A guide to loyalty and NPS: everything you need to know about customer experience and loyalty

You’ve heard the age-old adage “the customer is always right”. Whether you believe this or not, there is no getting away from the fact that the customer’s satisfaction is always the right benchmark when it comes to customer experience and loyalty.

Ecommerce retailers use NPS (Net Promoter Score) to measure how likely customers are to recommend them to friends and family. This gives merchants immeasurable insight into how happy customers are with the experience they’re receiving, and therefore how likely they are to come back and buy again. In this blog, we will look at:

• How to calculate NPS
• Why should you care about NPS?
• How can a loyalty program help you boost your NPS?

How to calculate NPS

In order to calculate NPS, customers are asked to state how likely they are to recommend a company or product to friends and family, using a number between zero and 10.

Responses to this question are then grouped according to:

• Promoters (customers who answer 9-10)
• Passives (customers who answer 7-8)
• Detractors (customers who answer 0-6)

Your overall NPS can be calculated by subtracting the % of your customers who are Detractors, from the % of customers who are Promoters. For example, if when surveying 100 customers you found that 35% were Promoters, and 15% were Detractors, your NPS would be 20.

Generally, any NPS above zero is considered good, however above 50 is excellent, and if you can make it to above 70 then you could consider yourself world class.

Why should you care about NPS?

1. Reduce customer churn

It’s five times more expensive to acquire new customers than to retain existing ones, so being able to identify customers that are at risk of churning is hugely beneficial to ecommerce retailers. However, NPS is also empowering for customers. Research shows that 62% of consumers feel that it’s important to share their opinions on how brands can improve. A net promoter score survey can help you drive retention by showing your customers that you’re listening and open to their feedback.

2. Encourage positive customer behaviours

Customers are four times as likely to buy when referred by a friend or family member, and 74% of consumers say that word-of-mouth is a key influencer in their purchasing decisions. The more Promoters you have in your NPS survey, the higher the likelihood of them making referrals or leaving positive reviews for either your products or your store more generally. An NPS survey also makes it easy to identify those Promoters and reach out to them with incentives to encourage and reward positive behaviors.

3. Identify changes in customer experience and loyalty

Changes in NPS give you a far clearer view of which way your customer experience and loyalty is trending. For example, an increase in Promoters is a positive sign, whereas an increase in Passives or Detractors should be seen as a red flag. This allows you to use direct customer feedback to track the impact of changes that you make to your loyalty program. Changes in NPS can help you evaluate and optimize decisions quickly and efficiently, and with far more than your gut feeling to go on.

How can a loyalty program help you boost your NPS?

1. Implementing a feedback loop

Your loyalty members have already shared their data with you and they are expecting you to be in touch, so reach out to them and implement a feedback loop.  Ask them to give you a score, but also take the opportunity to ask them some more in-depth questions. These are your most engaged customers, so not only will they be honest but they will also be willing to participate. However, if they are not, your loyalty program is a perfect vehicle to incentivize their responses with double points, free shipping or other rewards.

2. Use rewards to respond to low scores

Lower-scoring NPS responses should not be brushed under the carpet. They should be carefully considered and used to drive improvements. However, while you make those improvements, empower your customer service to use rewards as a mechanism to reach out to Detractors. Giving your team the ability to offer them perks such as early access to your next sale or moving them up a subscriber tier, can encourage customers to return to make a repeat purchase and limit the risk of them churning.

3. Say thank you to promoters

As we’ve already mentioned, your loyalty members are your biggest fans and they are the ones most likely to act as advocates for your brand. Identify those Promoters who have given you a great score and then reach out and ask them to leave you a positive review or referral. Thank them for any positive activity with rewards such as points towards their next purchase. It’s also worth looking out for Promoters who are actively advocating your brand across social media, and ensuring you recognize and reward their support.

If you’d like to find out more about using NPS to drive good customer experience and loyalty, get in touch and one of the LoyaltyLion team will be happy to help!