This article was originally published in March 2016 and has been revamped and updated.
Does your company retain its customers or repel them? Customer retention is one of the most important aspects of growing your company, yet it’s one that many companies ignore to spend more time focusing on acquiring new customers.
The longer your company can retain its customers, the greater the value of each customer you acquire. The key to retaining customers is extremely simple: deliver value, and provide a great experience that makes customers want to stay with you and recommend you.
By far the most effective way to measure customer satisfaction and loyalty is via Net Promoter Score®. We’ve discussed the value of Net Promoter Score in depth here, noting that it’s one of the most important growth metrics most startups and companies never bother to track.
Sometimes, the best way to realize the importance of something is to see it in action. We’ve studied companies with high Net Promoter Score — brands like Apple, Netflix and Amazon — to find out what unique characteristics set them apart from their competitors in customer loyalty.
The benefits of a high Net Promoter Score
The three brands we examined were Apple, Netflix and Amazon. Each company had an NPS that’s significantly above average for its industry:
- Apple has a Net Promoter Score of 72, which is 40% above the 32% average for the computer hardware industry
- Amazon has a Net Promoter Score of 69, which is more than 30% above its industry average
- Netflix has a Net Promoter Score of 68, positioning themselves above the competition
The biggest benefit of high NPS for these brands is retention. The average Netflix subscriber will stay with the company for 25 months, giving Netflix a significant amount to spend acquiring each new customer, all while letting them know that they’ll earn back their investment in a timely manner.
In an industry where the largest brands rank among the “most hated companies in America” (online and cable entertainment), Netflix’s high NPS is a serious achievement that has a measurable impact on the company’s ability to retain customers.
Apple has even more impressive customer retention. A report by RBC Capital Markets shows that 83.4% of Apple iPhone users planned to continue using the iPhone, compared to just 64% of Samsung users who planned on remaining loyal to the Samsung brand.
The company’s customer loyalty has been described as “almost fanatical” by analysts, helping Apple win and retain more long-term, loyal customers than rival brands like Samsung and HTC.
Amazon’s ability to retain customers is even more incredible. Programs like Amazon Prime — a membership-based customer loyalty system — have built Amazon an audience that pays to be as loyal to the online retailer as possible in exchange for benefits like free shipping.
Beyond retention, these brands have fantastic word of mouth marketing as a result of their high brand advocacy rating. Because Apple, Amazon and Netflix users are such active promoters, they bring in new customers at no significant marketing cost for their respective brands.
What do Apple, Amazon and Netflix all have in common?
1) Simplicity and reliability
Apple, Amazon and Netflix all consistently score above their competitors in NPS. One reason for this is the simple reliability of each of their offers. All three companies have spent a great deal of time and marketing effort to highlight their relative simplicity next to their competitors.
Until recently, “it just works” was a phrase you heard very frequently in Apple presentations. The biggest initial selling point of Netflix was its simplicity — a great online entertainment service that saved you time. Amazon has invested a great deal of resources into making its sales, shipping and return processes as simple and reliable as possible.
Because these companies offer a simpler, more reliable product or service than the competition, their customers are incredibly loyal. People ultimately don’t want to switch from your product to a competitor’s offering, but they’ll do it very quickly if yours is unreliable or too complicated.
You don’t need the design focus of Apple or the incredible amount of A/B testing that Amazon performs to become a simpler, more reliable option. Any step that makes your product a more reliable, dependable choice increases the value a customer gains from staying with you.
2) Deliver easier, faster and better services
Despite having millions of customers, NPS leaders know the value of customer retention.
After all, in this competitive world, promising reliable offers is not enough; you need to deliver services in a tangible time-frame, reduce customer effort and improve output, all while keeping the unit economics of the business equitable.
So, how do they do it? Well, there’s no one-size-fits-all approach to delivering an effective customer service experience, but here’s how Apple, Netflix and Amazon have handled it:
Collect customer information:
How many times have you been frustrated not because of the actual problem, but because you had to explain the problem twice or thrice to different customer service executives?
