Without segmentation, NPS becomes just another KPI that makes eCommerce managers even more confused.
The Net Promoter Score (NPS) is a metric that shows how many customers are willing to recommend a product or service to others. This is one of the most important KPIs for any eCommerce business to track since it is the only one that gives an insight into future customer behavior.
NPS represents the difference between the percentage of Promoters and the percentage of Detractors.
Understand more about how NPS works, here: The Smart Marketer’s Guide to Net Promoter Score (NPS)
In theory, this looks like a good metric to rely on. However, like any number, it can have different meanings for different people, according to the know-how of the observer, his biases, his way of INTERPRETING data, and the depth of that data.
In a fiercely competitive environment, where customer experience is vital to eCommerce survival, NPS can deliver nothing more than an ‘average number’ that cannot tell the entire story about your customers’ experience with your shop. This may cause many eCommerce managers to make wrong decisions based on misleading NPS scores.
Three ways to avoid misleading NPS scores, and improve your store’s experience
- Mind the gap: Pre-delivery vs Post-delivery NPS
One way of getting better insights from your customers about their experience with your store is to calculate the NPS at two key moments: before and after delivery.
In Omniconvert Reveal, we call these pre-delivery and post-delivery. By using this method to look at data, you can learn the extent to which, in your customers’ eyes, you have kept your promise. Without this extra set of customer intelligence analytics, the NPS in itself is an ambiguous number, like so many other over-hyped and underused metrics.
Constantly keeping an eye on this difference lets you understand how well the ‘under-promise, over-deliver’ principle is respected throughout the customer journey, as well as how customer expectations match with the reality you propose.
- Treat the objections in real-time, not after one quarter. Or worse, never.
Most companies monitor NPS with the help of external providers, who send their questionnaires and then…nothing happens!
In such a fast-paced commercial environment, however, typically customers’ expectations are to have their problems solved instantly. They don’t want to be called 2-3 days after an incident or, even worse, to be completely ignored.
Here is our proposed methodology, which takes into account segment & scores in order to be able to act in real-time.
Download the pdf here
A healthy and desirable NPS trend would be to show more of your best customers also being promoters. If you do not see this happening, then perhaps some of your long-term customers may be at risk of churning (leaving you), which means you need to look into what’s going wrong in their customer experience.
Find the common pattern among your passives, and start to work towards resolving those pain points, so you can turn those passives into promoters. As for your detractors, focus on your ‘high’ detractors (e.g. with a rating of 4-6) and work on moving them up at least to the passive group.
Lastly, do not forget your promoters. Understand why they love your business and make sure they, and others, continue to receive that same experience.
An easy way of achieving this is by making sure you know when a customer goes from being a promoter to being a passive or, even worse, a detractor.
In order to achieve the segmentation of your customer base based on buying behavior, Advanced Customer Intelligence is required. That can be done through RFM Analysis and Segmentation.
⏩ Learn how to do Effective Customer Segmentation through RFM Analysis
RFM (Recency, Frequency, Monetary) Analysis reveals data anomalies that allow eCommerce managers to discover the most important groups of customers when they balance the customer acquisition cost with the margins they generate.
RFM Segmentation, on the other hand, is a method of identifying the most important types of customers by grouping them according to their RFM values. This allows companies to target specific clusters of customers in a way that is more appropriate to their particular behavior – thus generating higher rates of response, increased loyalty, and better customer lifetime value. RFM Segmentation automatically creates customer groups such as VIP, Active, Dormant, Lost, and so on, so that eCommerce professionals can reward each group according to its value.
By monitoring low NPS scores for different RFM Groups you will be able to craft and deliver unique experiences to your customers across all channels and throughout your service and product range, in the process avoiding churn and increasing both customer satisfaction and customer loyalty.
- Look behind the average: segment NPS responses
We rely way too much on averages to be able to make ‘data-driven’ decisions.
Relying on averages for anything is the best way to keep great insights from outliers hidden away in our data forever. Such little differences could, however, hold great meaning.
The average Net Promoter Score removes the most interesting facts from our analysis. Without being aware of this, how can we hope to improve anything?
Wouldn’t it be great to know which customer segments, brands, cities, or commercial tactics provide the most Promoters or the most Detractors? The average NPS disguises this.
Don’t you want to know what accounts for outlier performance at either end?
Averages cover up insights
This is why a smarter way of looking at NPS is to monitor it from brand, customer segment, location, or other perspectives, so as to understand where you have hidden opportunities.
Monitor NPS by brand
Sometimes your best can become your worst. Take the following sample scenario.
Part of your differentiation strategy is to introduce new brands into your product range in order to increase variety. As hoped for, the customers are receiving a new brand well enough, and it becomes a best-seller. Maybe the prices are attractive, or perhaps the images are appealing, and different people are persuaded to purchase products from that brand.
However, what if, after purchasing that brand, the same buyers are disappointed and will never return to your shop to purchase anything else ever again? That fact remains hidden from you since you don’t track the retention rate at the brand level (the subject of a future article about customer retention & returns).
The benefits of monitoring NPS by brand:
- Customer churn prevention
- Better promotion campaigns
- Better product assortment
Monitor NPS by customer segment
Not all customers are created equally.
Some are more important for your company than others. However, most companies rely on their regular financial reports, showing how much revenue was generated by various brands, product lines or locations. Customer-centric companies are focusing heavily on their customers, segmenting them, and monitoring their experience and behavior, because they understand that they are the main reason for their company’s growth.
As can be seen above, a significant part of the revenue and margin is generated by the soulmates, the true lovers, and the ex-lovers. If you run RFM segmentation on your own eCommerce operation, you’ll find the same kind of anomalies in your own data: Pareto was right.
The benefits of monitoring NPS by customer segments:
- Customer service resources can be allocated according to customer value: better customer relations with the customers that matter
- Crafted loyalty programs that take into account the voice of the most important customers
- Better Lifetime Value
Monitor NPS by other variables
Want to apply this strategy?
Enjoy the ride with Omniconvert Reveal!
You can analyze your NPS, which will give you a better understanding of why your detractors are at risk of leaving you, what’s keeping your passives from further recommending your store and products, and why your promoters love you.
Customer experience is essential for business growth.
Although the net promoter score is a great way to monitor customer experience, in order to assess growth, you need to take the next step.
In the new-experience economy, customer experience matters more than price, more than products and, indeed, more than pretty much anything.
The loyal customers are the ones who bring repeated and predictive revenue to your shop. However, as our research has shown repeatedly, very few eCommerce companies actually measure and design tailored customer experiences for their ‘Day Ones’, i.e. the loyal customers. Instead, companies are trapped in the acquisition mantra, bringing in new cohorts of buyers that can give eCommerce management the impression of ‘growth’. If, however, these new customers are not nurtured properly, they will feel this, and will churn after the first purchase.
Regardless of field or channel, customer experience comes down to the way a customer perceives a brand, based on his or her interaction with it across the customer lifecycle. It’s all about the sum of micro-experiences and a continual flow of communication between customer and business. This includes pre- and post-sale impressions and encompasses both online and offline experiences.
How was it? Do you have any questions for us?
PS: On a scale from 0 to 10, what is the likelihood of recommending this blog to a colleague, peer, nephew or your boss? 🙂