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The Digital Utopia Podcast Episode #43

What is NPS, and how can your company use it?

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Ep 43

About the podcast

The Digital Utopia Podcast is for SMB Marketers and Business Leaders looking to align their Marketing, Sales, and Service departments so they’re part of one powerhouse growth team.

Each episode will dive into the strategies, philosophies, and tools that will change your approach to organizational growth, give you renewed focus and clarity, and allow you to build a brand that not only helps you stand out—but win.

The Digital Utopia Podcast is produced by Digitopia and hosted by Frank Cowell and Joseph Freeman.

Episode transcription

Frank
Hey, gang, welcome to the digital utopia podcast, Episode 43. I'm your host, Frank Cowell and I'm joined by my co host,

Joe
Joseph Freeman.

Frank
Today, we're going to talk about something we mentioned in the last episode, we touched on it just a little bit. That's NPS, the net promoter score tape, we're gonna talk about, what is it? Why does it exist? What are the ways to use it? And how often should you be using it? So Joe, let's talk about NPS Net Promoter Score. Now this is become an industry common thing, where you measure the sentiment of your customer database, and, you know, whether they're what we call promoters or detractors, but it was a it's something that I think a lot of people get confused about on how you actually come up the measurement and when you're supposed to use it. So let's talk about that today. So yeah, we can find out, you know, be clear on exactly what it is and, and how to implement into their business.

Joe
I think that how to implement is the most fun part of this, because so many people, not so many people, some people do NPS surveys, and then what do they do with that data? Well, I think let's unpack a little bit here today, what you can do with that data. So let's go What?

Frank
Go for it go for Joe.

Joe
What is NPS?

Frank
Yeah, so what is NPS? So it was we said it stands for Net Promoter Score. And what it aims to do is give you one number, that is the barometer, if you will, on the customer database that you have, and how many of them really are promoting your brand versus detracting from your brand. And so it's like a net composite score, that the Net Promoter Score survey is one question. And one question only. And it is this based on a scale of one to 10, where 10 is very much so and one is never in a million years? how likely are you to refer our brand slash product to your friends, slash colleagues? That's it? And that's the question how likely are you to refer 10 being a huge fan and one being I wouldn't refer you in a million years? That's it. Just the one question. Yep. And that's all you ask. And then we hear a moment, let's get into, I'd love for you to explain the calculation what you do with those answers. Because it's not just an average, right? You don't just say, oh, out of our 1000 people we surveyed, we got an average of 7.2. That's not how you do the calculation for Net Promoter Score. There's a very specific formula. But I just want everyone to understand that's the question. It's a one question survey. So if you ever get these emails after you buy something, and it literally has this question, how likely are you to refer us and it whether it's to a friend or a colleague, depending on whether it's a consumer or business, right? You get that question in an email, and then you see those little boxes one through 10. And they want you to click on one, that you're getting a net promoter score survey sent to you. Mm hmm.

Joe
Yeah. So if you've never done one of these before, it is exactly that it's 012345678910. And the way that it breaks down is up to six. You are considered a detractor. So if you as the consumer, or the customer, click on you know, zero through six, you're a detractor. If you click on a seven or an eight, you're considered a passive and, or neutral. And if and if you click on a nine or a 10, you're actually a promoter, right? So that would go into a lot of what we talked about fans and evangelists, your promoter, you're out there, spreading the good word. And so as Frank mentioned, this is not an average. So what happens is, let's use real numbers here, if you sent this out to 100 people, right? And if 50% of those people, so actually 50 of them clicked on passives, that's a seven or an eight. And then let's say that of the remaining 50, we had 20 of them hit detractor, and 30 of them hit nine or 10, which is a promoter, right? So what we're going to do is we're going to throw away the passives because they're neutral, we don't really care. So 50% of our scores gone right there right. Now the remaining 50% we said that 20 of them were detractors, right, 30 of them were promoters. So what we do is we simply subtract that number, the

Frank
percentages. Yeah, it's very clear. We're going to we're going to subtract percentages, not just raw numbers. So we're using right now 30 equals 30%. That's just because of the convenient math of 100. And in the sample, but if it was 542 you know, was the total you set out? What percentage were the nines and 10s? And what percentage were the sixes and below?

Joe
Yeah, so in this example, that's absolutely right, we are going to be left with 20%. Right?

Frank
Both 30 minus 20.

Joe
We're going to be left with 10%. Thank you, we're going to be left with 10%. And so we knock off the percentage, and that means we have a net promoter score of 10.

