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Revenue Weighted NPS

September 8, 2017
by Revenue Weighted NPS

Today’s guest blog covers a topic we love at Thanx — Net Promoter Score! Mickey from QuestionPro breaks down the math behind identifying your high-value customers and addressing their feedback.

Net Promoter Score is only one piece of the customer data puzzle. Here’s why companies should be linking NPS results to customer transaction data — especially when it comes to identifying your top spenders.Net Promoter Score is about more than simply polling for customer comments; when NPS is used operationally, it can be a systematic way to gather and quantify customer feedback in order to identify the Promoters, Passives, and Detractors among your customers. For that reason, collecting this feedback data is a great starting point when looking to understand how your business is doing in tersm of customer satisfaction. However, without customer transaction data to accompany NPS, businesses tend to treat feedback from their big spenders the same as feedback from first-timers. When the top 10% of customers are generally responsible for 40%+ of revenue, that’s a dangerous game to play. So, what if there’s a way to attach customer revenue to that equation and know exactly who is giving you feedback (and what their spending history with your company looks like) before you respond to it? While companies are just starting to tie NPS and feedback data to customer transaction history (hint: Thanx asks for NPS and feedback with every transaction, and ties it to each customer’s data profile), very few companies actually have the data to profile their customers in such a way. In our experience with data modeling, a pile of money is often left on the table when customer spend data isn’t taken into account before making decisions based on NPS. Working with your data to drive more value from customer feedback There are plenty of ways that you can slice your data to better understand who’s leaving NPS feedback for your business. One way to do this is through demographic profiling: For example, let’s say we have a hypothetical company that’s collecting experience feedback from Gen Z’ers (born after 1997) and Millennials: After calculating NPS data, the results are as follows:

The NPS Score for our hypothetical business would be 20, which is the same as the Pepsi Company and just a little higher than Corona (Customer Guru). So, one might think that the hypothetical business is in good company, as they match the rankings with these staple companies. Although there may be room to improve, it’s in a solid position and is doing pretty well. However, this isn’t the whole picture — dive a little deeper to uncover more valuable insights:

Using Weighted NPS to Gain More Insight

In this scenario, the customer CLV (customer lifetime value) is $4,000 across the board for all customers, but we can dig deeper with our segmented information. Imagine that Millennials spend more than Gen Z, let’s say $8,000 and $2,000. Though 2 of the 5 sampled customers are Millennials, they account for $16,000 in LTV, which is more than half of the business. Once you add these data into the mix, the business doesn’t seem to be doing so well amongst their most valuable customer segment:

Now you can see the kind of money that’s often left on the table. When we re-calculating NPS based on the weighted revenue data, the score from our examples ends up at -18.  As NPS becomes weighted, it becomes much clearer that this business could stand to lose more than 70% of their revenue if Detractors and Passives are not addressed.

How to Use Net Promoter Score to Drive Organizational Change

So we calculated our hypothetical company’s NPS , identified detractors, and we now know that these detractors are at risk of churning. By identifying the type of customers that are bringing more value, it becomes clear how the company can better target their outreach to appease their high-value customers. QuestionPro CX’s NPS Key Driver Analysis feature helps you determine which attitudes and interactions have the biggest effect on your overall NPS. Like most people, you have limited time and resources. If you’re given a week to fix your top two priorities, it is critical that you know which determinants or variables will yield you the biggest return. If you’re interested in learning more about calculating weighted NPS or Key Driver Analysis, take a live tour of QuestionPro CX.

Thanx collects and tracks NPS (Net Promoter Score) responses, allowing you to see trends in customer satisfaction over time, across your locations, and against industry benchmarks. Thanx automatically sorts through the noise to instantly alert you when loyal customers’ satisfaction is on the decline so you can reach out to rectify issues.

Interested in learning more about your top customers (and building a program that keeps them loyal)? Talk to us today.


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