February 16, 2024

NPS stands for Net Promoter Score which is a metric used in customer experience programs. NPS measures the loyalty of customers to a company. NPS scores are measured with a single-question survey and reported with a number from the range -100 to +100, a higher score is desirable. What is Net Promoter Score (NPS)? Net Promoter Score (NPS) is a metric that organizations use to measure customer loyalty toward their brand, product or service.  Many companies use NPS as part of their customer relationship management (CRM) strategy, as the metric is easy to form and calculate. A company just has to ask its customers one question: “On a scale of 0 to 10, how likely are you to recommend us to a friend or colleague?” NPS is measured as a score from -100 to 100. Higher scores are better, as the number informs an organization how well it’s perceived by its customers. NPS is a common metric used to determine customer perception and experience. Organizations use NPS scores to help find business areas that need improvement to create better customer loyalty. Organizations must ensure they keep NPS surveys from feeling coerced, however, and they shouldn’t be the only metric used when determining customer loyalty. How to calculate Net Promoter Score “How likely are you to recommend us to a friend or colleague?” are assigned a number on a scale from 0 to 10, with 10 being the most positive. Customers are then divided into the following three categories: promoters, passives and detractors. Promoters (score 9-10) are the most loyal customers and may refer others to the organization or service. Passives (score 7-8) are satisfied yet unenthusiastic and can be swayed by more competitive options. Detractors (score 0-6) are unhappy and can damage a brand with negative word of mouth. With social media, customers can easily share their thoughts on the organization’s products or services. The Net Promoter Score can be calculated by subtracting the percentage of detractors from the percentage of promoters. Another way to determine the same score is to use the following equation: (number of promoters – number of detractors) / (number of responses) x 100 So, for example, if there are 50 promoters and 30 detractors with 100 responses, the equation would be (50-30)/(100) x 100 = an NPS score of 20. Why is Net Promoter Score important? it was important for a company to know how many of its customers were assets and how many were liabilities. By correlating the customer’s subjective response to an objective number, the metric can be used to legitimately drive a company’s internal priorities.  NPS helps companies organize a methodology around improving their perception and reducing negative word of mouth or unhappy customers — which can lead to business growth. What can you measure with NPS? Organizations that offer a product or service — such as call centers, internet service providers, department stores or healthcare providers — can use Net Promoter Scores. The metric helps them do the following: determine customer retention and loyalty; determine customer perception; determine customer churn; and monitor organization, product or service improvements. How to interpret NPS Net Promoter Scores are expressed as a score from -100 to 100. A negative score occurs when a company has more detractors than promoters, and a positive score occurs when a company has the inverse. A good NPS is typically considered any score above a 0, since this means the organization has more promoters than passives or detractors. A bad NPS, likewise, is considered any score below 0. Knowing average Net Promoter Scores by industry can help organizations understand if an individual NPS is considered good in context. For example, if the typical score in a particular industry averages around a -10, an organization’s individual score of -3 wouldn’t be as bad by comparison. Likewise, an NPS score of 3 would be considered worse in context when compared to an industry where the average score is 30. How to create an NPS survey The most basic NPS survey would include just the question “On a scale from 0 to 10, how likely are you to recommend us to a friend or colleague?” However, surveys can be supplemented with additional questions that provide more insight into customer motivations. Additional survey questions typically include the following: Demographic questions about age or gender. Scores may vary across demographics, so asking these questions can give a company a better idea of customer loyalty across audience segments. A question asking the “Reason for your score.” This is normally an open-ended question asking the individual the reason behind why they gave that numerical score. Ask “How could we improve?” A question asking for permission to follow up with the customer as needed. FAQs How often should NPS be measured? The frequency of NPS measurement depends on the business and its dynamics. Many companies measure NPS quarterly or annually, while others may do it more frequently to capture real-time customer sentiment. Can NPS be used in any industry? Yes, NPS is versatile and can be used in virtually any industry to assess customer satisfaction and loyalty. It is widely adopted in sectors such as retail, technology, healthcare, and services. Are there any limitations to using NPS? NPS provides a snapshot of customer sentiment but may not capture the complete customer experience. Some argue that it oversimplifies complex relationships. Additionally, cultural and industry variations may impact the interpretation of scores. It’s crucial to supplement NPS with other metrics and qualitative data. 