How to measure Customer Loyalty and calculate NPS

Yaroslav Tryboi

We at Tetta Studio love metrics because they help us unbiasedly evaluate the results of marketing activities and advertising campaigns. Objective data helps our experts make real-time decisions to optimize strategies and efficiently allocate resources.

loyal customer

NPS (Net Promoter Score) – an indicator of the quality of customer service and consumer loyalty index. It shows how likely customers are to recommend a product, service, or organization to others. The simplicity and versatility of the NPS methodology make it widely used in industries ranging from retail to healthcare.

NPS was developed in 2003 by Bain and Company and is considered the gold standard for measuring customer experience. In traditional marketing, NPS is calculated using a one-question survey and a numerical scale from 0 (not at all likely) to 10 (extremely likely).

As a result of the responses, customers fall into one of 3 categories for determining the NPS score:

  • Promoters (score 9 or 10) – loyal customers who are ready to recommend you;
  • Liabilities (score 7 or 8) – satisfied customers but not motivated to be considered your promoter.
  • Detractors (0 to 6) – Dissatisfied customers who are unlikely to buy from you again and may even discourage others from buying from you.

How to Calculate NPS Loyalty Score

To calculate NPS, you need to subtract the number of ill-wishers from the number of loyal customers. For example, if 13% of respondents are detractors, 17% are passive, and 70% are promoters, your NPS score would be 70-13 = 57.

Why is customer loyalty important?

A loyal customer will make repeat purchases and recommend the brand to their friends. In this case, advertising campaigns will pay off faster. By constantly monitoring and improving their NPS, a business can increase customer loyalty, drive sales growth, and build a positive reputation in the marketplace. To work with the NPS indicator, a company needs to set up tools to optimize the strategy to retain customers and reduce customer churn.

3 Benefits of Loyal Customers for a Brand

  • It is easier and cheaper for loyal customers to sell;
  • Loyal customers can “protect” the brand in social networks;
  • Loyal customers provide quality feedback: leave reviews, do reviews, follow the work of employees, etc.

4 Interesting Facts About Loyal Customers

  1. 80% of shoppers make purchasing decisions based on their trust in a brand.
  2. Loyal customers spend 30% more than new ones.
  3. It costs 16-20 times more to sell to a new client.
  4. 60% of loyal customers tell their friends and colleagues about trusted and favorite brands.

NPS in the digital world

In the digital world of NPS, surveys are most often conducted via a mobile app or email after a purchase or service has been completed. With the development of information technology, the survey form is often supplemented with a comment field, which appears when a negative value is selected.

With the advent of artificial intelligence tools, businesses have analyzed thousands of parameters and used historical data to identify patterns and granular visitor segmentation. There are already online services that, thanks to neural networks and big data, track the target audience’s behavior and measure its loyalty in real-time. The Friendly AI Solutions website contains dozens of free AI services that help small businesses automate routine tasks and launch detailed visitor and customer analytics.

How to measure customer loyalty and increase it

Create simple customer feedback tools. This can be feedback after a purchase, bonus points for a review, a monitor with an NPS rating near the exit, or a QR code for a page with a complaint or suggestion.

Respond quickly to complaints, give discounts and bonuses to keep the client. Process customer feedback, improve website content, and improve service levels.

Talk about changes in the company and your work with staff. Customers need to know that you are trying to improve the quality of service.

Give inspiration. Think about how your brand can inspire and be integrated into everyday life. Let the brand be a source of new ideas for your target audience, even if these tips are not directly related to the company’s products.

Add some informal communication, and express emotions of joy and gratitude. Make system messages on the site and mailing list more lively and personal. Post photos of joyful employees before and after sales to show openness and mood within the company.