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CX is the brand differentiator in this saturated market landscape. Customers have more alternatives to do business with, thus increasing the competition in every niche. Building strong relationships with customers can help drive brand loyalty.
But how does NPS fit in?
Fred Reichheld called NPS the “One Number You Need to Grow,” indicating that NPS drives revenue growth. With increased satisfaction and advocacy, you can show how NPS impacts the bottom line and leads you on a path to business growth.
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For businesses, it is becoming important to deliver better CX than their competitors. This involves developing CX initiatives which mean investments. While these initiatives may increase immediate revenue, they may also impact the customer experience in the long term.
The CX initiatives carry economic importance for every business. While we know that better customer experience leads to retention, revenue growth, and advocacy, company executives and CFOs require proof of growing ROI that justifies the investments.
The key to validating the monetary benefit of the CX initiative is by bringing the customers’ voices to the heart of decision-making.
Gather data using NPS to gauge their satisfaction, likeliness of advocacy, and so on. This can help you monetize NPS to drive investments.
NPS analyzes how a brand converts customers into advocates. It explores three customer segments: Promoters who are more likely to advocate for your brand, thus leading to higher acquisition and retention; Passive who do not have lasting value; and Detractors who are likely to complain, thus causing lower acquisition and retention.
88% of customers show a high level of trust in a brand recommended by their friends or family members. Receiving word-of-mouth from customers drives purchase intent, improve perceptions of service quality, and influences behavior to switch brand.
23% of customers talk to friends and family about their favorite products every day. Giving word-of-mouth also drives customer loyalty and improves retention.
Therefore, the key is to nurture those customers advocating for your brand. And to nurture them, you need to improve overall satisfaction with the brand and their experience at every touchpoint.
We will explain further how you can monetize NPS and link it to CX investments.
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Let’s see how you can use NPS to link CX initiatives to the incremental benefit. Using the following approach can create a framework that helps you make data-driven business decisions to improve customer experience and monetize NPS.
Use NPS surveys to capture customer feedback across all touchpoints.
As a hotel manager, you need to capture customers’ opinions during all interactions, check-in, reception, dining hall, playroom, lounge, room, room service, and more. Gather customers’ satisfaction at every touchpoint to have a granular evaluation of your services.
This way, you can identify how & where you are performing well and which point of interaction needs improvement.
You can also send quarterly or half-yearly NPS surveys to gauge overall customer satisfaction with the hotel instead of specific touchpoints. You can ask your audience about their likelihood of recommending your brand and follow it up with an evaluation of the hotel on different criteria such as pricing, overall service, performance, etc.
Don’t stop by collecting customer responses to the NPS survey. Create a data collection program to integrate customer data from multiple sources, including surveys, your database, social mentions, etc.
Create a unified view of customers and monitor their behavior post-survey to determine any change in behavior over time. Use the data to identify where customers are churning and analyze their experience during the stay.
Analyze the integrated data to identify patterns and generate relevant CX insights. To better associate, the monetary value with CX initiatives, considers separating customers into segments. For example, a family on a trip that books a hotel once a year during their kids’ summer holiday, will not generate the same revenue as a businessperson who books once every month.
The key is to prioritize customer segments according to their financial value. Different customer segments have different priorities. Understanding the difference in customer value you can decide to put extra effort into saving a high-value client.
Additionally, you can use the NPS result to link churn and customer segments. If you have a hotel at a competitive destination, a businessperson may not care about price. However, for other customer segments, the brand with the most attractive CX gains a competitive edge.
Use NPS to analyze different segments and your position to competitors. Use the result to quantify the impact of CX investments and make data-driven decisions.
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You can also use driver analysis approach. Identify which touchpoint are driving promoters & causing detractors. With the root cause analysis and knowledge on drivers that are important for customers, you can prioritize actions that will lead to a higher impact on business performance & revenue.
With key driver analysis you can understand what is influencing your customer satisfaction, so you can reinforce it. For example, if you identify cleanliness and food play a bigger role in customer satisfaction you should focus on improving those two factors.
Key driver analysis can help you determine what factor of your service or which touchpoint in customer journey influences a positive word-of-mouth (NPS).
Before you begin to monetize NPS, you need to tie the reason for customer churn to your NPS. Analyze customer feedback to understand which customer segments are churning, when, and why. You can use the knowledge to understand the impact of CX initiatives on customer experience.
Will improving the food quality or increasing the menu option result in higher NPS?
Use “what-if” scenarios to determine where you should focus. Taking the initiative to improve a touchpoint that has no impact on CX will not help grow ROI. This way, your teams can determine the effect of CX initiatives and justify investments.
With your NPS model in place, you can target customer segments, anticipate churn, analyze touchpoint performance, and determine expected ROI. You can monetize NPS by associating monetary benefits with CX initiatives.
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Customers today consider consistent customer experiences and seamless customer services as the determining factor for their loyalty. They want the best experience in return for the money they spend on your business. They are willing to pay more for a personalized and exceptional experience.
Using the approach to monetize NPS, you can validate the impact of CX investments and tie it to the business revenue. The relation between NPS and ROI suggests that word-of-mouth can help you retain and acquire customers & scale up your market demand.
With NPS, you can now use a data-driven approach to determine which segment will respond positively to CX initiatives. You can identify the impact of different initiatives in monetizing NPS. This empowers you to develop marketing strategies to target your audiences and generate business revenue.
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