Hi guys, this post will be dedicated to all product managers out there. I will split this post into two parts, the second part will be written very soon .
Lately I had some discussions with some friends about “Customer Loyalty” and I realized most companies out there do not have a proper metric to measure “Customer Loyalty”. Companies do not have a metric in place to inform them about customer happiness in the product.
Most of them told me their products have the possibility for the customer to give feedback, but when I asked them if it is possible to have a metric that reflects customer happiness, the answer was unanimous: NO. At this point there is no possibility for them to measure how the customers are happy, neither to measure whether the product is performing on the market.
Some of them were asking why is it important to have a metric to measure the customer loyalty? In my opinion, the answer can be easy: the best marketing tool is “mouth to mouth marketing” that’s why it is so crucial to know what our customers think about our product. A good reference can bring more customers on-board more likely than a bad reference which can destroy possible ones. Having a metric that is able to measure this is quite essential in order to be able to improve customer satisfaction.
Naturally after explaining the reasoning they were asking me what would be my suggestion. I believe there are several options how to measure customer satisfaction. I explained what one of my clients implemented in most of their products. They did implement NPS – Net Promoter Score.
Implementing NPS was easier for the company to analyze user feedback and product problems; Based on this, the company could decide which action to take in order to improve customer happiness. NPS can also provide a stable measurement of business performance that can be compared across products, business units or even across industries, allowing the company to better understand what kind of portfolio does it have.
But what is “NPS” ? Net Promoter is a customer loyalty metric. The Net Promoter Score is obtained by asking customers a single question: “How likely is it that you would recommend our product to a friend or a colleague?”. The rating scale is 0 to 10 , where 10 is “extremely likely” and 0 is “not likely at all”. Based on the responses, customers are categorized into three groups: Promoters, Passives and Detractors.
A detractor is someone who will give negative references about your product. As an example I can use the situation when I went to a restaurant and spread the bad word about the service to my friends. The passives are people that do not complain neither promote your product. The promoters are the ones that spread a positive references about the product/service. These customers always come back and consume more of your products/services. To obtain a Net Promoter score (NPS) we must subtract the percentage of Detractors from the percentage of Promoters.
Here you can find some companies that are using already NPS:
The most important proposed benefits of this method derive from simplifying and communicating the objective of creating more “Promoters” and fewer “Detractors” — a concept that is claimed to be far simpler to understand and act on. Using this metric a company can know exactly what is the percentage of users that act as Promoters, Passives or Detractors. It is a great way to collect user feedback in a structured way identifying priorities that should be taking into account for the next interactions/releases.
Several years ago I worked in a company that used NPS on daily basis. They used NPS everywhere, in my opinion it was used too much but that is how they worked. They used NPS to compare product performance between organizations; they used NPS to measure employees´ performance and at last they used NPS to help product owners to prioritize and build product backlogs – this is what I want to talk about.
All customers that used products could answer the question: “How likely is it that you would recommend our product to a friend or a colleague?”. This question could be found under the “feedback” section inside of the product. When the user answered the question he or she would send the score and respective comments justifying his/her answer to a server where all scores with the respective comments were collected.
To analyse all these comments and scores, a team was created. Their responsibility was mainly to collect, analyse and cluster all different feedback. This feedback was sent once a week to all product owners involved in the product development. This feedback was extremely valuable since it would help the Product Owner to create a better product in future based on real wishes from the customers. The product owner could use this either to review his/her previous assumptions of what could be a good product, or to tackle emergent problems that appeared in each release. For example the sign would be if there were dozens of customers complaining about the same issues.The product owner would need to act. These issues should be tackled in next iteration in order to correct customer unhappiness. Clearly these matters had the highest priority in the product backlog because they had a direct impact on the customer.
All this feedback was critically important during the whole development phase but especially before the official release, when the product was in Beta stage. We used this time to collect extremely valuable feedback from customers in order to improve the product for the official release. At this point the PO was looking at feedback on a daily basis. This would allow the team to be able to change the most critical issues before the product was released resulting in a better product with a better customer satisfaction.
NPS is still part of the company´s product development. Even though I do not work there anymore, I truly believe they still use all customer feedback provided by NPS to improve their products.
To conclude this post, imagine this: You together with several other customers detect and report a problem. Two weeks later in the next iteration release you have the problem solved. The company was able to listen to you and correct your problem. In two weeks time!!! What would you think about the company that can listen and attend your wishes in two weeks time? It would be amazing, right? Do not worry, I believe this is the future :)
This was another topic that I wanted to share with you guys. I truly believe NPS can help companies or Product Owner to improve their own products and understand how well they are doing compared to other companies that use NPS as well. What is your opinion after reading this post?