue-over-time from each individual customer as high as possible.
But the technical definition doesn’t cover the magic that’s actually in customer lifetime value – as a metric and as a mission for a digital marketplace, an e-commerce site, and SaaS businesses. Because when you go after customer lifetime value with intention, making it one of your “North Star” metrics, you’ll find that the cost-to-acquire actually shrinks. It becomes less expensive to acquire new customers, and the revenue pours in exponentially.
We are also at an inflection point with SaaS. While many SaaS companies are still largely concentrated on acquisition-based growth through demos and trials, we’re seeing a shift to focus on the end-user and the metrics that capture how happy they are, because those end-users lead growth. And that’s where customer lifetime value comes in as a business case. It is the ideal way to tie customer loyalty to revenue.
Those end users who are sticking with you are buying more from you (cross-sells and upsells) and they’re telling their friends and colleagues how great you are (referrals). In a sense, they become your virtual sales army. They’re out there warming up leads and sending them to you, so you don’t have to pay to find them.
This is the magic we’re going to unlock for you in this comprehensive article. If you want to know how to maximize your bottomline, then improving Customer Lifetime Value is key. And we’re going to explain how it all works, and how you can start using it to get better ROI for your business right now.
Part 1: Making the case for Customer Lifetime Value as the key metric for your customer experience strategy
I don’t know a single company that hasn’t pondered these questions:
What resource investment will have the most impact on customer health and revenue growth?
What can (or should) I automate?
Should I invest more money into customer experience (CX), customer support, or customer success right now?
Should we focus on building this new feature or should we focus on infrastructure improvements that might make our platform more secure or faster, etc.?
Should we invest in self-service onboarding to improve the journey for the end user?
The answers to all of these questions lie in Customer Lifetime Value.
If your business thrives on high-volume sales and high turnover, then you’re probably not a subscription-based business – but you also don’t need to worry so much about customer lifetime value.
But, if your business would benefit from high-volume sales AND returning customers AND lower acquisition costs, then customer lifetime value is your metric, and you’ve probably got your answers to the above questions. The more you invest in both user experience and customer experience, the less you have to invest in customer support, leading to organic growth and a higher customer lifetime value.
Customer lifetime value isn’t a passive metric – a numerical pat on the back for when you’ve done a “good job.” It’s an active, actionable metric that can be used in a few different ways.
Let’s look at a few different ways to use the Customer Lifetime Value metric:
CLV as Profit Metric
Traditionally, customer lifetime value has been used as a benchmark for whether your business is going well or going under. You look at your CLV/CAC ratio, and if it works out to at least 3 or higher (for every $1 dollar you spend acquiring a customer, you earn at least $3 dollars) you’re in the clear. You could then calculate the CLV/CAC ratio across your marketing channels to determine which are creating the most lifetime value (invest in those more) and which aren’t.
CLV as Customer Persona Builder
Once you start parsing out which clients have the highest customer lifetime value, you can look for what they have in common in terms of demographics, psychographics, user behavior, how they found you, and other characteristics. You can then use those commonalities to create better customer personas so you can go after higher CLV clients with intention.
Predictive CLV
Customer lifetime value can be used to predict the lifetime value of new customers when you examine current behavior and purchase patterns, and then base projected behavior and patterns based on those early indicators. You might already know how to predict churn based on “red flag” customer actions, and this concept is the same but in the opposite direction. You look for retention and upsell-predictive behaviors by reverse engineering what your best customers did at the beginning, middle, and ends of their journeys with you (if they’ve ended!).
CLV as Key Performance Indicator
Customer lifetime value is a broad KPI of how well you’re serving clients, how valuable your product or service is to them, and how well you’re delivering your solution with the appropriate customer experience. It’s a great North Star metric. You know you’re headed in the right direction as CLV rises. But, you’ll also need metrics that tell you, more granularly, what’s going on and why at each stage of the customer journey. So we also use Customer Journey Metrics like Net Promoter Score, Customer Effort Score, Customer Satisfaction, etc.
Once you start tracking customer lifetime value, you can a lot with it to improve your business – which we’ll get to in Part 3. But for now, let’s look at customer lifetime value as an equation – or really, several equations.
Part 2: Customer Lifetime Value as Equation – how to crack the code of calculating this complicated metric
If you are not mathematically-inclined, I’ll make this as straightforward as possible.
Customer lifetime value is revenue you expect to receive from a customer over time, less the cost of acquiring and keeping that customer.
