In Focus: Measuring Customer Loyalty with Net Promoter Score®
This quarter’s benchmark report explores a new metric available in Zendesk: Net Promoter Score® (NPS), which helps companies measure customer loyalty. Based on 103,000 NPS responses, our initial NPS data analysis reveals what a good NPS number looks like and the type of customer feedback a company can draw from sending an NPS survey.
Early findings reveal a global NPS of 33. Looking beyond the score itself, we found that 53% of survey respondents left open-ended feedback. Analyzing that qualitative feedback gave insight into how a great customer service experience can impact long-term customer loyalty.
In country news, Peru, Argentina, and Italy were our movers and shakers in Q3 with the largest gains in customer satisfaction since the previous quarter. On the industry side, travel, Web hosting, and entertainment & gaming showed the greatest improvement.
Measuring Customer Loyalty
Zendesk recently introduced a Net Promoter Score® (NPS) survey tool to help companies gauge the long-term health of their customer relationships. NPS is essentially a metric that measures customer loyalty. Tracking metrics like NPS over time can help a company quantify customer sentiment and gather valuable feedback that’s critical for an organization’s long-term success. Through a one-question survey that asks “How likely are you to recommend my company to someone you know?” a business can quickly identify which customers are their biggest evangelists and which ones are churn risks.
The value the survey brings is both in the quantitative and qualitative data it provides. The ratings aggregate to form a company’s NPS, which can be tracked and improved over time. Additionally, the open-ended feedback a customer can leave behind becomes a wealth of insights into how your customers really feel about your company and its products.
The Beginning of an NPS Benchmark
Over the last couple months, our customers have been piloting the Zendesk NPS survey tool and have sent over a million surveys to their customers. Our initial findings are based off of 103,000 responses to NPS surveys sent by 230 companies during our NPS pilot. A company must have received a minimum of 20 ratings back from their customers in order for them to be included in this report, which provides a sneak peak into our early results but is not meant to serve as official benchmark numbers. When we’ve obtained a statistically significant sample of responses, we will make our official NPS benchmark metrics available.
Aggregating this early data set yields an NPS of 33 across companies in 22 countries and 16 industries. When we look at the NPS distribution, we see that ratings tend to skew to either end of the 11-point scale with a total of 54% of responses being either a 0 or a 10. When we group the ratings by the proportion of respondents that fall into each NPS category (promoters, passives, detractors), we find that the 55% of respondents are promoters.
So are these NPS results good or bad? That depends. Your first NPS does not tell the whole story. Our philosophy on NPS is that the first score serves as a baseline. The most important part of NPS results is the customer feedback you receive. And if you’re able to address your customers’ feedback and needs, how will this impact your NPS over time?
Response and Comment Rates for NPS Surveys
In looking at response and comment rates, let’s compare NPS surveys with the other popular customer feedback survey—customer satisfaction. Both these surveys are delivered to the customer via email, as opposed to being embedded in-product or on a website.
Response rate is the percentage of customers who submitted a survey rating compared to the total number of customers you invited to take the survey. The response rate for customer satisfaction surveys is more than 1.6 times higher than that of NPS surveys. The reason for this is customer satisfaction surveys are typically only sent to customers who have recently contacted a company with an inquiry. On the other hand, NPS surveys are sent to a broader, more representative sample of your customer base, whether or not they’ve recently interacted with your company.
When looking at the percentage of customers who left open-ended feedback, we see that the overall comment rate for NPS surveys is almost twice that of customer satisfaction surveys. Even though response rates for NPS surveys are half of satisfaction surveys, the customers who do respond to NPS surveys are more likely to provide additional commentary, which translates to valuable feedback for companies.
If we drilled into comment rates based on rating type, we see that 63% of customers who submit a bad rating on a satisfaction survey will leave additional feedback, while only 25% of customers who submit a good rating will leave additional commentary. Customers who had a bad interaction with your company seem to be very vocal about it, which is not essentially a bad thing. It gives companies the opportunity to follow up and turn that experience around.
For NPS surveys, we see higher comment rates among customers who are detractors and promoters—50% and 55% respectively. These customers who skew on the ends of the NPS rating scale perhaps have stronger feelings towards the company and therefore are more likely to leave additional feedback on why they feel the way they do. Passives, on the other hand, are not just passive in their rating, but also passive in their tendency to provide open feedback with only 37% leaving an additional comment on their NPS survey response.
Analyzing NPS Survey Feedback
So what exactly are these promoters and detractors saying in their comments? We wanted to understand the most common reasons customers were promoters or detractors, so we analyzed the content of the open-ended feedback from the NPS comments of those two groups. After all, gathering customer feedback is just the first half of the equation. The second half is turning the feedback into insights that are meaningful and actionable.
In order to analyze this qualitative feedback, we looked at the strongest correlations between phrases in the open-ended feedback and whether a response was from a promoter or detractor. We ordered the list by the conditional probability that a comment is from a promoter or detractor given the fact that the phrase is contained in the comment.
This analysis highlighted the importance of customer service experiences on a customer’s overall perception of a business, such as their likelihood to remain a customer or spread the word about your company and products.
Net Promoter, Net Promoter Score, and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc. and Fred Reichheld.
About the Zendesk Benchmark report
Unlike a survey or expert opinion, the Zendesk Benchmark is based on actual customer service and support interactions from more than 25,000 companies (across 140 countries) that opted to participate. It measures key metrics around customer support efficiency, customer self-service behavior, and levels of customer engagement.
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Original Benchmark report, March 2012