“Great leaders don’t tell you what to do. They show you how it’s done.“
We get asked this a lot – How do market leaders like Apple, Amazon and Netflix manage to maintain incredibly high customer satisfaction score? How do they trigger such fanatical levels of brand loyalty and retain more customers than their competition?
As it turns out, great customer experiences are not limited by economies of scale; they are driven by customer success strategies, which are placed at the very heart of successful businesses. These strategies not only shape business outcomes, but also impact how your customers perceive your brand.
In this article, we explain how Net Promoter Score® leaders like Apple, Amazon and Netflix keep their NPS® high. From providing a unique experience to taking proactive feedback, we plunge into all of the actionable marketing strategies used by these market leaders to improve customer success, retention and brand loyalty.
The benefits of a high Net Promoter Score
We’ve analyzed data from three companies – Amazon, Apple and Netflix, and looked at some of the perks of having a high Net Promoter Score.
Each of these companies stood out from the competition, by having their NPS significantly higher than average in their industry:
- Apple had a Net Promoter Score of 72. It is 40% above the 32% average for the computer hardware industry
- Amazon had a Net Promoter Score of 69. It is more than 30% above its industry average
- Netflix has positioned itself above the competition with the Net Promoter Score of 68
High customer retention rate is one of the biggest advantages of having a high NPS. Based on Netflix lifetime value metric, an average subscriber stays on board for 25 months. That means Netflix can afford to spend more to acquire each new customer.
Netflix high NPS is a serious achievement considering the fact that sectors with the lowest average NPS for the last five years have been Internet Service Providers along with the Cable Services. It has a measurable impact on the company’s ability to retain customers.
Apple customer retention rates are even more impressive. RBC Capital Markets found that 83.4% percent of iPhone users plan to stick with Apple in comparison to 64.2% of Samsung users who plan on remaining loyal to Samsung.
Apple has long inspired an almost fanatical loyalty among its customers, helping them beat the records and retain more customers than their competitors Samsung and HTC.
Amazon customer loyalty and retention incredibly increased after launching Amazon Prime. According to an analysis of Amazon Prime memberships by Consumer Intelligence Research Partners (CIRP), 73% of people who take advantage of a free 30-day trial membership are likely to pay to subscribe to a $99 plan. Customers pretty much pay to be loyal in exchange for benefits like free shipping and video streaming!
As a result of their high Net Promoter Score, these brands generate great word-of-mouth referrals. Users of Apple, Netflix and Amazon are so loyal that they bring in new customers by referring these brand to their friends, liberating them from spending a lot of money on marketing.
What do Apple, Amazon and Netflix all have in common?
Create a unique experience
Apple is one of the world’s most successful and profitable technology company, with revenues reaching over $200 billion. It holds over 40% of the US smartphone market and has a fantastical 87% brand loyalty across the US and Europe.
Netflix is the world’s leading Internet television network with over 86 million members in over 190 countries with a combined viewership of 33.42 million and peak period downstream traffic of 37.05%. In countries like Canada, Argentina and U.K, Netflix’s penetration rate is forecasted to be around 35% by 2020.
Notice that what unites these companies is the fact that they have managed to turn their unique product offering and unfair advantage into impressive customer loyalty, therefore making them market leaders.
In his book Zero to One: Notes on Startups or How to build the Future, Peter Thiel talks about how the only way to build a great sustainable business is to make it a monopoly.
People want the best product experiences at minimum risk and effort. A monopoly testifies the fact that your business has enough social validation, market penetration and product innovation to deliver an unique experience.
If you think about it, you realize that Apple does not make the cheapest smartphones; Netflix does not provide free streaming unlike YouTube; Amazon does not lure customers with cheap discounts or flash sales.
They just deliver unique experiences that people want to talk about, and that’s how they increase their Net Promoter Score (NPS).
That’s tip #1 for brands that want to improve their NPS score – create unique experiences that people want to talk about.
The rapid growth of Netflix can largely be attributed to the power of network effects.
Network effects is a phenomenon whereby a good service becomes more valuable when more people use it (ex. telephone, internet). Big companies tend to have large network effects over smaller networks, which leads to consumers being willing to pay more to join the large network (Leibowitz, 2002).
If fewer people were using Netflix, there won’t be much of an incentive for content producers to host their content on Netflix. However, since Netflix is used by millions of users worldwide, the cumulative advertising revenue makes producing premium content for Netflix viewers equitable.
The network effects phenomenon is not limited to creating enough demand. It also reduces the cost of providing a service.