That’s exactly the kind of trap that NPS leaders like Netflix, Amazon and Apple avoid.
For instance, once you have registered a complaint with Amazon, you don’t have to keep repeating the problem over and over again. The records of customer complaints are persistently stored in Amazon’s centralized database, and can be accessed conveniently by any customer service executive.
Apple is known for storing their customer’s names, and personalizing interactions, like the ones mentioned in this Reddit thread.
The tactic might not increase the number of promoters, but it goes a long way in reducing the outflow of detractors, thereby improving your Net Promoter Score.
Apple, Amazon and Netflix provide a single sign-on feature that lets you access all the services in the ecosystem using just one credential.
For instance, you can use your Apple ID to access all services hosted by Apple; you can use your Amazon ID to place orders, access AWS services, or purchase books on Kindle. Similarly, you can purchase a single Netflix subscription and use the credentials to stream content from any of your devices.
But, wait… how does a single sign-on implementation improve NPS?
In rather simple terms, NPS is just a metric that evaluates the referability of your brand. The more referable your brand is, the better the NPS score.
By making users remember just one credential for accessing the entire ecosystem, you make the product experience simple and easy-to-use.
The counter-argument to using multiple login credentials has been that it makes the ecosystem secure and less susceptible to malicious attacks. But, the question need to ask is – should security come at the cost of convenience?
And, even if you don’t consider that argument, think about this – if you have multiple login credentials for a single user, how are you going to accurately track customer behavior?
For instance, if Amazon used different credentials for accessing different services, how would it accurately analyse brand advocacy? It’s perfectly possible for user X to love purchasing from Amazon, but hate the Kindle experience. If he/she uses different login credentials for accessing these two services, there’s no way Amazon could accurately map the user behavior, which just refutes the point of delivering a consistent and personalized experience.
By associating a unique customer ID with every customer, you can accurately measure your NPS score and identify customer behavior (promoters/detractors/passives). You can also personalize features, keep track of customer complaints and deliver a consistent customer experience.
3) Great customer service
All three of the companies we’ve profiled have fantastic customer service. Apple via its large network of retail stores, Netflix through its excellent phone and online support, and Amazon through its online customer service system.
Returning a product to Amazon is simple. Fixing a broken Apple device is straightforward. If a subscriber runs into a problem while using Netflix, it’s easy to talk to a real person. The brands that achieve the highest NPS don’t just focus on reliability — they also focus on great service.
This goes beyond the “great” to which most companies aspire. Amazon has made headlines in the past for refunding small balances of 16 cents to customers when the price of an item they’ve previously ordered decreases — a small action that most companies wouldn’t bother with.
Customers remember small actions, whether they’re positive or negative. Offering extra service and value to your customers, even if it’s a tiny 16 cent post-sale discount like Amazon offered to one of its customers, shows customers that you truly care and inspires fierce brand loyalty.
Responsive and accessible:
If you look at how Apple, Netflix or Amazon resolves complaints or interacts with their customers, it’s pretty evident that they leverage multiple channels – from social media, emails to live chat and telephonic support for addressing customer complaints.
Why do they connect through multiple channels? And how does being more responsive and accessible affect customer success?
According to a study by Touch Agency, more than one million people view tweets about customer service every week, out of which 80% tweets are negative or critical in nature.
That just explains how critical it is not only to listen to what your customers have to say, but also to respond to their queries.
If you’re not using social media to connect with these detractors, you’re only messing up your NPS score, as people are 2x more likely to tell people about their bad experiences than good experiences. That’s the reason these brands have a dedicated social media team for handling customer grievances and responding to them.
Moreover, while most people prefer a telephonic conversation to resolve a “critical” issue, not every customer wants to call you. For low-level issues, customers prefer engaging with passive modes of communication like emails, live chat or text messages.
Your customer experience must be optimized towards providing seamless multi-channel support, with the most accessible channels put above the fold, and the least accessible channels below the fold.