Here it is in equation form: CLV = (ARPU X average # of months or years retained) – (CAC + CRC)
People have been refining ways to calculate more accurate CLV ratios for years. What’s so hard? So. many. variables. Here are the basic numbers you’ll need for the CLV calculation for a SaaS business:
Average Monthly Revenue Per Customer (ARPU)
Here are all the different ways customers bring in value in a subscription software business model.
Original revenue
Renewal revenue
Upsell revenue
Cross-Sell revenue
Referral Revenue
Most calculations only deal with original revenue and renewal revenue, but that doesn’t cover the whole picture. When calculating Average Monthly Revenue Per Customer (ARPU) for our customer lifetime value equation, just remember to account for upsells and cross-sells, not just original revenue and renewal revenue. Referrals take care of themselves — they’ll show up in the customer acquisition cost (CAC) calculation because you’ll see that you’re getting more new customers without spending more on sales & marketing.
You’ll also want to know your CAC because the two are intertwined. Your CLV will increase if you are able to increase revenue from customers while maintaining or lowering your acquisition cost.
Customer Acquisition Cost (CAC)
How much you spent on sales & marketing in a given time period (learn more about this here)
Divided by…
How many new customers you gained in the same given time period
Customer Retention Cost (CRC) The cost of serving the customer is often overlooked in CLV calculation. And if your onboarding customer success and/or customer service programs are significant, you definitely want to factor in Customer Retention Cost. Totango, a Wootric integration partner, wrote a whole book on calculating CRC, but a quick estimate looks like this:
How much you spend to onboard, train and support customers in a given period
Divided by…
How many new customers you gained in the same given time period
Customer lifetime value calculation in non-subscription models
One more way to calculate CLV is through a predictive model that can be highly accurate. This method is common in consumer businesses such as e-commerce. That equation looks like this:
CLV = (Average monthly transactions X Average order value) X Average gross margin X Average Customer Lifespan*
*The average customer lifespan is calculated in months.
Segment Customer Lifetime Value to make it more actionable
Calculating customer lifetime value for your company can be revealing and is a great start to working with this metric. Like measuring NPS though, it really isn’t actionable until you start segmenting the metric. To make customer lifetime value more actionable and predictive, you’ll want to separate these numbers by customer segment and acquisition channels. That’s when you’ll be able to optimize your acquisition strategies to raise your CLV rates even higher. Start by looking at customer lifetime value by pricing tier or persona. For example, you may discover that the CLV for enterprise customers is no higher than self-service customers once you factor in the high cost of acquiring and supporting “the big fish.”
Part 3: The 4 Most Powerful Ways to use Customer Lifetime Value to grow your business
To use CLV as an actionable, predictive, productive metric, you have to segment your users and rank them by their CLV. Then you can look at the data you’ve collected on them – which acquisition channels they came from, what their first interaction was on your website, what their customer journey looked like through onboarding and beyond – to optimize each stage of the customer journey.
And then you can return to customer lifetime value as a ‘big picture’ measurement of your optimization progress.
Here are three primary ways to use customer lifetime value to optimize acquisition and retention.
1. Optimize your acquisition strategies for CLV – and use CLV to optimize your acquisition strategies.
Your CRM platform should tell you which channels customers came through to find you, and you may notice that your high-CLV customers tend to come from one of those channels over the others.
One of the most clear-cut stories of how a big company used customer lifetime value to increase profit is IBM. IBM used customer lifetime value to determine the effectiveness of their marketing channels to attract high-spending customers – direct mail, telesales, email, and catalogs per customer (yes, this is an old story – way back in 2008). When they reallocated resources to the best-performing channels, they 10Xed their revenue.
It’s low-hanging fruit to decide to spend more marketing money on the channels yielding the highest CLV clients. But we can go one step further.
2. You can use your Customer Lifetime Value to create better buyer personas.
Yes, this requires a platform that can gather all of the available information on each customer. But use whatever information you’ve got. You will find that your high CLV customers have a lot in common (though you may need to form segments for the commonalities to clearly emerge).
Once you have your high CLV buyer personas, you can use them to form marketing, outreach, and retention strategies based on their specific acquisition channels and user behavior through onboarding and retention.
For example, let’s say that you find that your high CLV clients come to you through G2 or Capterra. And once they reach your site, they don’t just “buy now” – they have at least one interaction with your live chat helpline. Your high CLV customers need a conversation before converting, which means if you tweak your G2 listing or website content answer their questions without having to reach out, you’ll likely see higher conversions from customers who’ll stick around.