Frank
Which is terrible. By the way,

Joe
It's pretty bad. Yes, that's a bad one. It's pretty bad. So again, just to recap, we're going to throw out the passives, we're going to subtract the percentage of promoters from the percentage of detractors, and that is our number, the number we report is not a percentage. So if you come up with 40%, the number you report is 40. You have an NPS of 40. Pam. So let's talk about that. What is a good NPS, Frank?

Frank
Well, you know, what's funny is, I think, when people first aim to do an NPS, and they first launched NPS, they, you know, they think in terms of normal percentage scores of like, we want to be 90% great with our customers. So we expect a 90 NPS. But as you just went through an example they're getting 90 is near impossible, right? So good scores, if you look at some of the top brands in the world, they have scores in like the 60s, as an example. And you might find some that are a little more a little less than a great brands. But that's generally where you're going to find them. And again, that's just because to your point, you only take the percentage of promoters minus the percentage of detractors, and that becomes your score. So when in case of having, let's say, 60, as your total NPS, you may have had something like, you know, let's call it 90%, you know, in in one, or that's not a real number, but you may have had like at minus 20, right? Like that might have been how you get to 60. So if you get into the 60, you're doing really, really well. Yeah.

Joe
So let's do one more tangible example, just to make sure that we're, we're separating percentages, right. So if we only sent this out to 10 people, and of those 10 people, let's say all 10 actually responded, right, and say that eight of them were nines and 10s. Those are promoters, let's say one of them was a seven, and one of them was a three, so you've got one passive and one attractor in there yet, we're going to toss out the passive, right? And so that being ignored completely, just ignore it completely. So that means of the eight promoters, that's 80%. Yeah. And then we had one attractor, that's 10%, we're going to subtract that, which leaves us with 70%. That means your NPS in this example is a 70. Yep. Which is actually really good based on what you just mentioned.

Frank
Yep, that's, that's a great score a really great score. And so that's why you'll see again, the top brands in the world, if you go look them up there in the 60s, I think one of the top ones was like 67, you know, which is ridiculously high from an NPS standpoint. So don't take your traditional one to 100 rating that you're used to grading yourself on. And we're 97% to our goal, and we're, you know, 100% to our goal, it's not that, you know, real readjust your expectation on what your NPS score is going to be. And if you've never done this, you might go into it and say, Hey, if we get 50, let's be happy.

Joe
Well, yeah, and for me, just like everything we do, especially when we're starting to uncover metrics in the business for the very first time, maybe don't even worry about what it is. You just get it, get it and say that is what it is. It's not necessarily good or bad. I mean, it actually might be bad, but it is what it is. And now we have a benchmark to base our goal setting against right. Now we say, Okay, well, we, yeah, we've got benchmark of 10. Next time we send this out, we want this to be a 20. Right. And so I think that's the most important thing, don't get yourself down about, you know, all of the detractors you have the first time you send it, you might actually find you have a lot of detractors you didn't know about?

Frank
Yeah, which is a good thing to find out, you know, because if otherwise, the the other thing you could be doing is just never asking and never finding out and then you wonder why your churn and retention is your churn is high and and you just don't know why. So this at least gives you a place to start investigating.

Joe
Yep. So let's talk a little bit about how often we should be sending these out. And then I want to talk about what to do about it, because again, we've you know, we've come in contact with a lot of businesses that are actually doing this, and then they put it in a report. And that's it. It's a report, they don't actually do anything to actively change it. And so I want to get into that quickly. But first of all, how often do you think you should be sending out these NPS surveys?

Frank
You probably have a lot of different answers to this question. And so it really depends on the flow of your business. You know, how often are customers cycling in what size is your customer base? To give you a general answer, knowing that it can vary based on your business. I like every 90 days, if you notice that we talk a lot about quarterly, quarterly rhythms on this podcast. So I'm a fan of also putting that on a quarterly rhythm. Yeah, I think that's really important.

Joe
Yeah, I think that works. And I think just depending on the relationship you have with your clients and the type of service or product you have, then you just have to be cognizant of, you know, potential fatigue in there. But, you know, that's up to your business,

Frank
we should also point out that the larger the customer base, the more accurate This is of the sentiment of how well you're doing as a company. You know, if you have, in your example, a moment ago, 10 total customers, you have 10, I don't know, if you need an NPS, right, you should just talk to those 10 people, you should talk to those 10 people, you cycling through those people every quarter, and let's say that's your business, you're just built on these high value service contracts, you're your small boutique firm, you don't need an NPS, you don't know you need to be talking to every one of those 10 customers. So the more customers you have, and harder it is to talk to every customer, the more valuable a tool like NPS will be to your business.

