Referral Metrics

Referral metrics show whether or not users are willing to refer a product.

Net Promoter Score

Theory

An indicator for customer loyalty is NPS which can be assessed by asking customers how likely they are to recommend your product (Datarockets, 2019). Moreover, your level of customer happiness acts as a good indicator for churn (Skok, D., 2019), customer loyalty and therefore also future revenue of a company.

Application

Start your data collection, design who you wish to survey and at which touchpoints (Genroe) “How likely are you to recommend this product to a friend?” Then cluster your survey results:

• Detractors = rating from 1–6
• Neutrals = rating from 7–8
• Promoters = rating from 9–10

On average:

• a promoter is worth 2.6x more than detractors.
• 83% of satisfied customers are willing to refer a product.
• People are 4x more likely to buy if they get a referral from a friend.
• Referred customers are in turn 16% more likely to stay.

What next:

• Start by analyzing your overall NPS and your NPS for the individual customer segments (Skok, D., 2019).
• Based on your survey insights, start implementing changes to work on your customer loyalty.
• A NPS survey is one way to determine your customer satisfaction.

Alternatively, you can track sentiment via natural language processing (NLP) using tools like Google Insights, Google Alerts or Brandwatch (Dopson, E., 2020).

Practice

External benchmarks do not offer much insight due to the fact that they depend largely on industry, country and other factors. Thus it is recommended to use internal KPIs and to strive to continuously improve them (Genroe).

During the seed stage it is vital for fintech startups to closely monitor their NPS to assess the uptake and customer love at this point of time. A problem in early stages mentioned by Peter Windischhofer, the founder of Refurbed, is the small size of the sample. The implication for NPS is that if it changes by, for instance, 10% on a weekly basis and there are less than 100 responses it cannot be said whether or not this is simply a statistical error or a significant trend.

What the Refurbed team did in the beginning was to call every single customer to first of all increase response rates and second of all get more valid insights. Their current NPS for their specific industry is at 70, which is extremely good in comparison to others.

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