CX: Overview of Revenue Impact
The Revenue Impact module in SurveyMonkey CX provides users a general framework for connecting the customer experience to business results. While based on published research, these calculations are intended to serve as generalized estimates that help business leaders think about the many ways customer experience impacts business results over both short-term and long-term timeframes. It is a way of justifying investment in improved customer experience.
We currently provide two Revenue Impact visualizations, both of which rely on users to estimate ARPC (average revenue per customer) and the total size of their customer base:
Projected Revenue Impact by Sentiment
This visualization helps you understand the potential future financial impact of Promoters, Passives, and Detractors in three ways:
- Potential Revenue Growth: Promoters are more likely to renew subscriptions, make repeat purchases, and to refer new customers via word-of-mouth recommendations. We frame this as Potential Revenue Growth and calculate it as Number of Promoters * 0.3 * ARPC. In other words, as a rule of thumb, 30% of promoters may be expected to refer a new customer.
- Long-Term Revenue Risk: Passives are at a higher risk of churn over a 6-month timeframe vs. Promoters. We frame this as Long-Term Revenue Risk, and define it as Number of passives * 0.3 * ARPC.
- Short-Term Revenue Risk: Detractors are at a much higher risk of churn over a 3-month timeframe vs. Promoters. We frame this as Short-Term Revenue Risk and define it as Number of detractors * 0.5 * ARPC.
The Revenue Impact of Increasing Your NPS
This visualization helps you to understand the potential future financial impact of converting Detractors to Promoters by focusing on improved customer experience. It is based on research that has estimated that Promoters have on average 2.6x the LTV (Lifetime Value) of Detractors.
The estimated financial impact is calculated as: ARPU * 2.6 * Number of Detractors Converted to Promoters. The chart that we present shows this estimated financial impact for several scenarios, for converting 5-30% of existing Detractors to Promoters.
Formulas for Calculating Revenue Impact:
The formula to calculate Revenue Impact originate from the foundational NPS methodology text. The 50% and 30% multipliers used are general approximations across all business types. ARPU = Average Revenue Per User
- Short Term Revenue In Danger: Number of detractors * 0.5 * ARPU (Half of detractors are likely to leave soon)
- Long Term Revenue In Danger: Number of passives * 0.3 * ARPU (in the next 6 months, 30% of passives are likely to leave)
- Potential Revenue Growth: Number of promoters * 0.3 * ARPU (30% of promoters are likely to make a referral that turns into a long term customer)