Why NPS Matters for Your Ecommerce Strategies in 2021
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May 4, 2021
Ecommerce grew more than anyone forecasted in 2020. In just Q4, ecommerce revenue was up more than 32% compared with the same period the year prior. This (kinda forced) evolution of ecommerce has opened the floodgates for consumers to shop in completely different ways than had been the standard. This means that there’s great opportunity for storeowners—more ways to provide new, mind-blowing experiences and, in reality, mess up along the way.
One of the main benefits for consumers in a more ecommerce-friendly shopping environment is that their options are seemingly limitless. Modern consumers have instant access to any brand that offers what they’re shopping for with a quick Google search, and they’re by far more likely to try alternative methods of shopping or alternative brands—75% of consumers have done so during the pandemic.
They also have no shortage of delivery options (shipping, BOPIS, drive-up,
store employee on roller skates straight to their unrolled window), payment options, and more. With a solution for nearly any consumer need or want, it’s clear that historically critical factors like price are no longer the most competitive. Today, brands end up competing based on the experiences they offer to customers.
But with experiential competition taking center stage, where can brands even start to understand how people are experiencing their online store? How customers navigate the site, how much friction exists on the way to conversion, and what they think about your brand and engagement all add up to measuring the customer experience.
Thankfully, there’s a metric that already exists that has been waiting for this time to shine: Net Promoter Score (NPS).
NPS provides an indication of the customer experience and better shopper sentiment. These factors are becoming increasingly important for brands to focus on in modern ecommerce. It’s the yardstick that measures long-term customer feedback, loyalty, and the likelihood that they’ll recommend a brand to another person to help understand the overall perception of the brand in question over time.
There are a few other ways to measure consumer sentiment. Customer satisfaction score (CSAT), for example, measures short-term happiness with a specific incident. Customer Effort Score (CES) measures how much effort a customer puts into completing a task, including resolving an existing support ticket and making a return. However, NPS is key for determining long-term customer loyalty and retention, which is where online stores earn most of their revenue, and could be the North Star for brands during this wild time in ecommerce.
NPS Refresh: What It Is and How to Measure
Net Promoter Scores are not a new ecommerce phenomenon stood up for the recent surge in shifting behaviors. NPS was first developed by Bain & Company in 2003 purely to help companies measure the intangible: customer loyalty. In its simplest form, NPS helps companies understand how to how, when, and where to delight customers in order to earn lasting loyalty and achieve organic and sustainable growth.
Measuring Net Promotor Score
You may be thinking that such an important metric is determined by some fancy-shmancy tech that records and interprets site visits, clicks, purchases, brainwaves, and beyond, then spits out the almighty NPS. Nope. NPS is determined by asking customers one simple question:
“On a scale of 0 to 10, how likely is it that you would recommend
[Organization X / Product Y / Service Z] to a friend or colleague?”
Customers who answer with 1–6 are known as “detractors,” or those weren’t very satisfied at all. Those who score their experience a 7 or 8 are “passives,” and they could take or leave your brand the next time around. And those who give 9 or 10 are deemed “promoters,” and these are the ones who are very likely to shout your store from the rooftops and come back based on their experience.
NPS scores range from -100 to 100. Generally speaking, a customer experience in the negatives needs improvement, 0–30 are good, 30–70 are great, and 70–100 is excellent. This might seem confusing since customers are using a 0–10 scale, but NPS runs from -100–100, so let’s clear that up now.
Keep track of how customers are rating your store, then follow this formula:
((Number of Promoters – Number of Detractors) / (Number of Respondents)) x 100.
Imagine this scenario:
Your 300th customer has rated your store. So far, the breakdown looks like this:
- 85 detractors
- 67 passives
- 148 promoters
To determine your NPS, you’d follow the formula:
((148 – 85) / 300) x 100 = 21
Your store’s NPS of 21 means people feel pretty good about the experience and may recommend it to others, but it’s also a major indicator that there’s room for improvement. It’s time to crack out the fine-toothed comb, go over your customer journey from acquisition to post-purchase, and see where there’s untapped opportunity to delight people and draw them closer to loyalty.
NPS Solutions Available Today for Ecommerce Stores
Brands can invest in a variety of platforms to measure their NPS score. Platforms such as Hotjar, Delighted, and Wootric are all platforms built to measure NPS. Brands can determine which platform works best for them since each platform measures NPS slightly differently, functions differently, etc. But even if an NPS platform is far off in your future, stores can always keep their eyes peeled to consumer surveys, review aggregators, support ticket analytics, and social media analyses to collect, analyze, and act on customer feedback.
Factors such as location and industry have an impact on brands’ NPS. European consumers are typically more conservative when rating their customer experience, and high scores are rare. In the United States, consumers are more likely to rate a brand well. Each specific industry type, or ecommerce vertical, also plays a role—property management and debt collection are going to have lower NPS scores than industries that typically spark joy, like entertainment and travel. Knowing your industry and location’s standards can help brands benchmark their own customer experience.
If your store’s NPS score is sitting in the negatives, look at it as an opportunity instead of a death sentence. Even while popular brands can benefit from high NPS scores, they’re vulnerable to negative scores—some may even surprise you. Disney, known for creating magical experiences at parks and whimsical family films, has a -7 NPS score. Costco, on the other hand, has an incredible 79 NPS score.
Brands have the power to improve their NPS score if it’s not up to snuff. Pay attention to your customer reviews for product defects, tech glitches, and other pain points that they have with along their journey with your store.
How Ecommerce Merchants Can Use NPS to Drive CX Strategy
In a fiercely competitive digital environment, NPS can drive your strategy in creating the best online shopping experiences. Better experiences not only differentiate your brand from the mounting competition, but they also create long-term customer loyalty, growth, and revenue.
An example of what an NPS email could look like. Fast, simple, and endlessly useful to brands.
Analyzing this data can showcase the pain points customers are facing on your website, issues with your products and customer experience, and friction they experience on their way to conversion. Defining the problems bogging down your NPS score can lead to a better understanding of your customer experience than just knowing the score.
Creating an engaging and enjoyable customer experience through your digital channels will differentiate your shopping experiences from other ecommerce sites. The entire customer experience, from the moment they begin interacting with your brand until the package with their purchase in it is delivered, plays into a brand’s NPS score. The principles that drive that metric are a brand’s best tool for creating a better overall experience.
With better experiences, brands can boost their customer loyalty and keep their customers coming back time and time again. NPS is the loyalty metric to look to in 2021, and kicking it up even a couple points could mean big payoff in the future and loyalty that lasts beyond the pandemic. Customer experience is more important than ever and it’s high-time that brands start focusing on creating the best customer experience they can, from that first touch all the way through the post-purchase touch points of tracking, delivery, and issue resolution.
No matter where ecommerce is headed (spoiler: It’s only going to keep expanding), turning your sights toward customer experience and the resulting loyalty and repeat purchases is crucial to growth. Steeply discounted prices and two-day shipping are no longer the gold standard that customers expect—it’s all about the experience your brand delivers today and for as long as we can see.