For most companies, especially SaaS companies, losing customers is a major problem. The importance to know how to reduce churn with NPS® and understanding customers needs has become predominant. You will find many writings about the Net Promoter Score (NPS). But, the more attention it gets, the more difficult it becomes for people to truly understand the power of the NPS. It’s not about the score itself, it’s about how you use it. In this blog post, you’ll discover 5 steps to reduce your churn by using your NPS as it should.
1. Make sure you know what NPS means
The Net Promoter Score measures customer experience, which means that NPS can also reduce churn. And it’s based on just one question: “How likely is it – on a scale from 0 to 10 – that you would recommend our customer service to a friend or a colleague?” There are three categories of respondents:
- Promoters (score 9 or 10): loyal and enthusiastic customers, who are eager to endorse your company to their network.
- Passives (score 7 or 8): satisfied customers but not enthusiastic, and remain inactive in terms of advocacy.
- Detractors (score between 0 and 6): unhappy customers, who might damage your brand by sharing their negative experiences.
Your NPS is calculating by subtracting the percentage of detractors from the percentage of promoters. So, your NPS ranges from -100 to 100. For example, if you have 60% promoters, and 15% detractors, your NPS is 45. That seems to be quite low, but you need some context to interpret your score and reduce churn with NPS.
But, what is a customer churn?
Churn is when a customer ends their business relationship with a company. The cost of churn means lost revenue but also time and new effort to replace these customers. It is well known that it is more difficult to acquire a new customer than to do business with an existing one. Sometimes, the acquisition cost of a customer has not been covered by this customer, which is also a significant cost. Businesses need to be able to understand the reasons why customers churn. NPS is a very effective way to reduce churn if used correctly of course.
2. Benchmark your sector
An NPS score means nothing without benchmarking. Your customers’ scores are always in the context of how they experience your sector. That’s why technology companies reach on average a higher NPS than public sector organisations. Of course, you want your NPS to be 100 to reduce churn. But in most industries, that’s impossible. A good example is the media industry, where the average NPS is as low as 35. So, if you’re a media company with an NPS of 40, you’re doing a great job.
3. Identify different types of customers
NPS scores give you great insights into how different customer groups relate to your customer service. Combined with other customer data, you could identify different groups. You might as well combine your NPS data with other customer satisfaction surveys, to get even better insights. Allowing you to know where to start to reduce your churn.
4. Share the results of your NPS and surveys
After analysing your data as you should, it’s time to share the results throughout your company. Even if honest customer feedback can be quite scary, it’s the only way to have a clear view in the mirror. It’s important to share a reliable and sincere analysis to reduce churn with NPS. Moreover, sharing feedback makes your employees more empathetic towards your customers. What motivates them to reflect on how they can improve customer care.
5. Act accordingly to reduce churn with NPS
Analysis has no meaning without the lessons you learn and the action you take afterwards. Do you know why your detractors aren’t satisfied? Why your passives aren’t engaged? Then you’ve got all the knowledge you need to reduce your churn and improve customer care. And you can start as soon as today. Contact our expert’s team to create your NPS and reduce churn in your company.