Net Promoter Score August 16, 2016 5 min read by Alex

The Benefits of Implementing Net Promoter Score in Small Businesses

The Benefits of Implementing Net Promoter Score in Small Businesses

From GE to Apple, many of the world’s biggest companies use Net Promoter Score® to measure and track customer sentiment. Most swear by NPS® as the most accurate and effective means to measure loyalty and satisfaction among customers.

But what if you’re not one of the world’s largest companies? What value can NPS provide for your much smaller, much more hands-on business?

Most people associate Net Promoter Score with big business due to its usage by large brands and Fortune 500 companies. Bain & Company, which developed NPS, estimate that two-thirds of the Fortune 1000 use Net Promoter Score to track customer satisfaction and loyalty.

The popularity of Net Promoter Score among big businesses doesn’t mean it’s less useful for solo businesses – in fact, it means quite the opposite. As a small, one-person business, you can benefit even more from using Net Promoter Score to assess client satisfaction.

Here’s why:

  • As an individual, you receive feedback directly from clients and can take action almost immediately. If a client is unhappy, you can reach out right away. If they’re very happy, you can touch base to thank them for their business. This speed is an advantage that larger businesses don’t have.
  • Approximately 65% of new business comes from referrals, making word of mouth your most valuable marketing channel. Since you don’t have the multi-million dollar marketing budget of a Fortune 1000 brand, maximizing referrals from happy clients is an excellent way to bring in new clients and fuel your service business’s growth.
  • Net Promoter Score gives you an accurate read on the quality of your service, sourced from a diverse sample of your clients. By tracking your business’ NPS you gather full knowledge of its strengths and weaknesses.

Bringing Net Promoter Score into your business is simple, and the results of implementing NPS principles can be immediate. Below, we’ve put together a simple process for using NPS to learn more about your clients, earn more referrals and generate more business.

Benefits of using NPS for small businesses
Benefits of using NPS for small businesses

Value qualitative feedback as much as your NPS itself

When using an NPS service to send a survey to your customers, you get both a quantitative score (a rating from 1 to 10 of the likelihood of the client recommending you to their friends or colleagues) and qualitative feedback.

For a service provider, the qualitative feedback you receive is just as valuable – and perhaps even more valuable – as the score each client gives you.

The reason for this is simple: a score explains what each client thinks of your service. Written feedback explains why they have this impression.

By digging into the qualitative feedback you gain from surveying your client, you can learn why clients like your service, as well as what they dislike.

For example, an analysis of the feedback you receive from Promoters is a great cross-section of your service’s strengths. Review what clients love about your service and you’ll discover the key types of value you provide, giving you clear benefits that you can state to new prospects.

Review what passives have to say about your service and you’ll discover small improvements that can transform you from good to great. Review feedback from detractors and you’ll discover your biggest weaknesses and clear points where improvement is essential.

As a service professional, one of your advantages is the ability to respond to precise feedback quickly. Take qualitative feedback seriously, and don’t make the mistake of viewing NPS as an entirely quantitative metric.

Sort feedback to learn what your clients like the most

If you have an active base of more than 100 clients, you can sort their feedback into categories to learn what they love the most about your service.

Help desk software company Groove used this tactic when it first started using NPS and found that one of its features – its simple user interface – was listed as the feature customers valued the most.

Sorting the feedback you receive from clients can help you learn which aspects of your service have the biggest positive effect on your average level of client satisfaction.

Organize your customers' feedback
Organize your customers’ feedback

You can also find opportunities to improve your service to generate more revenue while earning better feedback.

For example, if customers rank price as the aspect of your service they like the most, while also delivering complaints about service quality, you can deduce that an increased focus on quality is a smart investment even if it results in a slight increase in pricing.

In addition to sorting and categorizing feedback, it’s important to sort and categorize the sources of your feedback. If you have a diverse client base — for example, small businesses, individuals and larger companies – sort their feedback into categories based on the type of business.

By sorting both your feedback and feedback sources into categories, you’ll learn which types of clients are ideal, and which aren’t a good match for your business.

Use a low score as an opportunity to win back detractors

As an individual, rather than part of a large company, you’re in an excellent position to take swift action and win back clients after receiving negative feedback.

An astonishing 89% of customers [see the report in PDF] claim they would switch to a competitor after receiving a poor experience. Respond swiftly and positively and you could win back a large percentage of upset or disappointed clients, and even turn many into valuable promoters.

This is called “closing the loop” and it’s an important part of retaining clients. When a customer provides feedback through NPS, they enter into a loop. This feedback loop lets you learn from their feedback and subsequently use their input to improve your service.

One of our articles reveals why closing the feedback loop is important. Aim to delight detractors by offering to fix the problems they highlighted (or better yet, going above and beyond to deliver an experience that exceeds their expectations) and you’ll win many of them back.

As a service provider, individual clients can have a significant lifetime value. Act quickly if and when you discover a client is a detractor and you could turn them into a valuable, enthusiastic promoter.

Understand statistical significance and margin of error

Since one-person service businesses have far fewer clients than the average product business has customers, it’s important to understand how a lack of statistical significance can affect your Net Promoter Score.

When you survey a small audience, statistical noise – unexplained variations that occur due to a small sample – can affect your data. The smaller your audience, the greater the level of noise, leading to large swings in your Net Promoter Score that might not be completely accurate.

Before you assign too much value to a single month’s Net Promoter Score, calculate the margin of error based on the size of your survey audience. If your client base is small, it will take longer for you to reach a statistically significant Net Promoter Score.

This post on StackExchange offers more insight into how sample size can affect your NPS as a customer satisfaction metric, as well as how a small sample size can affect the accuracy of each customer “bucket.”

Start using NPS to retain clients and generate more referrals

As a freelancer, consultant or service professional, Net Promoter Score is a highly effective tool for retaining clients, learning how people feel about your service and increasing the number of referrals you receive.

Retently helps you automate Net Promoter Score, letting you generate valuable feedback from clients while you focus on running your business. Sign up and launch your NPS campaign today.

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