For instance, Amazon built the largest global infrastructure for computing services, which now provides scalable cloud services to businesses around the world. As a matter of fact, Netflix now accounts for 1/3rd of AWS traffic during peak usage times.
Due to the power of network effects, Netflix is now able to provide cheaper and better services, because it costs less to serve a million customers than it costs to serve a thousand customers.
In the same way, Apple uses network effects to reduce the cost of manufacturing iOS devices, thereby improving profit margins. Amazon maximizes its bottom line by increasing sales volume and strengthening its delivery network.
But… how does network effects impact NPS?
Network effects increases the value of your product experience, and it reduces the cost of delivering the service, thereby making you extremely competitive. For instance, Netflix killed the cable TV and drastically reduced content piracy due to its strong pricing.
After all, who would bother spending time looking for a torrent of Star Wars, when they could endlessly play it at their convenience for just a small monthly fee?
Netflix gained immense word-to-mouth publicity because it provided an economical, convenient, and easy-to-use solution – all because it leveraged the power of scalability and network effects.
That’s tip #2 – leverage the power of network effects to reduce costs and improve customer experiences.
Make customer success a priority
“Customer success is more than delivering service or support.”- Lincoln Murphy
Unlike customer service, which is a reactive mechanism for assisting customer when they’re in despair, “customer success is the proactive orchestration of the customer’s journey towards their ever-evolving desired outcome.”
From enabling customers to make informed decisions to optimizing product experiences based on feedback, customer success is about retaining customers by ensuring they get maximum value out of your product.
Customer success starts with helping customers pick the right option.
If you walk into an Apple store, they would help you pick the right device based on your expectations, and won’t try to upsell devices or services that you might not need. Every product page on Amazon comes with detailed description/specification that clearly set the right expectations.
What happens when you set the right expectations from the start and think about the customer’s desired outcomes, instead of improving your bottom line?
You improve overall customer satisfaction and brand loyalty.
After, dissatisfaction only occurs when there’s a mismatch between reality and expectation. But, customer success aligns both of them, thereby improving your brand advocacy.
That’s tip #3 – ensure your customer gets off on the right foot.
Once you’ve set the customer on the right path, the next step is to ensure they stay on the right track. Instead of waiting for customer to reach out to you with a problem, you need to be proactive in connecting with your customers and creating feedback loops to improve their user experience.
For example, look how Apple evaluates the quality of recent customer interactions using surveys.
Why are feedback loops important?
That’s because according to a recent study on “Understanding Customers” by Ruby Newell-Legner, a typical business only hears from 4% dissatisfied customers. Interestingly, out of 96% customers who don’t complain, 91% never come back.
Taking feedback from customers enables customers to express their dissatisfaction, and gives you crucial data points on how to further improvise the customer experience.
For instance, Amazon enables customers to rate their recent purchases, so that they can constantly improve services, and identify their promoters and detractors.
The same narrative goes with Netflix.
That being said, CSAT surveys only allows users to rate interactions, not the overall product experience. For capturing accurate feedback on the overall customer experience, these brands rely on NPS score, which has been widely acclaimed as the ultimate survey question for assessing customer success.
So, that’s tip #4 – close feedback loops to optimize customer experiences.
Proactive customer support
Once you’ve set customers on the right path and ensured that they stay on it, the next step is to improve the quality of help that they receive.
Proactive orchestration is in line with Paul Graham’s popularized startup advice – do things that don’t scale. While ordinary customer success aims at being reactive towards customer problems, proactive customer support is not about simply dodging the bullets; it’s about thinking from the customer’s perspective and maximizing customer success.
For instance, Apple is known for its exemplary customer service. From providing free repairs to offering brand new devices as replacement, Apple has gone out of the way to ensure customer success. Amazon is known for refunding price differences, even in multiples of a few cents to its customers.
Netflix provides a delightful customer service by not imposing any rules on its customer service executives on how to interact with customers. Apart from asking one question at the end, they’re free to say pretty much whatever they want, which has led to a lot of interesting interactions, including the popular chat between a Star Trek fan and a Netflix customer service executive, which grabbed attention of national TV, apart from getting viral on the Internet.
Again, proactive customer service aligns with the idea of creating experiences that people want to talk about.
As you might have noticed already, it’s the recurring theme of all the strategies discussed in the article, and a crucial aspect of increasing your Net Promoter Score (NPS).
That’s tip #5 – make your customer service proactive, not reactive.