Being familiar with NPS (Net Promoter Score), which is a popular metric to measure how likely a customer is to recommend your service, you notice a drawback; it doesn’t tell you the whole story. NPS is not perfect, so how could you dig deeper and understand the reasons behind the score? The best practice is to segment your NPS and conduct cohort analysis (breaks customers into related groups for analysis). In this tutorial, we will show you how to use segmentation to get further customer insights into NPS.
What is NPS segmentation and cohort analysis
Even if your company has only one product or service, your customers have different needs and are bound to the company in different ways. Segmentation lets you slice the NPS for particular user cohorts. By analyzing these cohorts, you will find out whether everyone feels the same or the score is result from high ratings by one cohort and low ratings by another. Then you can work on your product or service specifically targeting the users in the particular segments, thereby improving customer satisfaction efficiently.
How to segment NPS respondents
These are six major ways to segment NPS for cohort analysis. But If you have users in multiple regions, be aware of cultural differences in how people rate on a numerical scale. Although it’s hard to measure the cultural impact, it may change how you define your NPS segments. Now, let’s see how to segment your NPS. Within each of the three categories (detractors, passives, and promoters) group them in the following ways:
Where is the customer in the customer lifecycle? Customer satisfaction differ by stage. If most of the detractors are from one stage, you’d better check on what’s happening there and fix the problem(s). In this way, you could make detractors into passives or even promoters. Here is an example of the customer lifecycle for SaaS business:
How long have they been your customers? Does the level of satisfaction increase or decrease along the journey? The best way to figure it out is to put customers who signed up at the same time into the same group. Time-based cohort analysis is particularly useful in looking at churn. For SaaS businesses, customer churn will likely peak at the start but will stabilize later on. Without a cohort frame, you may not see the pattern and end up making incorrect conclusions about customer retention.
What is the user’s role within the company? Customers from a sales and financial department require different features of your product/service. Tracking their feedback will give you a direction on how to customize user experience. Besides, the actual users may not have a say in the ultimate l decision. You’ll need to compare user NPS and admin NPS to see if there’s a inconsistency.
Is the type of service plan affecting their happiness? If so, you may need to improve the features, especially on the less favorable ones. For example, you are using a freemium model and find those free users to be the happiest. It could be your product or service doesn’t deliver the value that paid customer expected. But If this is common that the free users are happier, then you’d better avoid tracking the segment since it is wasting your valuable resources. You should instead focus on turning paid users to promoters.
How often do they use your product/service? Actions speak louder than words. So look at what they actually do in their account. For example, if you see a trend that promoters are the most active users among three categories, you may want to get detractors and passives more engaged. You also want to get insights from your promoters about product feature usage to drive engagement for the passives and even detractors.
Does the quality of support impact customer happiness? If you find out that the detractors usually give low score on CSAT (Customer Satisfaction by answering “How would you rate your overall satisfaction with the product or service you received?” on a scale of 1-5), customer support or rarely reach out for help, you could strengthen your support service and actively offer help to your customers in need.
Detractors, passives, and promoters are not the same. Dig deeper into NPS insights so that you can determine what makes up each category, prioritize customer segments, and develop better strategies for each value segment. Last but not least, customer sentiments change constantly so keep measuring NPS regularly, keep close relationships with your customers, keep providing them values, and keep them loyal for life.