3. Use Customer Lifetime Value with Customer Success for higher retention rates & referral revenue
Customer lifetime value and customer success are so intertwined as to be inseparable. Why? Successful customers don’t leave. So, when you want to improve your customer lifetime value, having a customer success program in place is one of the best ways to do it. Customer success asks, at each stage of the customer journey: What is the customer’s ideal outcome, and how can we best move them towards it? Then the customer success team can create strategies around supporting customers at pivotal moments – like places in the onboarding process where customers tend to get frustrated and leave (Customer Effort Score surveys are ideal for flagging these points of friction) or using churn-predictive behaviors to ‘red flag’ certain interactions to receive Customer Support pop-up chats.
4. Use Customer Lifetime Value to obtain more referrals from customers.
Your long-term high CLV customers are your brand ambassadors and influencers, and once you identify them, you can start to leverage that by rewarding and strengthening their connection to your brand. That could be something as simple as inviting them to be part of a free Beta testing group, so they can give you their insights into the next iterations of your product or service, or even just asking them to write an online review. Some businesses host online communities for their best clients, or offer them priority support.
Want an even easier way to identify the customers most likely to refer you to others? Learn how to use NPS surveys to not only find your promoters, but encourage them to promote you more.
5. Use Customer Lifetime Value to guide product design and validate product development decisions at the business level.
Product teams may be removed from revenue goals on the day-to-day, but strategic decisions about where to expend engineering resources should be made with business impact in mind. Product can use CLV to inform what customer segments the product should be designed for. Building CLV-related goals into user stories or feature specifications can help prioritize the roadmap and provide a success metric for retrospective once the product is out the door.
Part 4: 10 Ways to Increase & Optimize Your Customer Lifetime Value
Prioritize customer experience above everything else. And don’t just say it; measure it with metrics like Net Promoter Score, Customer Satisfaction, and Customer Effort Score. Calculate and track churn rates and engagement metrics.
Invest in customer success. Customer success drives acquisition, retention, and customer spending (upsells and cross-sells), raising customer lifetime value by helping customers achieve their ideal outcomes.
Invest in UX testing. The data you get from UX testing makes your product easier to use, reducing friction, and making it a must-have tool for your users.
Pay special attention to onboarding. Churn happens most frequently during or shortly after onboarding, so paying attention to churn-predictive behavior patterns (often identified by a Customer Effort Score survey) in the onboarding process can help you form a strategy to smooth those friction points and find easier ways to move your client towards meaningful success milestones.
Bring product management, customer success, customer support, and marketing together in shared responsibility for metrics. Collaboration between product and customer success is common, but it is a good idea to expand the team because they have so much to gain from working together. For example, with onboarding, product managers need to understand how their tech decisions affect adoption and retention metrics; and customer success teams need to have access to onboarding user data that helps them identify upsell opportunities. Some shared metrics for success include NPS, churn rate, trial conversion rate, adoption rate, and, of course, customer lifetime value.
Use CLV as a segmentation tool. This allows you to deliver appropriate experiences to customers who are high-value, and who have the potential to become high-value. The appropriate experience might be the level of customer support each segment receives, or the messaging they get throughout their buyer’s journeys. You may also find that each CLV segment has different pain points and needs, which you can target for even higher acquisition and retention rates.
Ask your most loyal customers for support. Following up a positive NPS survey response with an automated request for an online review is simply asking happy customers to follow through on what they just said they’d be willing to do. They’ve already said yes – so make it easy for them to act on promoting you. This won’t directly affect your CLV score, but it will drive down your CAC as the referrals come in.
Keep customers engaged by adding value to your product or service, or through high-value content. If you don’t have substantial updates/improvements/expansions planned for your product, you can keep customers engaged with educational materials–i.e. content that helps them reach their ideal outcomes faster and easier. This has the added benefit of being useful for top-of-funnel marketing as well.
Don’t “acquire customers” – build relationships. The customers who stay with you the longest feel like they know you. They feel like you know them. You’ve become an integral part of their daily lives, and they’d miss you if you went away. So consider changing the way you think of acquiring customers. You’re building relationships. And the more personalized and personal you make your customer interactions, the more likely your customers will feel connected to you and committed to your brand.
Maximizing Customer Lifetime Value is really a whole-company effort, requiring a great product, great service, and a deep understanding of your customers’ needs, frustrations, and desires. It’s a ‘big picture’ metric; a North Star number to guide you towards creating better customer experiences. But this one metric can also shed light on valuable segments and strategies that can profitably impact your business. customer lifetime value is a number you can’t afford to ignore.
