NPS has become a wildly popular way for businesses to measure customer sentiment. But smart businesses use NPS for so much more than that. Here we look at how NPS can be used by travel brands as a tool for ancillary product selection and design.
No doubt you'll have heard a lot about NPS, or Net Promoter Score, as a KPI for your brand. It measures how likely a customer is to recommend your brand to a friend. NPS has become a 'go-to' metric for companies. When applied correctly, NPS can be more than a KPI—it can be an invaluable product and service design tool. The insights gained from NPS can help travel brands enhance products and services, expand market reach, and build genuine customer loyalty. NPS can also help carriers and other suppliers develop a sustainable stream of ancillary revenue growth.
Curious to know how? Let's dive in.
NPS was born in the travel industry
What first inspired the famous Harvard Business Review article by Frederick F. Reichheld in 2003 was a presentation by Andy Taylor, then CEO of Enterprise Rent-A-Car. Taylor explained that the car rental company's simple survey strategy focused on growing the number of customers who would recommend the company to friends. As Reichheld wrote at the time:
"By concentrating solely on those most enthusiastic about their rental experience, the company could focus on a key driver of profitable growth: customers who not only return to rent again but also recommend Enterprise to their friends."
After hearing about the Enterprise customer satisfaction rating, Reichheld spent the next two years testing its effectiveness and submitted his article introducing the concept of NPS as the "one number you need to grow."
But despite the catchy headline, the number alone can't get the job done. It can only serve as a compass. As any experienced traveller knows, compasses aren't all that useful without a destination. And it's always helpful to have a map.
So what's the secret to NPS's success? The answer is simple: Ensure your NPS number includes the question, "Why?"
Why is the customer willing or unwilling to recommend your brand to friends? That's your map. Study the replies and target them for action.
Does this sound radical?
It's not. The goal of surveys is to know what customers think about your business. Still, it's challenging to distill genuine sentiments or intent from numbers on a graph, much less use those numbers to predict consumer behaviors.
Airbnb has one of the highest NPS scores in the travel industry at 74, and their dedicated data scientists came to this very conclusion.
"By measuring customer loyalty as opposed to satisfaction with a single stay, NPS surveys aim to be a more effective methodology to determine the likelihood that the customer will return to book again, spread the word to their friends, and resist market pressure to defect to a competitor. We find that higher NPS does in general correspond to more referrals and rebookings. But we find that controlling for other factors, it does not significantly improve our ability to predict if a guest will book on Airbnb again in the next year. Therefore, the business impact of increasing NPS scores may be less than what we would estimate from a naïve analysis."
Huh, bummer, right? Well, not really
Again, if you're only looking at NPS as a number alone, then you're missing the point. The value of putting the NPS question in the survey is to gathering the answers to the 'Why?'
Some people won't fill out the why, but Airbnb's crack team of data scientists found that comments and reviews are a more significant indicator of brand loyalty and willingness to advocate on behalf of the brand. You can still gain valuable insights if you correlate NPS responses (or lack thereof) to reviews.
"Guests who submitted a review but did not answer the NPS question behave similarly to promoters. These results indicate that when measuring NPS, it is important to keep track of response rate as well."
Convert customers to product designers
In the article that started it all, Reichheld writes, "The only path to profitable growth may lie in a company's ability to get its loyal customers to become, in effect, its marketing department." In other words, give your customers a chance to join your design team.
It pays to listen whenever customers share how they feel about your product. It pays even better if you apply what you learn.
As reported in Skift, Derek Jones, CEO of Kuoni, shared how the company uses customer feedback on NPS to refine their process.
"An example of an issue that was picked up at the beginning from the NPS survey Kuoni was sending to its customers was happening at post-travel. It had identified that there were issues around the airline journey on pre booking seats and baggage allowance. By identifying the amount of detractors that were affected by this, Kuoni was able to redesign their processes of pre booking for its customers. This ultimately helped to eradicate as many of those detractors as possible. Kuoni uses the feedback from the NPS surveys to make relevant changes, and this practice helps it maintain a high NPS."
