5.04 – Understanding Some of The Technical Stuff
Survey data and analysis can be quite technical. Thankfully, you don’t need a degree in analytics to understand what you can and should be doing to get the information you need to run a successful business. This lesson discusses a couple of key technical indicators to help you make sense of some of your data: Net Promoter Scores and confidence levels.
Net Promoter Score (NPS)
A widely used benchmark for evaluating brand performance is the Net Promoter Score (NPS). This score reflects how likely customers are to recommend your company’s products or services to others. NPS, which ranges from -100 to 100, helps determine the potential for customer referrals and loyalty.
NPS categorizes respondents into three types: promoters, detractors, and passives.
- Promoters: Customers who score their likelihood of recommending your brand as a 9 or 10. These are your happiest customers and the ones you should nurture for referrals and case studies.
- Detractors: Customers who score their likelihood of recommending you as a 0–6. These customers are at risk, and it’s crucial to explore ways to improve their satisfaction and retention.
- Passives: Customers who give you a 7 or 8. They are neutral about your brand. Prioritising relationships with these customers can prevent them from becoming detractors or lost customers in the future.
These categories help you understand what your NPS means for retention, attrition, and potential referrals.
Many marketing platforms include NPS questions and calculators, which can help you accurately tabulate your NPS. These resources range from online survey platforms to customer relationship management (CRM) systems. Companies like Satmetrix offer easy-to-use tools. For a free service, you can try Npscalculator.com.
To provide context, the average NPS for life insurance companies is 31, department/specialty stores average 58, and internet service providers score an average of 2.
You can calculate your own NPS using these steps:
- Subtract the number of detractors from the number of promoters.
- Divide the number from Step 1 by the total number of responses.
- Multiply the final number in Step 2 by 100.
For example, with 100 total responses:
- 70 promoters – 30 detractors = 40
- 40 / 100 = 0.40
- 0.40 x 100 = an NPS of 40
A good benchmark is to look up the average NPS for your industry. Focus on surpassing your category averages and delivering experiences that keep your score rising.
Enhancing Your Surveys
Beyond determining the likelihood of customers purchasing from you and referring your brand to others, your surveys should guide product development. For example, if managing a two-year-old software product used by small businesses for planning and financials, you might ask:
- Should we launch an upgrade or continue with the current version?
- What features do you use most, and what would you like to see added?
- Does our brand messaging reflect your experience with our product?
Level of Confidence
Decide on the level of statistical significance you’re willing to accept. Aiming for at least a 95 percent confidence level is typical. Many online survey tools can determine the number of responses needed for a given confidence level. For instance, for a 95 percent confidence level with a 5 percent margin of error, you need a sample size of about 370 for a population of 10,000.
If seeking general feedback rather than concrete actions, lower confidence levels might be acceptable for ideas you can test over time.
Qualtrics offers a free sample size calculator. This tool also helps determine the confidence levels achieved with past surveys based on the number of responses. For example, with 137 responses, adjusting the margin of error to 7 percent gives a 90 percent confidence level. Lowering the margin of error will reduce the confidence level.
Increasing Response Rates
To increase the validity of survey data, boost the response rate. Consumers are more likely to complete surveys that are about them rather than solely about the company. Ask questions that provide meaningful insights for them and add these variables to customer profiles.
Avoid oversurveying. Use discretion in how much information you request and how often you ask for feedback. Keep surveys short and infrequent.
Start your survey by explaining that the information will be used to better serve customers. If responses will remain confidential, let respondents know. Transparency about the use and sharing of their information is crucial for building trust and encouraging survey completion.
