One of the most important KPIs for your ecommerce business
I am an active customer and marketer. I like to think about how to improve things, I always evaluate the services and products I buy and, most of the time, I like to give feedback.
Recently, a new restaurant has opened, which sells only fish products. I like fish-based food, so I tried two or three products. The personnel was welcoming and friendly, and that was a plus for me.
I went there and bought fish sandwiches a couple of times, and then I thought I should also buy a fish plate with rice and vegetables. The fish was good, but the rice and vegetables were very poorly prepared. Also, the fish plate was more expensive than many other plates I could buy from other restaurants.
I was very disappointed. I liked the business, the restaurant idea was good, the employees were friendly and nice, but that single plate disappointed me and I never bought food from them again.
The same experience also frequently happens online. A customer buys from a shop that he finds interesting. He tries one or two products and then the customer disappears. Do you know what happens next?
Nothing! Nothing happens because, most of the time, the marketing team forgets about a basic principle: feedback and improvement.
Stop for a second and think about outbound marketing. December is the right month of the year for asking feedback and also for saying a big “Thank you” to all your customers.
I want to share with you one of the most important KPIs for your eCommerce business: Net Promoter Score (or NPS).
This KPI was first introduced in 2003 in a Harvard Business Review article “One Number You Need to Grow“. The purpose of finding the NPS is to evaluate the loyalty of your customers.
To find out the Net Promoter Score, you only have to ask your customers one simple question “How likely is it that you would recommend our company/product/service to a friend or colleague?”.
The scoring for this answer is most often based on a 0 to 10 scale. Those who respond with a score of 9 or 10 are called Promoters; they are considered likely to buy more and remain customers for longer. Those who respond with a score of 0 to 6 are called Detractors, and they are less likely to come back and still buy from you. Responses of 7 and 8 are labeled Passives, and these are customers that are vulnerable to the offerings of the competition.
The Net Promoter Score is calculated by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters. For purposes of calculating a Net Promoter Score, Passives count towards the total number of respondents, but do not directly affect the overall net score.
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Finding your NPS will give you insights about how good you are in keeping your customers happy and what are your chances of getting new clients from recommendations.
But you shouldn’t stop here! Add another question to your NPS survey: “If you could improve something about our business/products/services, what would that be?”.
By doing this you will find out what are the reasons for which the Detractors don’t buy from you anymore. Also, you will find out why the Passive customers don’t recommend your business.
It’s up to you to use the insights that you get out of this short survey of two questions:
- You can make an improvement plan for 2016;
- You can create a loyalty program;
- You can set increasing the NPS as a new objective for your marketing team;
START
The most important thing to do right now is to start measuring the NPS and find out your customers’ opinions. Just do it.
You can send surveys by email, you can install website pop-ups or you could train your employees to ask the two questions after a sale is done and your customers have had the full brand experience.
No matter how you do it, just start. Use this end of the year wisely and think more about your business’ „gold mine”: the existing customers.
If you really, really, don’t have the time to do it now, make it a priority for the next year.
I wish you a 2016 with a growing number of Promoters!
Yours dedicated,
Călin Biriș
Digital Director