One serves the other. It's a cyclical process. You listen to the customer, apply that information to the design of your products and services and—like magic (except it's data science!)—the number of promoters grows.
Japan Airlines uses NPS feedback as a roadmap for organizational improvement, reviewing comments to guide decisions on products and services. Since first adopting this measure as part of its essential strategy, the airline has seen its NPS increase year-on-year.
“The JAL Group adopted the Net Promoter Score (NPS), which is focused on measuring customer loyalty, as a key performance indicator (KPI) in FY2017 and internally shares customer ratings and feedback to improve its products and services and deliver unparalleled service to our customers. We continuously strive to innovate better products and services and achieve the world’s top-level customer satisfaction.”
JAL calls this “putting customer feedback into tangible form,” which is an elegant way to describe the dynamic of using NPS as a design engine. “We have created products and services that meet customer needs by making improvements based on customer feedback,” the airline states.
Mine the NPS 'Why' to find golden opportunities in ancillaries
Just as JAL mined its NPS to redesign their cabin products and services, travel brands can do the same to re-engineer their ancillaries.
Well, let's look at the role ancillaries genuinely serve in travel booking. They either reduce the pain points of travel or add pleasure to the journey. Their value-added contribution makes them attractive enough for customers to add these ancillaries to their booking.
To determine which ancillary services might best boost your NPS, look to the pain points first. The best way to reduce brand detractors is to keep them from becoming detractors in the first place. Do your 'Why' NPS results reveal any common complaints which could be resolved with an ancillary service?
For example, if travelers express frustration over travel requirements, adding ancillaries that demystify and simplify the process of crossing borders and eVisas could increase the likelihood of booking. They will also eliminate a pain point, improving the chance that your brand's NPS score will rise.
Other pain-point-reducing ancillaries might be adding insurance for peace of mind or extra baggage allowances to avoid unpleasant surprises at the airport.
Pleasure-oriented ancillaries might include seat upgrades or extra-legroom. For tour operators, they may consist of offers of pre/post tour days, hotel reservations, or exclusive activities.
If your team closely monitors the 'Why' of NPS, you can find other opportunities we might not have imagined. The key is to measure sentiment, implement the new ancillary, and track that ancillary's performance across revenue generation and NPS improvement.
Don't forget the NPS principle of simple design
It's also important to remember that one philosophy behind NPS is to keep things simple. Enterprise embraced the process that inspired NPS because it simplified their customer survey and yielded simple, actionable insights.
Likewise, adding ancillaries to the booking flow should not complicate matters for travelers. Let customers add options along the way and always suggest them in the proper context.
Checking travel requirements at the start can boost confidence in the journey. Adding eVisa applications later in the booking flow can help remind travelers that they will need these documents before setting off. Customers should be able to see how their ancillary choices affect the price they'll pay at check-out, so there are no surprises that might cause them to abandon the cart. A quick reminder of ancillaries available at check-out might prompt them to add to the booking.
You can also add ancillary offers to customer messages after booking, including in the booking confirmation—even in any thank-you messages to acknowledge NPS survey feedback. It should be easy for customers to return to their reservation and add any ancillary right up to the day of travel.
Turning detractors into promoters won't happen overnight, but when it happens, the results can boost team confidence. And confident, empowered team members will also increase NPS.
The cycle is simple: query, listen, evaluate, redesign, question, and listen again.
At sherpa° we’re passionate about freedom of movement. Our mission is to help travellers move freely around the world and to shift the way the world's leading travel providers approach border crossings. Through unmatched industry knowledge and expertise, we help our partners—from airlines to cruise lines to online travel agencies—open new ancillary revenue streams to help them reduce costs and operational risk while enhancing the customer journey and growing consumer confidence in travel.
More than simply providing a product or service, we're moving travel forward. Away from stress and confusion, and towards ease and connection. So travellers can move freely wherever life takes them. This is the future of international travel. Contact us today to find out how our suite of solutions can help grow your business.