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Cohort analysis is a type of behavioral analytics in which you take a group of users, and analyze their usage patterns based on their shared traits to better track and understand their actions. A cohort is simply a group of people with shared characteristics. Cohort analysis allows you to ask more specific, targeted questions and make informed product decisions that will reduce churn and drastically increase revenue. You could also call it customer churn analysis. What is Cohort Analysis? Cohort Analysis is a form of behavioral analytics that takes data from a given subset, such as a SaaS business, game, or e-commerce platform, and groups it into related groups rather than looking at the data as one unit. The groupings are referred to as cohorts. They share similar characteristics such as time and size. Companies use cohort analysis to analyze customer behavior across the life cycle of each customer. In the absence of cohort analysis, businesses may experience difficulties in understanding the life cycle that each customer goes through over a given timeframe. Businesses use cohort analysis to understand the trends and patterns of customers over time and to tailor their offers of products and services to the identified cohorts. A business sees a lot of data coming in on a daily basis. Analyzing such large volumes of data is not only complex but also an expensive task that requires dedicated staff. However, a business can break customers down into more manageable and actionable cohorts. Types of Cohorts to Analyze Cohorts can be grouped into the following categories: 1. Time-Based Cohorts- Time-based cohorts are customers who signed up for a product or service during a particular time frame. Analyzing these cohorts shows the customers’ behavior depending on the time they started using a company’s products or services. The time may be monthly or quarterly, depending on the sales cycle of a company. For example, if 80% of customers who signed up with the company in the first quarter stick with the company in the fourth quarter but only 20% of customers who signed up in the second quarter stick with the company up to the fourth quarter, it shows the Q2 customers were not satisfied. The company could’ve overpromised during Q2 promotions, or a competitor may be targeting the same customers with better products or services. Analyzing the time-based cohorts helps in looking at the churn rate. For example, if customers who signed up for the company’s product in 2017 churn out faster than those who signed up in 2018, the company can use this data to find out the cause. It could be that the company is not keeping up with its promises, a competitor offers better quality products, or a competitor is directly targeting your customers with better incentives. For a SaaS business, the churn rate tends to be high at the start of a given timeframe, and drops as the customers get used to the products. Customers who stay longer with the company tend to love the product and churn at a lower rate than at the start of a time frame. In the absence of cohorts, a company may not identify the exact cause of a high number of customers abandoning the products within a given timeframe. 2. Segment-Based Cohorts- Segment-based cohorts are those customers who purchased a specific product or paid for a specific service in the past. It groups customers by the type of product or level of service they signed up for. Customers who signed up for basic level services might have different needs than those who signed up for advanced services. Understanding the needs of the various cohorts can help a company design tailor-made services or products for particular segments. A SaaS company may provide different levels of services depending on the purchasing power of the target audience. Analyzing each level helps in determining which kind of services fit particular segments of your customers. For example, if the advanced level customers churn at a much faster rate than basic level services, that is an indication that the advanced services are too expensive or that basic level services simply better meet the needs of most customers. Understanding what customers are looking for in a package helps the company in optimizing its notifications to focus on relevant push emails that customers will open and read. 3. Size-Based Cohorts- Size-based cohorts refer to the various sizes of customers who purchase a company’s products or services. The customers may be small and startup businesses, middle-sized businesses, and enterprise-level businesses. Comparing the different categories of customers based on their size reveals where the largest purchases come from. For categories with the least purchases, the company can review any issues with the product and service offering and brainstorm areas for improvement that can boost the level of sales. In a SaaS business model, small and startup businesses usually churn at a higher rate than enterprise-level companies. Small and startup businesses may have a small budget and be testing low-priced products to see what works for them. Enterprise-level businesses have a larger budget and tend to stick with a product for a longer period of time. benefits of cohort analysis Determine business health. A great indicator of a healthy business is increasing revenue even if you aren’t acquiring new customers.  that cohort analysis “can help you determine which cohorts/groups of customers are contributing the most to revenue.” This, in turn, allows you to focus on upselling other products or services to them. Understand customers better-Cohort analysis allows businesses to gain a deeper understanding of their customers by tracking their behavior over a period of time. This can help you identify patterns and trends that may not be immediately apparent from looking at vanity metrics. Enhanced customer segmentation- By dividing user groups and creating specific cohorts, businesses can create more targeted and effective marketing campaigns and offer personalized customer experiences. Increased customer retention.-cohort analysis helps by analyzing retention rates and identifying potential churn risks. With this information in hand, you can take proactive