Joe
That's a great point. You know, I would say though, if you're talking to them, you should build this into a regular conversation. Even this question specifically, you know, how likely are you to refer us and you can even take their answer as likely or not very likely. And here's why, or, or whatever. And you can interpret what that means. But once you get that data, you got to do something with it. Right? So if you have a big database, and you get a whole bunch of data back, that's, that's fantastic. But that can be very overwhelming, especially if you have a lot of detractors in there. What do we do about that? Right? So what we usually coach companies to do is start small and build on it, but have something happen for every score range in there, right. So for the detractors, if you get an attractor, have something happened. And that could be as simple as an internal alert, right? If somebody comes back with a score of three, maybe that goes in as an internal alert to the marketing team, maybe it goes to the service team, depending on how your organization is structured, and who should be in charge of this. But you should set up a series of events, and those events could be a someone's gonna call and reach out to this person and see what's going on and how we can make this better for them. It may be that you've got too many, and you're not going to do that individually. And so you're going to put together some sort of a plan to help r&d, the customer experience. I mean, whatever you do is up to you.

Frank
You could even have a follow up survey question go out, and what's the number one thing we can do to improve as a brand? And just you have an open ended? An open ended answer box. Yeah. Right. Like at this point, like, just hear the words and see the words, you know, you don't necessarily need another, you know, choose one, pick, all right, apply, like, at this point, I would just start asking those people, Hey, tell us what what can we be doing better as a brand and someone should be poring over those? Yeah.

Joe
And actually, most companies that we work with they if they're going to doing anything with this information, it usually is on the detractors side. And that makes sense, right? Oh, no, there's a there's a fire, let's go put it out. Right, they start figuring out what campaigns we can run, what products we can improve what experiences who needs to be talked to, right? A lot of times, they are kind of just doing that with or without a defined process behind it. Where we see people dropping off is in the passives. And in the promoters, right, so passives great, we got passives promoters, great, let's go pat ourselves on the back and give high fives we're doing a great job, right, right, or wrong, because what you should be doing. So let's talk about passives. If you get passives back, you don't want them as passive. That's, that's not a bad thing for us. But it's kind of a bad thing for us, because what we really are aiming to do is to build fans, evangelists, right. So those actually represent no man's land for us. So we need to have campaigns put in place so that when promoters are sorry, when scores come back as passives something happens to make them no longer passive, but to make them super excited. So that could be special promotions. for them. That could be some extra love. That could be a box of doughnuts. I mean, it could be any number of things, but it has to be something that's prescribed and hopefully, you know, the the follow up is somewhat automated so that the people on your team know what's next. We got a score back. That was a seven. What's next, right?

Frank
By the way, if you if you do want to send us a box of donuts, not gonna oppose that. That's a great idea.

Joe
Yeah, yep, donuts. The Key of Frankie's

Frank
doughnuts are always a great idea, folks.

Joe
And so that my favorite one is is really the promoters. Again, oftentimes you get promoter scores back and all you do is give you so yourselves high fives and we don't really want that but we want to do is to get in front of them and say one Thank you. Thank you so much for being so excited and so loyal to the brand, to what can we do better? I know you're super excited about it, but what can we do better for you and three, this is a perfect time to be asking them for testimonials. Yeah, every time to be asking them for case study, you know, video interviews, maybe it's a perfect time to ask them for a backlink on their website to yours. Anything you can think of that while they are excited to promote you ask them them to promote you, they just said they would ask them to promote you,

Frank
you know, I love that you're bringing this up as an example, Joe, because we've talked in the past about mapping out your macro funnel, you know, the macro funnel of your business. And I think oftentimes when people think about the funnel of their business, it stops at Okay, that the bottom of the funnel, they became a customer. But beyond that, there are moments in the customer relationship that continue to contribute towards your your revenue, your profit. And those are things like reviews on websites, testimonials, participation, case studies, like you mentioned, backlinks, they're all these things that actually create a flywheel effect. And that's why I call it the macro funnel like at the large, you know, looking very large at that the scope of your business through that customer journey. Most people forget after they become customer, I think you bring up a really great point as that Net Promoter question. And then for your nines and 10s. Like, go in for those, you know, macro funnel inflection points, that's a great way to combine the two and give a system to to doing that in your business.

Joe
Yeah. So for our friends who are not doing this and are interested in doing this, let's talk a little bit about how you might get started with, you know, some NPS surveying? Right? I mean, there's a number of ways and go ahead.

