Net promoter score (NPS) is a metric used to measure customer loyalty and satisfaction with a company or brand. While it’s obtained through a simple process and a single question, it can provide significant insight into how your customers or clients feel about doing business with you. Commercial real estate companies can use their NPS to improve processes, identify opportunities for improvement, guide future offerings and drive growth.
How NPS is Determined
NPS is based on post-purchase surveys that ask customers how likely they are to recommend your company or offerings to friends or colleagues. The question changes only slightly if you are asking about a product, features, service or your company in general. For example, to see how people feel about a service you would ask “How likely are you to recommend {named service} to a friend or colleague?” If you are inquiring about a product you ask, “How likely are you to recommend {named product} to a friend or colleague?”
Customers use a 0-10 scale to answer the question. A 0 rating means they are not at all likely to recommend it, while a rating of 10 means they are extremely likely to recommend it. The responses are grouped into three categories: promoters (NPS 9 or 10), passives (NPS 7 or 8), and detractors (NPS 6 or below).
(Frederick F. Reichheld is often credited as the originator of the net promotor score definition. He penned a 2003 article in Harvard Business Review titled "The One Number You Need to Grow.")
The single question is sometimes followed with an invitation for the customer to type a message to explain their rating. While optional, this open-format follow-up gives customers a chance to speak directly to you while providing important details and insight.
Examples of NPS Applied to Commercial Real Estate Businesses
Property managers can use NPS in numerous ways. They might issue NPS surveys to new tenants a year into their lease. They might also seek NPS feedback annually from existing tenants, as well as ask for NPS ratings from departing tenants. These three net promotor score calculations can be very valuable for learning what prospective tenants want, not only for the property manager's leasing agents but also for building engineers and on-site managers.
At the conclusion of a CRE development project, or perhaps at various milestones of larger projects, a construction company, subcontractor or developer might use the NPS to get honest feedback from their customers and clients. Again, this can be highly useful for business development teams as well as operations managers.
A third example involves professional services, such as third-party janitorial services in office buildings, life sciences buildings, and hotels. The professional service provider uses NPS surveys to solicit feedback from their customers. How likely are they to refer {professional services} to their peers?
Of course, this feedback is worth more when it is shared with employees, their supervisors, and management.
How to Use NPS Results
Companies can use NPS as a tool to measure customer satisfaction, identify areas for improvement, and track changes in customer sentiment over time. By analyzing the feedback from promoters, passives, and detractors, companies can better understand what they are doing well and where they need to improve.
Here are a few ways you can use NPS in your organization:
Identify areas for improvement: By analyzing feedback from detractors, companies can identify areas where they are falling short and take corrective action to improve customer satisfaction.
Beta test new services or features: You can roll out services, products and features and use NPS to see how warmly those new offerings are received. This is especially useful for proptech companies as they roll out new technology or update existing technology. The NPS during testing helps measure potential demand so you can better allocate resources.
Identify trends: By analyzing NPS data over time, companies can identify trends and patterns in customer feedback. This can inform business decisions related to products, service improvements, and how resources are put to use.
Prioritize investments: Companies can use NPS to prioritize investments and determine which offerings have the greatest potential to drive growth. It is also helpful in deciding how to allocate internal resources in a way that supports areas likely to be profitable.
Using NPS to Close Deals and Drive Growth
While NPS is typically used to see how customers feel about the services or products your company offers, that’s not all it can do. Improving your NPS can boost customer retention and enhance your brand image. You can also use it in novel ways that help you close more deals and support overall business growth.
Example 1: A net promoter score can help you make quick adjustments in your business in order to become a more attractive option for prospects. For example, if you see that many clients are unhappy with how long they are on hold, for example, you can make quick changes that reduce wait time or introduce chat help to alleviate the problem.
Prospects reaching out to you will experience a better journey and a more positive view of your organization. Current clients will appreciate the improvement and be more likely to stay, reducing churn. They may even become promoters and offer referrals.
Example 2: If you find that people love a service or product, you can increase marketing efforts and generate more sales. You can also use it in your proposals and pitches, showcasing top services or products alongside case studies. On the flip side, if your NPS uncovers problems with a product or service, you can refocus marketing efforts, proposals and pitches on offerings that are more likely to be received favorably.
When and How Do You Collect NPS Data?
When you collect NPS, you have two choices: do it yourself or use a third-party firm to do it for you. If you want honest, impartial feedback, you might be more likely to get honest answers from a third-party NPS scoring firm. Customers tend to be more upfront with negative or constructive feedback when an impartial third party asks.
If you're a small firm with a small marketing budget, you can easily do the NPS yourself. It is, after all, only two questions: How likely are you to recommend us (0 to 10), and why did you answer that way (open-ended response)?
The formula for calculating NPS is also simple:
Total number of detractors divided by total responses = % of respondents that are detractors
Total number of promoters divided by total responses = % of respondents that are promotors
Subtract detractors from promoters = NPS
If you send 100 surveys, and 15 come back with scores of 0 to 6, your detractor rate is 15%. If 25 come back as promoters, your promoter rate is 25%. Therefore, your NPS is 10 (25 minus 15). With that baseline, you can now set goals to elevate your NPS at the next survey.
Here are a few NPS tools to get you started:
NPS is a simple, yet powerful tool that helps companies measure and improve customer loyalty and satisfaction. The NPS is a great tool that your sales development team can use in conjunction with Biscred’s intelligent prospecting tool. Share your customer and client feedback in your email templates, and look for opportunities to develop case studies to share with prospective new customers.