What is NPS and how does it help grow your e-commerce business?

September 19, 2018 by Fio Dossetto


If your job is growing an e-commerce business, you know that you’re not going to go far without happy customers.


It doesn’t matter if you sell clothes, experiences, dishwashers, or wedding rings—one of your must-haves is a satisfied base of customers who praise you and send a steady flow of referrals your way.


These are your ‘promoters’ in the Net Promoter Score® (NPS) system, and to increase your sales you have two tasks: measure how many promoters you have, and understand why they love you—so you can create even more of them. 

This article is a mini-guide to help you get started, with a success story at the end from an e-commerce company that’s used NPS to help increase their revenue by 70% (!). 

Table of contents

What is NPS? 

NPS stands for Net Promoter Score and is a metric that businesses use to measure their customer loyalty.

The score itself is a number between -100 and +100, which you get by surveying your customers and asking them this question:

"How likely are you to recommend this company to a friend or colleague?"

Customers pick an answer from 0 to 10, with 0 being 'not at all likely' and 10 being 'extremely likely'. Depending on the score they pick, they are classified as detractors (0 to 6), passives (7 and 8), and promoters (9 and 10):

NPS-chart

You then calculate your NPS as the percentage of promoters minus the percentage of detractors:

NPS-formula-1

Given the available -100 to +100 range, any score above 0 is good; top-notch companies generally have an NPS of 70 and above.

NPS as a predictor of e-commerce growth

NPS is often connected to business growth. The higher your score, the better your relationship with customers who are going to act as evangelists for your e-commerce site, fuel word-of-mouth, and generate a positive growth cycle.

At Hotjar, we like to say that NPS is more than a number—the real goldmine is the information you collect by asking a few follow-up questions as part of your customer survey:

  • What’s the main reason for your score?
  • What can we do to improve our business - and your score?
  • What can we do to WOW you?

When you go through the answers, you can see what’s working for your most satisfied customers and double-down on it; you can also discover what’s causing people to have negative experiences so you can fix and improve the situation asap.

When you should run an NPS survey for your e-commerce

A SaaS (Software as a Service) business like ours usually asks the NPS question after 30 days from sign-up, which gives users enough time to get familiar with the service. But in e-commerce, the logic is different and there isn’t a ‘one-size-fits-all’ approach—when you ask the NPS question very much depends on how your business works.

Let's break this down:

1. You own the service but not the final product

If you are an e-commerce marketplace, your customers’ experience with your website ends after they place an order; a third party provides the product or service. Think of eBay or Etsy: after a customer completes an order, it’s the individual seller who is responsible for delivering the product.

If this is your case, you could ask the NPS question right after the order is complete, like Booking.com currently does. Users are presented with an on-page NPS question right after booking a hotel:
 

bookingcom

BOOKING.COM asks THE NPS QUESTION STRAIGHT AFTER YOU BOOK A HOTEL

Booking.com doesn't own what happens next. They don’t own the hotel someone has just booked—so the customer experience with them has technically been completed. If that’s also the case for your e-commerce website, consider asking the NPS question at the same time, framing it as follows:

based on your experience with us so far, how likely would you be to recommend our website?”  

2. You own the service and also the final product 

If, instead, you sell a product or service that you will also deliver, you want to delay asking the NPS question to give your customers enough time to receive and experience it. 

How much should you wait?

→ If you sell products that get shipped fast and consumed shortly afterward, such as food items, flowers, or clothes, you can wait a few days to a couple of weeks to ask the NPS question

→ If you sell products that take longer to be produced, shipped, and/or used, like bespoke furniture, household appliances, or recurring monthly services, you probably need to wait longer and allow a 30-day or so window

 

🏆Pro tip: the best time to ask an NPS question depends on the kind of product you sell, so test your way around it:

  • If people complain that you’re asking too early, that means you need to send your survey later
  • If your response rate is low and nobody is complaining, try sending it earlier  


After a bit of tweaking, you'll find the right time.

An e-commerce NPS case study from Taylor&Hart

Taylor and Hart is a London-based jeweler who specializes in bespoke engagement rings and has one of the highest NPS in the industry (more on this below). Rather than being a one-time purchase business, they want to keep serving the person who buys the engagement ring, their families, and friends, year after year—and they use NPS to understand the likelihood of that happening.

taylor-hart-nps

THE HOMEPAGE OF TAYLOR & HART's WEBSITE

I spoke to their CMO, Stefan Milev, to ask him two specific questions:

1) When do you send out your NPS survey? 

We track NPS at two specific points.

Firstly, all customers are assigned a dedicated consultant that guides them through the purchase, so we send out our first service NPS email survey about an hour after a customer places an order. This email lets the customer rate our level of service up until that point and add comments about it, which in turn tells our consultants what they need to improve or continue doing.

We then send a product-specific NPS survey 40 days after purchase, when the ring has been produced, shipped, and received:

Taylor-hart-NPS-question


We know that it usually takes 22 days on average for us to produce and ship a ring, so we add on some extra days to account for holidays/delivery/etc. At 40 days, we are absolutely sure the customers have received our rings and can comment on their quality.” 

s-milev


Stefan Milev - CMO at Taylor & Hart

2) How has NPS allowed you to grow your e-commerce business?  

We pride ourselves on having one of the highest NPS in the industry: it has been constantly over 80, both for service and product, for over 2 years now. We showcase the number via screens across the company, which creates a healthy level of competition for our consultants and a nice atmosphere overall. Our NPS is transparent, so everyone in the company can see the feedback and take it as a learning to continuously improve.


To us, NPS is something of a success metric: it allows us to optimize both our sales and production processes, and in combination with other feedback it has led us to increase our monthly revenue by 70%. We keep this metric to validate if we’re doing things right and, if not, we immediately sort it out. I’d recommend that every company finds a way of using NPS, regardless of whether they’re selling a service or a product or both.

s-milev


Stefan Milev - CMO at Taylor & Hart

Key takeaways

  • NPS measures the loyalty of a company's customer base with a score from -100 to +100, which comes from customer answering the question "How likely are you to recommend this company to a friend or colleague?"
  • To grow your e-commerce business, you need satisfied customers or ‘promoters’ who talk about you enthusiastically and send referrals your way—and the way you measure your promoters is by checking how many people scored you 9 and 10 in an NPS survey.
  • NPS is a useful number for evaluating and benchmarking your business, but its real value is in the answers to the follow-up questions you get to ask as part of the survey: What’s the main reason for your score?, What can we do to improve our business - and your score?, and What can we do to WOW you?
  • When to send an NPS survey depends very much on the type of e-commerce you own. You’ll have a short window to play with if you are a marketplace like eBay or Booking.com, and longer ones if you are also responsible for delivering the products. Test your way around it to find the right time for your customers.

 

📚Want some further reading? We've been reporting on our own NPS for over a year now: check out this article to learn more about the good, the bad, and the ugly of using NPS at Hotjar.


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Fio Dossetto

Content Marketer — An ex-academic turned marketer, Fio is most often found thinking about language, editing content, and working remotely around Europe—in that order.

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