Frank
Yeah, I was gonna say who should be looking at NPS? Before we talk about how to get impolite Who are the people that need to be looking at this score regularly? First of all, I assume, you know, marketing sends this out? Or does customer service in this out and then to who should be aware of this number?

Joe
Yeah, that's a good point. So we almost always have the marketing team send this out, this is kind of a, you know, a marketing sort of right in their wheelhouse sending emails putting together, you know, the campaigns and flows that would facilitate this type of an activity. So marketing team, but then that, of course, should be reported to all of the department's marketing, sales and service. And of course, your executive team probably wants to know about this too, right? Because what's going to happen, depending on what the scores come back is, is you're going to need in some ways, all hands on deck to help facilitate the next steps, right? If it's, if they come back as promoters, need to figure out who is going to go ask them for the testimonial for the case study who's going to sit down with them and actually interview them about these things, who's going to implement, you know, I mentioned a backlink who's going to do that you need to have this all planned out. And if it's all the way down at the zeros, 123 fours and the detractors, you need to know who is in charge of making that better. Oftentimes, that's the service team, right? That's the service team needs to be alerted by marketing that we got some bad scores. And they need to be given a list of people to reach out to to fix this. Yeah, right. That's so obviously, you can figure this out on your own in your own organization, depending on your size and the personalities involved. But generally, we would have marketing send this out. And almost always, we have service on the backside kind of following up to make things better if they're bad. And if they are already good, or if they just need to be made a little bit better for your passives. Usually marketing sales can work together for that.

Frank
Yeah, that's great. That's really great. And of course, as you mentioned, the executive team absolutely needs to know every time the score is updated, and it should be tracked. And you should be able to see this plotted quarter by quarter. So you can see where the trend is going, you know, to get a 50 score and itself is not bad. But it's bad if your previous score was 65. You know, hold up alarm bells, what's going on, but if your previous score was 40. Great, that's something to celebrate.

Joe
Yeah, absolutely.

Frank
So implementation.

Joe
Yeah, so there's many software's I mean, you can just google NPS and you'll come up with some software's to do this. We of course, use HubSpot or HubSpot fans and HubSpot comes with a service hub that will allow you to do this it's it's already baked in. But even if you don't have a service hub, you don't have HubSpot. Even if you're only using MailChimp or something like that. You can still do this, right, you can just create an email. And you can create little calls to action in the forms of links. And, you know, hyperlink a zero and a one and a two and a three and a four and hyperlink all those up and write out the question. And when they click on one of those links, you know, in the most rudimentary way, just hyperlink each one to a different page. And when they land on that page, the page simply says, Hey, thanks so much for the feedback. But behind the scenes, you now know how many people clicked on link one, Link two, Link three. And depending on the email software you're using, like I mentioned, MailChimp, you should know Who did it to, you should be able to go in and pull a list of everyone who clicked on that link in that email. And therefore, you can pull a list of detractors of passives and of promoters. So that would be a really basic way to get started.

Frank
Yeah, and if you're ready for a little nerd hack here, Joe, nerd, it, you could do a link to the exact same page and just put a different anchor link on there. So pound one, pound two, and so on. So if you want to make this really easy, just link to the same page that says thank you. And then if your your MailChimp software will tell you what percentage clicked on each link. And there you go, there's your your total numbers that you need to know, for your net promoter score. So to your point, let people shouldn't complicate this, like there's no reason why you can't get this question out to your database.

Joe
So I'm going to nerd hack challenge you there. Most software's don't actually track hashtags, they will track parameters. So if you put a question mark, one, you know, number equals one number equals two number equals three that would track

Frank
There you go. Let's do that.

Joe
We're getting too geeky here.

Frank
Yeah, two, super fun stuff. But the point, developer, the point being, yeah, Joe and I are former programmer nerds. The point being, don't complicate this, right.

Joe
Don't complicate it. No, no, this is simple. This is a single question. And where it gets complicated is when you get the answers back and do nothing about it, then you're just wasting your time. Yeah, so you don't need to overcomplicate this, just figure out who's clicking on what, and then figure out some basic follow up for each of the three buckets, your detractors, your passives. And hopefully, you know, the most percentage of falling in two promoters for you. Great, great. Awesome. I think that's it for this week.

Frank
Good. Well, hope you folks have enjoyed this little discussion around NPS Net Promoter Score. I would encourage you folks to take action today and get that question sent out to your database. And you could do this in a matter of a day, you can get them sent out today. And by the end of the week, you can start to see what your net promoter score is, and then track it over time and see how well you're doing. Thanks for joining us for this episode of the digital utopia podcast. I look forward to seeing you again here next time. Take care.
 
 
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