Linking NPS to financial performance

Linking NPS to financial performance

Trying to find the ROI behind customer experience investments might be a tricky time to time. Here is one approach that is based on vast studies about companies that excel in listening to their customers and taking that information back to their business to improve it.


Let’s start by analyzing the difference in value between your detractors and promoters. Here, NPS typically has a very high correlation with retention: the happier the customer, the more loyal they are and therefore the more revenue they generate for you during their customer lifetime.

You should look at your customer’s behavior in history. Of the promoters, which you had 1 year ago, how many of them have stayed? How many have left? Most likely these numbers are very different for the detractors.
When you have, based on the historical data, established a clear link between your customer experience metric and churn rate, you can immediately start to understand how big of a financial impact your X-point NPS increase has. A study done in London School of Economics in 2005 found that 7 point NPS increase led to an average 1% revenue increase.

But you shouldn’t assume industry averages apply to you directly.

There are huge industry-specific differences – in competitive industries, customer experience differences easily lead to a situation, where your customer decides to switch vendors. In industries, where consumers have very limited choice, they can stay as your customer for a long time even if they hate you. In B2B the user and buyer can be different persons and the decision-making dynamics therefore complex. Therefore, I warmly recommend knowing your own numbers.


Keep in mind that there are also other ways the customer experience improvement impacts your bottom line. Higher NPS typically correlates with higher advocacy, which brings you more customers and revenue. Your most loyal customers also typically buy more from you. You have a chance to up-sell and again increase your revenue.


The benefit can result from the cost savings as well. The higher your NPS, the smaller the number of customer complaints and returns. This can make you save in customer support and repair costs.


To summarize, there are some standard ways through which NPS improvement (or customer satisfaction increase) translates to financial value. You should quantify at least some of these for your company. Once you have done that, you have a good understanding of what is the financial value of one-point NPS increase – that makes it easy to assess, whether a particular action targeted to drive the NPS up, makes sense or not.

As conclusion, we could say that this model will give you a head start on how to see the financial benefits around NPS. Again not a comprehensive model but will help you out!

CXforum is born!

CXforum is born!

We believe that everyone deserves to be happy and get better quality experiences every day.

That is the reason why we created a center of excellence and global knowledge base around “The entire journey” which basically means that we had to create the largest global community of Customer experience and Employee experience professionals that helps each other to excel in creating the happiest customers and employees in the world.

Technology has changed the world so that 89% of companies compete purely on CX basis and what we noticed is that only 10% of companies invest enough in their customer experiences. 

This said, companies are not able to rely on sololy in investing high technology, even though that remains to be important, the only way to survive is to create exceptional experiences day after day. And who create those experiences? Well, your employees of course. This is another reason why we think that we need to concentrate on discussing and educating ourselves about the entire journey and not just one touchpoint.

Even though CX has taken its place in the professional community of marketers it still remains a very uneducated field of marketing. Very few universities adequately teach about customer experience, employee experience, customer journeys, and above all how to drive business benefit from them and create happier customers.

There is a lot of talks but few deeds – and this is where CXforum comes in. Our goal is to really revolutionize the world of marketing and CX.

At the moment we are building killer content for every CX professional (obviously) but also above that an educational system with certifications to really make sure we can create great CX professionals for companies. We also create CX professional directories for companies to find CX professionals easily. This is topped with the worlds biggest CX events ever made – so that you can have access to the best information out there.

CXforum is an independent network of Customer Experience and employee Experience professionals, companies, and people to bring knowledge and methods together to create better experience unconditionally.

The idea of CXforum was created during one single night when I happened to meet one single-minded CX professional from Melbourne. After a long night of chat, during the first hours of the morning, CXforum was set up and good to go!

Jaakko, Co-Founder of CXforum

What is EVI® and Why You Should Measure It?

What is EVI® and Why You Should Measure It?

As customers, we experience different emotions with different brands. These emotions create a lasting impact on our buying decisions. We are loyal towards brands that appeal to our emotions and turn away from those that don’t. For businesses, these customer emotions are very important to consider. 

Emotional Experience (EE) looks at the aggregate of emotions that customers feel throughout the buying journey. It can give businesses an accurate projection of how customers perceive their brand and make necessary improvements to attract and retain customers. 

The Emotional Value Index (EVI®) is the metric used to measure EE. You have to categorize emotions into different clusters based on their amplitude and assign them a value between -1 and +1. Then, it’s a matter of taking the weighted average. 

Now, why is measuring EVI® crucial?

To evaluate your Customer Experience (CX) strategy 

Is your CX plan performing well? How do your customers perceive it?     
EVI® can help you find out.

As EVI® is a metric that can be applied both at the micro and macro level, it can be used to gain an overall picture of your company’s CX strategy. It will show the most dominating emotion that best represents your brand in the eyes of customers. It’s a result of the shopping experience, customer service, and quality of products or services offered by your business. 

For example, if the EVI® data analysis indicates a negative emotion, it could mean that customers are facing a pain point at a particular phase. You can then fine-tune your CX strategy and elevate the experience for better results.

Understand your customers 

Do customers like your products? What exactly do your customers expect from you?

There’s nothing that overtly explains your customer requirements and expectations than their emotions. By understanding how they feel about your products, buyer journey, and engagement level, it’s easier to cater to their requirements. The best way to learn about your customers is by asking them!

You can gather EVI® data through surveys designed for specific touchpoints and different phases of the customer journey. It helps you understand how customers feel and why they feel that way. More importantly, EVI® feeds you with important information about the customer profile(s) of your business.

Evoke emotions that generate higher sales

What emotion(s) persuade customers to click “buy”? What emotions encourage them to purchase repeatedly?

Tapping into customer emotions is the best way to create happy customers for your business. Your brand should evoke happiness, joy, and excitement in your clients for high retention and loyalty. If customers are pleased throughout their buying experience, your business will generate higher revenue. It’s not just from their purchases but also from the increase in new customers through word-of-mouth. 

On the contrary, emotions like frustration, disappointment, and sadness can lead to high churn rates. It will deter customers from your brand. The middle ground emotion, “indifference”, means that customers don’t perceive your brand as worthier than others.

Drive your brand towards success

How can you offer what others don’t? How can you make your customers feel exclusive? 

Today, customers stand with brands that walk the extra mile to make them feel special and acknowledged. That’s not it. They prefer brands that vocalize issues they care about. By keeping track of customer emotions through EVI® and utilizing customer data, it’s possible for a business to offer personalized experiences. 

EVI® helps you figure out ways to win the hearts of your customers. You can monitor how customers feel about your loyalty programs, promotional events, and discounts using EVI® surveys. You can even convert an unhappy customer to an overjoyed loyal client with it! It helps you gauge the efficacy of strategies to promote growth.

If you want to learn more about EVI -methodology, please visit https://www.emotionalvalueindex.com/ or https://www.feedbackly.com/blog/how-to-measure-emotions-emotional-value-index-evi/

EDIT: © Emotional Value Index and EVI® are copyrighted, registered, developed, and owned by Feedbackly ltd and they are registered with the European Union Intellectual Property Office, and with the United States Patent and Trademark Office.