The Financial Impact of Customer Experiences
Most business owners think better customer experiences can lead to higher revenues, but no one seems to really know how much of an impact is possible. This leads to a simple question: how much revenue can be gained—or lost—due to customer experience as measured by Net Promoter Scores?
A recent article provides specific answers based on Net Promoter Scores (NPS) and revenue for two common types of online business: a transactional business selling products and a subscription business selling memberships. Before looking at the results, let’s review NPS.
About Net Promoter Scores
NPS provides a numerical rating based on the response to one simple question:
“How likely is it that you would recommend [company] to a friend or colleague?” Responses are scored based on a 0 to 10 scale and categorized as follows:
- Promoters (score 9-10) are loyal customers.
- Passives (score 7-8) are satisfied customers.
- Detractors (score 0-6) are unhappy customers.
Knowing a company’s NPS suggests whether a particular customer is loyal, satisfied, or unhappy. Among other things, NPS can help to predict whether customers will continue purchasing (Promoters), might consider your competition (Passives), or will soon stop buying (Detractors).
Better Customer Experience Can Double Revenue
Want to double your revenue from existing customers? Try this:
- Product Sales: shift customer NPS from Detractor to Promoter.
- Membership Sales: shift customer NPS from Passive to Promoter.
Businesses that sell memberships (subscription sales) have an even greater opportunity to increase revenue by moving NPS Detractors to NPS Promoters to quadruple revenue!
The Bottom Line
Improving customer experiences is one of many ways businesses can increase revenue so every business should survey and track the NPS of each customer to support better decisions. Providing customer service may seem expensive, but it could be more affordable than investing in marketing to find new opportunities or sales to create new customers.