For instance, Apple’s help page tries to address customer issues by asking them questions about the problem and redirecting them to self-help content. Since reading an article is a much easier task than connecting with customer service executive, customers feel motivated to look for a solution in order to save time.
It’s only when they don’t find any help, the page encourages them to initiate a live chat, talk to a customer care executive or send an email to the company explaining the problem.
Encouraging users to resolve problems on their own reduces customer queries and improves “wait-time”. It also brings only the critical queries to your customer service department, thereby improving efficiency and effectiveness.
As per a study published by BenchMarkPortal in 2005, timeliness matters as much as the quality of your email response. Customers feel agitated when they are forced to wait for long, since they misinterpret the “wait-times” for indifference.
But, optimizing your customer service experience to be more connected and accessible to your customers has a net positive impact on overall customer happiness and brand reputation, thereby improving your Net Promoter Score.
4) Unique products/offers
One of Apple’s biggest selling points is its unique hardware and software. No online store even comes close to matching the scale of Amazon. There’s no streaming service with a larger range of content than Netflix (although Amazon’s competing service comes close).
Companies that rank far beyond their peers in Net Promoter Score don’t just offer great service and reliability — they also offer a product or service that’s unique within their industry. They’re a clearly defined, differentiated option that sits within its own category.
The more different your value proposition is from that of your competitors, the more your brand stands out. When you become a unique option within your industry, you’re no longer “another” choice — you’re the only choice many people will consider.
This helps you earn customers, and it also helps you retain customers. If you can offer a unique form of value and wrap it up with excellent service, simplicity and reliability, you’ll earn the same excellent customer loyalty as brands like Apple, Netflix and Amazon.
One of the keys to achieving tremendous business success lies through continuous innovation. Amazon has innovated with Amazon Go and Alexa, Apple with AirPods and Apple Watch, whereas Netflix was able to break away from the competition with its huge video library, exclusive content and original programming.
A recent study by Accenture revealed that more than 90 percent of executives believe that long-term success of their organization’s strategy depends on their ability to develop new ideas.
In order to successfully innovate, encourage your team to think creatively. A great example of this approach is Google, which is allowing its engineers to spend 20% of their work week on projects that interest them. Google was able to come up with great products and innovations, including Google + conversations and Adsense.
Look for ideas everywhere. That includes listening to your customers and your team. If you are using Net Promoter Score survey, when asking for customer feedback, ask them how you could improve your product or service.
We’ve previously written about the importance of NPS for Product Managers, Growth Hackers and Marketing Managers. We’ve talked about its value for providing valuable customer feedback that gives you plenty of ideas for uncommon innovations. Listen to their thoughts carefully and choose the ones that best fit your needs and goals.
Investing in innovation is critical if you want to stay ahead of your competition and attract consumers. People love owning unique products or bragging about their extraordinary experience, which is why innovation is so important.
5) Unique customer experience
Amazon is the world’s leading eCommerce website, with presence in more than 15 geographies and annual sales of $107 billion (2015-16). It sells approximately 323 million products to more than 304 million customers worldwide.
Netflix is the world’s most popular online streaming service with a combined viewership of 33.42 million and peak period downstream traffic of 37.05%. By 2020, Netflix’s penetration rate is forecasted to be around 35% in countries like Canada, Argentina and U.K.
Notice what’s common between all these companies?
All these businesses have managed to convert their unique product offering and unfair advantage into intense customer loyalty, thereby making them market leaders.
If you think about it, you realize that Apple does not make the cheapest smartphones; Netflix does not provide free streaming unlike YouTube; Amazon does not lure customers with cheap discounts or flash sales.
They just deliver unique experiences that people want to talk about, and that’s how they increase their customer satisfaction and Net Promoter Score (NPS).
Once you’ve created a unique product experience that people want to talk about, the next step is to be consistent in your efforts. After all, it takes months to win a customer, but only seconds to lose one.
