The importance of loyal customers and customer satisfaction is vital to every business, including banking and finance. So, it becomes essential for businesses to know about these two things.
In banking, the most effective way to get insights about loyal customers, CX, and other factors is NPS. This kind of CX metric is essential for banks and financial institutions.
So, let's understand NPS, its working, benefits, and the right time to do it.
What is NPS in Banking and Other Financial Institutions?
In banking, having a loyal customer base is a must. But why? The answer is simple: loyal customers not only remain with you for a long time or maybe a lifetime but also get many customers by referring you.
Here, the customer acquisition cost is almost zero as you got promoted for free by your loyal customer. But how do you know that your customers are satisfied with your services and are loyal to your organization? Here comes the NPS.
NPS, or Net Promoter Score, is one of the most widely used and recognized metrics in the world of banking and finance. It works on a straightforward methodology that requires surveying the bank's customers. Based on the data collected from the survey, a net promoter score is given to the bank or the financial institutions.
How Does NPS Work?
The two main components of NPS are the survey and the score calculation. A simple formula finds the score of NPS, which is why it is considered one of the most straightforward metrics for banks and financial institutions.
Survey
A net promoter score survey includes simple questions. Mostly, the customers (participants) are asked how likely they will recommend the bank or its services and products to others.
Scoring Scheme of Net Promoter Score:
Promoters (Score 9-10): These customers are highly satisfied and will likely recommend the company to others.
Passives (Score 7-8): These customers are somewhat satisfied but less enthusiastic than promoters.
Detractors (Score 0-6): These customers are dissatisfied and unlikely to recommend the company.
The scoring scheme decreases the chance of foul entries in the survey. However, if there is any foul entry where the customer attended the survey mindlessly, it is compensated by the large sample size.
Calculation to Find NPS
The calculation of NPS is done by subtracting the percentage of detractors from the percentage of promoters. It leaves us with a score between -100 to 100. Here, the higher the score, the more loyal customers and promoters the bank or financial institution has.
You can also read: Understanding Net Promoter Score: A Comprehensive Guide
Reasons Why You Should Measure NPS in Banking and Other Financial Institutions?
There are various reasons why it is good for banks and other financial institutions to measure NPS. With the help of NPS, you can learn a lot about your organization, like:
You can know if you are growing at an adequate speed or not growing with the help of NPS.
You can also understand your organization's position among others. It helps you compare yourself with your competitors.
It will inform you about the performance of your products and services to make improvements or decisions like withdrawing a service or product.
You can work on increasing your NPS Score by continuously making improvements. It enhances the CX and decreases customer acquisition costs as the referrals increase.
When Should You Launch Your NPS Surveys in Banks?
You may think an NPS survey can be done at any point, but it's ineffective. You should consider the right time to do an NPS survey. Multiple timestamps are ideal for surveying a specific service or product.
In simple words, the question you are asking in the survey should match the time when you are taking the survey. For instance, if you ask customers about their experience with your banking services at the time when they just onboarded, it will not make any sense. So, it’s important to take surveys on the right occasion.
That is why there are three major types of NPS surveys based on the occasion.
Relationship NPS Survey
Relationship NPS survey is taken occasionally, like every 6 to 12 months. This survey checks the overall satisfaction of the customer with the bank's services, products, and customer service. It is the best NPS survey to estimate your loyal customer base.
Post Query Resolution NPS survey
A post Query Resolution NPS survey is taken right after your customer service team is done resolving an issue faced by your customer. It helps you to get insights about your customer service process.
Onboarding NPS Survey
Keeping your onboarding process smooth is essential to provide the best customer experience. You can get actionable insights about your onboarding process with an onboarding NPS Survey. For an onboarding NPS Survey, you can wait for 1-2 months. During this time period, the customer will most likely use your major services and products like net banking, debit card, or credit card.
Wrapping Up
In summary, NPS is undoubtedly a single metric for banks and financial institutions. With the help of NPS, you not only get a score to compare yourself with your competitors but also learn a lot about your organization and customer expectations.
Moreover, with the increasing development of technology, the effectiveness of NPS is increasing, making it more accurate with less assumptive. Furthermore, Banks and Financial service providers must benchmark their NPS scores to keep improving and serving their customers.