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Have you ever ordered a product or used a service and a few days later, you received a survey with one question: On a scale from 0 to 10, how likely would you recommend us? This one-question survey is basically what leads to calculating the Net Promoter Score (NPS). NPS is an essential eCommerce KPI to improve customers' loyalty and revenue. In this article, we will go through everything about NPS for eCommerce and how to improve it to scale up your business.
Table of contents:
- What is Net Promoter Score (NPS)?
- How to Calculate Net Promoter score (NPS)?
- What is a Good Ecommerce NPS?
- What Are Ecommerce NPS benchmarks?
- Why is NPS so important for your online store?
- NPS for eCommerce best practices
What is Net Promoter Score (NPS)?
The Net Promoter score (NPS) measures how likely your customers are to recommend you to others. This KPI is related directly to brand loyalty and customer satisfaction. Only loyal customers and satisfied customers are willing to recommend your brand to their social circle. A strong NPS means you have many promoters and brand advocates, which means more sales and revenue!
How to Calculate Net Promoter score (NPS)?
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Step one: Send your customers the Net Promoter Survey: "On a scale from 0 to 10, how likely would you recommend us?"
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Step two: Go through the responses and divide your customers into three categories:
1- Promoters: Customers whose answer was 9 – 10
Those are your brand ambassadors who will give a powerful word of mouth. You should work on building a long-lasting relationship with them and maintain their loyalty to you through great incentives and starting loyalty programs.
2- Passives: Customers whose answer was 7-8
This group is neutral to your brand. They were satisfied with their experience, but they are not super enthusiastic about recommending you as promoters would do. You should pay attention to this group to win them as promoters instead of ignoring them and losing them to other competitors or worse, them turning into detractors.
3-Detractors: Customers whose answer was 0-6.
Lastly, customers who won't recommend you. Those are undoubtedly disappointed customers who had a bad experience with your business, and you must act immediately and reach out to them to better understand what went wrong and how to turn their experience around to win them over. When detractors are ignored, you are not losing them a returning customer, but you are also risking the possibility of them spreading bad word of mouth about you. In simple words, bad reviews.
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Step 3:
After categorizing the customers' responses, the final setup to calculate the NPS is to subtract the percentage of detractors from the percentage of promoters.
NPS = %Promoters – %Detractors
So, if 80% of respondents were Promoters and 20% were Detractors, your Net Promoter score is 60.
What is a Good Ecommerce NPS?
Any NPS 0 or negative is super alarming that customers are not happy and needs to be actioned immediately. On the other hand, an NPS between 1- 30 is good with areas for improvement. NPS above 30 means you are doing really well. It indicates that your customers are happy and satisfied and will likely turn into loyal customers and brand ambassadors.
What Are Ecommerce NPS benchmarks?
Ecommerce is a large industry with a huge number of sub-industries; fashion, food, sports equipment, supplements, electronics, home products, etc. So providing a specific benchmark wouldn't make sense and can be misleading.
However, as an eCommerce business owner, you can search for NPS benchmarks for your specific industry and for your direct competitors. On a general scale; SurveyMonkey found that the average NPS is +43, and according to Satmetrix, the average NPS score for online shopping retailers is 45.
Why is NPS so important for your online store?
1- Social proof and word of mouth
When you have a large number of loyal customers who are willing to promote your brand to their friends, families, and co-workers, this means easy customer acquisition and revenue growth. BrightLocal found that 84 percent of participants use online reviews and friends to determine which products or services to use. Work with your promotors through incentives and loyalty programs to get them to share great reviews or even write testimonials for you.
Discover 8 Types of Social Proof for Your E-commerce Store and How to Use Them
2- Eliminating bad word of mouth
Tracking NPS means you are keeping an eye on detractors or unhappy customers. By reaching out to them in a timely manner, you can listen to their feedback and turn their experience around. By this, you are not only eliminating the chances of them spreading bad word of mouth and turning customers away, but you can even win them as loyal customers.
3- Improving customer experience
Talking to your passives and detractors and hearing their feedback can help you improve your customer experience and make the right decisions toward achieving customer satisfaction.
4- Standing out among competitors
The eCommerce industry is growing bigger and bigger every day, and you need to stand out in this vicious competition. Having an army of brand advocates and a large data of excellent reviews and testimonials will help you win customers over other competitors.
NPS for eCommerce best practices
1- Send the survey to all your customers
Don't target top spenders only or recent customers only. Try to treat all your customers as equals and learn about their experience. Sending your NPS survey to a selective group of customers can result in you getting an artificially high or low score than the actual score, which will consequently make it difficult for you to take the right actions.
2- NPS is not just a number
NPS is a very simple and straightforward metric. However, don't get deceived by this simple number. You need to dig deeper to understand what went wrong with detractors and what could have been improved for passives to become promoters.
3- Celebrate improvements and don't get distracted by benchmarks
Focusing too much on beating the benchmarks can put you down. Instead, celebrate improvements in your NPS score. Keep analyzing areas of improvement and do more of whatever worked well for your customers.
4- Take immediate action on NPS surveys
The faster you react to detractors and passives the more likely you can win them over. Never waste the opportunity to listen to your customer's feedback and take the right actions to offer excellent customer experience and post-sale service.
5- Segment NPS responses
NPS score can be a very generic bulk number. What can make it easier to understand is breaking it into segments. NPS by location, NPS by product, NPS by channel, etc. It is also important to segment the NPS responses as pre-delivery or post-delivery NPS. In other words, are the customers giving their opinion based on the ordering process, shipping, and delivery? Or based on using the product after receiving it?
6- Setup recurring NPS surveys
Keep measuring NPS frequently to track how much you and your team have been improving and what else you could be doing for better customer loyalty and satisfaction.
Final Thoughts:
Net promoter score (NPS) is an essential KPI for eCommerce. Treat NPS surveys as an opportunity to grow and to learn about your customers, and don't get too stuck focusing on the number but on the feedback behind it. Celebrate with your team every small improvement and embrace with them the NPS spirit to motivate them to create the ultimate customer experience and to win many loyal customers.
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