All companies lose customers – every month. Looking at all transactions per month, around 15 percent of these result in loss of customers. Considering that a six percent customer churn per month is enough to halve your customer base within a year, it should be clear that:
Companies and shops are well advised to strengthen their customer loyalty, avoid customer churn, thereby not only preventing loss of sales but actually increasing them. This is where zenloop with its Net Promoter ScoreⓇand Net Promoter SystemⓇcome in and support companies in their efforts.
Our Shopware Technology Partner zenloop explains in the following guest article how the project with the Net Promoter ScoreⓇand the Net Promoter SystemⓇcan be implemented.
What exactly is the Net Promoter ScoreⓇ?
First things first: Net Promoter ScoreⓇ– what exactly is it? The Net Promoter ScoreⓇ(NPS) is essentially a key indicator that provides information on customer loyalty and the probability that customers will recommend a particular company or its products and services.
The score is calculated on the basis of a simple, standardised customer survey that is made up of the following two steps:
1. On a scale from 0 (very unlikely) to 10 (extremely likely), how likely are you to recommend our product/company to friends and colleagues?
2. What is the main reason for your assessment?
Using the Net Promoter SystemⓇ, customers are then divided into three categories based on their scores:
- Detractors or critics (score 0 to 6)
- Passive or indifferent customers (score 7 and 8)
- Promoters or fans (score 9 and 10)
System und Net Promoter ScoreⓇwere developed by Fred Reichheld (Bain & Company) with the aim of providing companies with customer feedback and data in a simple way, to allow new goals and indicators for further action to be gleaned from this process. The standardised format of the Net Promoter ScoreⓇalso simplifies a comparison with other companies.
More than just an index: Converting NPSⓇfeedback into actionable measures
When looking at the Net Promoter SystemⓇas a whole, however, it is actually much more than just an index. In addition to the quantitative feedback, it is important for a company to also focus on the qualitative feedback by analysing and assessing comments. Specific feedback can then be fed back to the organisation, communicated to relevant stakeholders and used as targeted input for improvements, strategy development and company forecasts.
The success of this targeted undertaking depends on the ability to convert feedback into actionable measures and close the feedback loop in the correct way. In short, this means to take customer feedback on board and use follow-up strategies such as:
Responding to customer feedback individually and showing appreciation
If customers provide feedback, they put in time. Thanking the customer for the time they invested and the input they provided is the company’s responsibility. Templates and text blocks can scale down the answers as far as possible, thereby keeping the effort required by the company as low as possible. Retention platforms can also be used to personalise thank-you pages depending on the score.
Important: If text blocks and templates are used for answers and response to feedback, personalised design must not be neglected. The more specific a response is to the feedback provided, the more positive this is going to be received as appreciation is expressed for the effort. At a minimum, however, there should be a response to the score provided by the customer.
- providing an apology for the negative experience for detractors,
- asking for what is missing that would turn it into a special experience for passive customers,
- and saying thank you and expressing happiness about positive feedback and praise for promoters
Extracting specific information and identifying problem areas for improvement
Analysing feedback in detail and responding to feedback or asking more specifically about the reason for the score allows for identification of problem areas, gathering specific customer experience information and formulating opportunities and requirements for improvement.
In this manner, hidden bugs can be identified that you didn’t even know existed. Company products and the company system can thus be enhanced to provide missing options in line with customer wishes. The functionality of existing processes and features can also be improved and adapted to customer requirements.
Actions can be defined and prioritised in line with customer preferences and customer experience can be enhanced in the long run.
Preventing detractors from leaving and winning them back with a personalised approach
Closing the feedback loop correctly and renewing contact with respondents can prevent detractors from leaving altogether or turning to the competition.
Detractors often have relatively low expectations of companies. A win-back approach with personalised measures offers huge potential for improving customer relations, winning back detractors and even turning them into promoters.
Important to know: The most loyal customers are often former detractors.
Activating promoters and utilising them for recommendations
Another way of closing the feedback loop in a profitable way is the activation of promoters. These are the real fans of the shop and its products. It is therefore appropriate to couple a thank-you message to promoters with a friendly request for recommending the company to others including links to relevant review portals. A referral programme can be of benefit to further increase promoters’ motivation to recommend the company.
All in all, a high quota of promoters can save marketing and advertising costs and support the acquisition of new customers.
Increasing sales through customer retention
Improving customer retention through the use of the Net Promoter SystemsⓇalso results in increased sales. The more promoters a company has and the more detractors and passive customers it can convert into promotors by entering into long-term relationships, the greater the sales opportunities.
Promoters have a higher customer lifetime value: not only would they buy again but they also buy more often and spend more money when viewed over a particular time period. A greater retention rate therefore equates to a higher repeat purchase rate, a higher purchase frequency and a higher average order value.
In terms of numbers:
- On average, a promoter’s purchases are around four times that of a detractor.
- The average shopping basket value of a promoter is around 62 percent higher than that of a detractor.
- Compared to passive customers or detractors, promoters show a significantly increased purchase rate when it comes additional services and products.
- Moreover, ten promoters typically generate one new customer, thereby creating additional sales.
An increase in customer retention also results in an increase in total sales.
Using a plugin to automate customer retention and increase sales
Connecting your shop to retention management platforms via a plugin couldn’t be simpler. With just a few clicks, customer retention can be measured and converted automatically, allowing for accurate business growth forecasting. Retention management platforms such as zenloop ensure the following:
- High response rates for NPSⓇsurveys thanks to custom integration and optimised user friendliness
- Configuration of individual alarm messages and reports as well as instant internal forwarding of critical topics
- Automated analysis of customer comments via smart labels and identification of reasons for customers leaving
- Targeted and immediate address of critical customers based on feedback
- Utilisation of loyal promoters and fans for free recommendations of the company’s shop or products
- Motivating and informing employees through visualised real-time feedback as well as customer focus via transparent customer feedback
Detect any loss of customers with zenloop and start winning them back now
Using the zenloop plugin, Shopware shops are now able to easily query and analyse the NPSⓇand use relevant insights to increase long-term customer retention in a targeted manner. In addition, the zenloop software enables you to increase the CLV and prevent customer churn. This way you get to know your business from the customer’s perspective and can elevate customer experience to the next level.