When you examine customer experience management (CXM), it is critical that you understand customer loyalty. Net Promoter Score (NPS) may be the most widely adopted Key Performance Indicator (KPI) for measuring customer loyalty.
NPS quantifies a customer's willingness to recommend your company, product, or service to a friend or colleague, based on their response to a single question - On a scale of 0 to 10, how likely are you to recommend us to a friend? This simple metric helps businesses categorize customers into Promoters (9-10), Passives (7-8), and Detractors (0-6) based on their responses and provides a clear indicator of overall sentiment and potential for growth.
When you go more in-depth into this KPI, understanding the differences between Transactional and Relational Net Promoter Scores is a key to better leveraging this powerful metric effectively across different aspects of your business.
Transactional NPS vs. Relational NPS
While both types of NPS measure customer loyalty, they serve distinct purposes and are implemented at different stages of the customer journey:
- Relational NPS (rNPS): This type of NPS survey is designed to measure a customer's overall loyalty and satisfaction with your company or brand as a whole. In most cases, it is conducted at regular intervals, such as quarterly or annually, or after a significant period of customer loyalty. Relational NPS provides a high-level view of the long-term health of your customer relationships and perception of your brand.
- Transactional NPS (tNPS): By comparison, Transactional NPS measures customer satisfaction and loyalty immediately after a specific interaction, transaction, or customer touchpoint. This could be after a purchase, a customer service call, an online order, a product installation, or a visit to your retail store. tNPS is an event-based metric and provides immediate, in-depth feedback on specific experiences your customers have had.
Why You Should Track Relational NPS?
Relational NPS offers a broader, more comprehensive view of customer loyalty and the overall health of your brand. It can measure long-term customer sentiment and can be a strong predictor of future business growth, customer churn, and customer lifetime value. Here is a better look at a few key reasons you should consider tracking Relational NPS:
- Gauge Overall Brand Loyalty: rNPS measures the strength of the customer's entire relationship with your brand, not a single interaction, and reflects cumulative experiences. Annual Relational NPS surveys help to understand overall customer loyalty and track how it is trending year-over-year.
- Predict Future Growth and Customer Churn: Higher Relational NPS scores can correlate with increased customer retention, more repeat purchases, and a higher number of positive referrals, which all point to long-term growth. A subscription-based streaming service could track Relational NPS quarterly and gain insight on declining trends that can signal an increased risk of customer churn.
- Make Strategic Decisions: This data helps identify broad areas for strategic focus to improve the overall customer relationship, brand perception, and long-term strategy. A car manufacturer might use Relational NPS feedback to understand how its brand is perceived overall and use the data to influence long-term product development and marketing strategies.
- Benchmark Against Competitors: Relational NPS is a common metric for businesses and it can allow for general benchmarking against competitors to help understand your position in terms of customer loyalty. A tech company might compare its Relational NPS to published industry averages to see how its overall customer loyalty stacks up.
Why You Should Track Transactional NPS?
Transactional NPS offers immediate and specific insights that are valuable in identifying and addressing key pain points in the customer journey. It allows businesses to quickly and easily pinpoint operational strengths and weaknesses, and allows them to make data-driven improvements to the customer journey. Here is a closer look at reasons why you may want to track Transactional NPS:
- Pinpoint Specific Issues: Transactional NPS helps identify exactly where in the customer journey things are going well or poorly and provides focused feedback. For example, a retail company can use tNPS after an online checkout and discover low scores are linked to a confusing step in the payment process and make improvements.
- Enable Quick Service Recovery: A low Transactional NPS score can provide immediate alerts and follow-up procedures with dissatisfied customers to resolve their issue quickly. A good example is that a software company's support team could contact a user who gave a low tNPS after a support chat to offer additional assistance and turn a negative experience into a positive one.
- Monitor Performance of Key Interactions: This KPI allows businesses to consistently track how well critical touchpoints - like product onboarding, a service call, or a delivery experience - are performing over time. Airlines could use tNPS after each flight to independently monitor satisfaction with the check-in process, in-flight service, and baggage handling.
- Empower Frontline Teams: Transactional NPS provides direct feedback to the teams that are responsible for specific customer interactions and help them understand their impact and identify areas for improvement. A hotel chain might share tNPS scores from post-stay surveys related to the check-in experience with their front desk staff to highlight opportunities for improvement.
READ MORE: How To Create a Net Promoter Score Survey
It is important to understand and recognize the differences and uses of transactional and relational NPS for your business. This data allows businesses to deploy a more complete and effective customer experience management strategy that will help promote long-term growth and success of your brand.
Contact boostCX for a demo of our customer experience management platform and find solutions that will help you track and analyze your Net Promoter Score!
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