Permanent Account Number abbreviated as PAN is a unique 10-digit alphanumeric number issued by the Income Tax Department to Indian taxpayers. The department records all tax-related transactions and information of an individual against his unique permanent account number. This allows the taxman to link all tax-related activities with the department. PAN primarily acts as a database for all individual transactions, such as the tax collected at source (TCS)/tax deducted at source (TDS) credits, income tax payments, return on gift/investments/wealth, etc. Simply put, the PAN enables the tax department to identify an individual’s tax-related transaction. What is a PAN? Permanent Account Number (PAN) is a unique identification number provided by the Income Tax Department. The Income Tax Act mentions that individuals falling under the following criteria are required to obtain PAN: If a particular person’s income crosses the basic exemption limit for a financial year. If the overall earnings or business exceeds the limit of five lakhs in the financial year. If the person is required to get import and export code or GST registration. If the person receives any amount after deducting withholding tax from the total earnings payable to another person. If any financial transactions which are undertaken require submission of PAN card mandatorily. PAN in India can be obtained voluntarily by any person, irrespective of citizenship, residency or age. Hence, foreigners, NRIs and minors are also allowed to obtain PAN. PAN Card The tax department issues an individual’s PAN on a physical card referred to as the PAN card. The PAN card includes information, such as the PAN number, photograph, name, and date of birth of the holder. PAN has a typical format of ABCTY1234D. The first three characters, i.e. ‘ABC’ in the above number is an alphabetic series ranging between AAA and ZZZ. The 4th character, i.e. ‘T’, represents the PAN holder’s status. The alphabet ‘T’ represents Trust, ‘F’ for Firm, ‘H’ for HUF, ‘P’ for Individual, ‘C’ for Company etc. The 5th character, i.e. ‘Y’, represents the first alphabet the PAN holder’s last name. The next four characters are sequential digits ranging between 0001 and 9999. The 10th character, i.e. ‘D’, is an alphabetic check digit that runs from A to Z. Transactions Requiring PAN PAN is required for filing an income tax return in India. In addition, according to the rules of Income Tax under 114B, 1962 submission of PAN is necessary for an individual if the taxpayer gets involved in the following financial activities: Involved in selling or purchasing activities of motor vehicles excluding two-wheelers, where the PAN document is mandatory during the registration process. Opening bank account including with cooperative banks. To apply for a credit card or debit card or loan. An opening of DEMAT account. To pay hotel or restaurant bill of more than Rs.50,000 in a single transaction. To purchase foreign currency of more than Rs.50,000 or travel outside the country. To purchase mutual funds worth Rs.50,000 or above.  Buying a company’s debentures or bond worth Rs.50,000 or more. Buying bonds worth Rs.50,000 or more from Reserve Bank of India (RBI). Depositing cash of Rs.50,000 or more in a bank or post office in a single day. Buying bank’s draft, any cheque which is worth Rs.50,000 or more through cash payment in a single day. One time deposit which exceeds Rs.50,000 or more in a single day or Rs.5,00,000 in a single financial year in banks and post offices. Paying a total amount of Rs.50,000 in a financial year for more than one prepaid payment instruments like smart cards, online wallet, mobile wallet etc. While paying insurance premium policies of Rs.50,000 or more during a financial year. While selling or purchasing various securities (except shares) worth of more than Rs.1 lakh in a single transaction. While selling or buying any immovable assets through stamp valuation authority for more than Rs.10 lakhs. Involving in buying or selling activities of any goods or services worth above Rs.2 lakhs in a single transaction. Buying or selling of a company’s share at a value of more than Rs.1 lakh in a single transaction, which does not belong to any recognised stock exchange.   Applying for PAN PAN applications can be submitted at PAN facilitation centres that are available in every Indian city/town operating under UTITSL (UTI Infrastructure Technology and Services) and NSDL (National Securities Depository Limited). In addition, a person can also register and get his PAN card through the online mode. To obtain PAN, PAN application form 49A provided by income tax department must be submitted online or at a PAN facilitation centre. PAN Application Form 49A PAN application must be submitted in Form 49A.  How to Fill Form 49A Follow the steps mentioned below to complete and submit the Permanent Account Number application form 49A: The individual who is supposed to use the PAN card must give their last/surname with First and Middle name in the respective order, the name will be printed as it is given in the form 49A. If the person is an Aadhaar cardholder then the Aadhar must be mentioned mandatorily by the user. The person has to mention their source of income, if the person has no source of income then it has to be mentioned in the separate column. The details of the applicant representative must be given according to the Section 160, of Income Tax Act 1961, according to this act if the applicant is a minor or mentally challenged person, then the details of the representative who takes care of minor needs to be filled in the form. Also, the proof of identity and address of the representative must be submitted with Form 49A. The application must be signed and verified by the applicant or representative. Once the application form is submitted, a unique number will be created and given to the user to track the status of the PAN document processing. Contact details will also be given in the application form to resolve the queries. Once the PAN application is prepared, the applicant can sign the application form,