If you look at Apple’s product line and feature set, you’ll realize how hard they worked to deliver consistently great user experience. Every Apple product feels premium in hands, regardless of the generation. iCloud makes it easier to sync content, while handoff mode lets you seamlessly switch calls and apps between devices. Also, if you’ve used an iPhone before, there are chances that you’ll have no problem adapting to using an Apple Watch or Macbook.
The same goes for Amazon and Netflix.
Amazon provides great customer experiences, regardless of the size of your order and the frequency. It doesn’t matter whether you order from the app or through the website, the shopping experience stays consistent. Netflix lets you stream your favourite movies or shows at the same speed, irrespective of your device, genre, time or location.
When a company consistently delivers great customer experience, they infuse customer loyalty and motivation to talk about those experiences.
The next important aspect of delivering a unique customer experience is personalization. According to Genesys Global Survey, 38% customers believe personalization plays a vital role in delivering happy customer experiences.
For instance, Apple Music uses personalization to pick the best soundtracks for every user. Amazon analyses browsing history and past orders to improve product suggestions. Netflix uses the power of AI and machine learning analytics for personalized video recommendations.
Personalization makes customers feel that you’re delivering a one-to-one customer experience, thereby improving user engagement and customer satisfaction. And it’s only logical that these happy customers are more likely to recommend your brand than unhappy customers.
6) Build Brand Loyalty
If customer success is the process of orchestrating your customers toward their desired outcome, brand loyalty is the end-result.
Brand loyalty enables you to eliminate price sensitivity, beat competition and mitigate exorbitant marketing expenses. After all, why do you need to spend on advertising, when you can turn your customer’s social capital into your economic capital?
Net Promoter Score is nothing but the measuring scale of customer success, with brand loyalty as the measurement unit. The reason Amazon, Apple and Netflix have high NPS score is because they have succeeded in building up immense brand loyalty.
So far, we have discussed the strategic factors that go into delivering a great customer experience, but brand loyalty is about going up the Maslow pyramid. It’s about making customers “own” your brand).
So how do these brands do it?
Here are three parameters that Apple, Netflix and Amazon have used to build brand loyalty and grow their NPS score:
According to the principle of paradox of choice, customers feel less anxious when they have lesser choices to make.
For example, let’s say you want to buy a smartphone. You can either spend hours researching the best Android or Windows smartphones in the market, or you can just buy an iPhone. Apple has built the reputation for making quality smartphones, which is the reason people “feel” good about the brand.
In a similar way, you would rather order stuff from Amazon than take the risk of trying a new online store. It’s because Amazon has built up the reputation of #1 online marketplace.
Reputation is about building customer trust, so that they feel comfortable sharing information and transacting on your platform.
It’s the most vital ingredient for brand loyalty, because customers are unlikely to recommend brands that have a bad reputation or are not trustworthy.
“Divide responsibility and nobody is responsible.”- Edward Deming
Amazon has managed to practically kill ‘brick-and-mortar’ businesses by instilling great accountability into their business model. For instance, you can order anything from Amazon, and return it within 15 days, if you don’t like it. If that’s not enough, Amazon even refunds customers the price-difference on items they recently bought.
Apple is known for making accountability the cornerstone of its management, with one single individual responsible for success or failure of a business strategy. From replacing iPhones to offering free credits to customers for overcharging, Apple lives by its founder’s ideology of upholding long-term credibility over short-term profitability.
People buy from businesses that have high accountability and credibility, as it reduces buyer anxiety and makes them confident about making future purchases.
Measure and improve your Net Promoter Score
Do you know your business’ Net Promoter Score and how likely your existing customers are to recommend you to their friends and colleagues? If you’re ready to get started with NPS, we’d love for you to give Retently a try. We’ve spent a lot of time designing and building the easiest NPS survey product out there. We know you will love it!
Update: We also posted another article that you might find interesting “What Do Companies with Low Net Promoter Score Have in Common”. Read it here.