May 19, 2021

Churn analysis and the Net Promoter Score: Can NPS predict customer retention?

While customer acquisition is a critical parameter for any business to grow, neglecting current customers in pursuit of new ones can have a damaging impact. Developing and maintaining a loyal customer base can generate long-term business growth: retaining customers can lead to savings on customer acquisition costs, as current customers already know your products and, according to research, 60% of customers would tell a friend or family member about a brand they are loyal to. Loyal customers are also more likely to join loyalty programmes and spend more on products, even when offered equivalent and lower priced products by competitors.  

Having leaks in the customer pool, also known as customer churn or attrition, should therefore be a grave concern for any business. There exists a wide body of research devoted to analysing customer switching behaviours, and churn prediction focuses on spotting customers who are likely to discontinue the use of a service. Among the plethora of factors that could make a customer churn, it is widely accepted that dissatisfaction with the service they have received is a key driver. Targeting the causes of this dissatisfaction is therefore at the core of developing churn prevention or customer retention strategies. 

When talking about customer loyalty, the discussion naturally turns to the Net Promoter Score (NPS). As a customer sentiment metric, NPS has taken the world by storm since its introduction in 2003, offering an attractive ratio of relevance to simplicity, and has been adopted by two-thirds of Fortune 1000 companies. The question asked is simple: 

Source: KAE

NPS provides a straightforward metric for tracking customer advocacy, then, acting as an indicator of customer satisfaction and loyalty as well as giving information on a company’s reputation versus its competitors. But is NPS a good predictor of customer retention? Surely it makes sense to think that loyal and satisfied customers are less likely to churn and more likely to establish a long and fulfilling relationship with a brand. 

In fact, there might not be a straightforward relationship between NPS and customer renewals: as self-reported NPS at a given point is subject to many biases, it might not by itself be useful for reliably forecasting renewal revenue for an individual organisation. Differences in how, when, and from whom results were obtained can also determine the quality and direction of results, even if in general companies with higher NPS scores experience lower churn rates. One example of a company with a high NPS and high customer retention is Amazon. According to CEO and founder Jeff Bezos the company reached 200 million subscribers in its Prime membership program worldwide in 2021. Research shows that up to 70% of customers who sign up for a trial membership convert to paid membership and it is estimated that 93% of consumers renew their paid membership after one year, with the retention rate going up to 98% after two years. Another example can be found in Netflix. The streaming service has developed a loyal customer base over the years, and most of the customers that pay for Netflix do not subscribe to other streaming services.  

In recent years there has been an increasing consensus among customer satisfaction experts that it is risky to rely on a single metric to measure customer loyalty, and a consequent increasing interest in multidimensional or hybrid approaches that combine demographic, behavioural and attitudinal customer data. By itself, NPS does not give insight into why customers are happy or unhappy, it tells us nothing about actual customer behaviour nor does it provide any insight into return on investment. But simply asking a follow-up question such as “Why did you give the answer that you gave?” can offer deeper insight. If an organisation wants to learn why its customers churn, the answer may well lie in this kind of textual feedback. By mining this written feedback, organisations may be able to spot and classify complaining, neutral and satisfied customers with greater accuracy. All this information can be used to develop targeted customer retention strategies, the effect of which can then be rapidly assessed at many points along the customer journey via NPS.  

Moving from the aggregate to the individual level, NPS offers a fast and straightforward way of identifying unsatisfied customers. Scores correlate to how satisfied customers are with the service or product at the time of asking the question, so if it is possible to reach out and act almost immediately, through strategies implemented by customer services teams, companies can attempt to win back dissatisfied clients or mitigate negative word-of-mouth before it occurs. 

In conclusion, NPS alone is not a good predictor of customer retention and does not give many valuable insights into churn. A hybrid multidimensional approach combining demographic, behavioural and attitudinal data can provide a more accurate measure of customer loyalty than a single self-reported loyalty metric. The real value of NPS comes from quantifying the effects of individual elements of the customer journey, such as experienced pain points or channels of contact, and from enabling organisations to act quickly to address issues. To gain insight on churn, looking at customer spending patterns and verbatim feedback is an effective way to identify customers who may churn and unveil drivers of attrition. 

May 24, 2018

Vantage: Starling Bank

Starling Bank, the challenger bank recently named as the Best British Bank of 2018, has CX firmly on its mind

Starling Bank, one of the UK’s first digital only challenger banks, is known for its fast service and straightforward banking. Julian Sawyer, Starling’s COO, explains how important customer experience is to the evolution of the bank from product development to business growth.

Tell us more about Starling Bank, including what makes your vision unique?

Starling is a completely different kind of bank. Back in 2014, during her role as Chief Operating Officer of Allied Irish Bank, our founder Anne Boden became interested in how financial technology could be used to help customers manage their money. She also came to realise that the only way to do this was to start her own bank. And so that’s what she did.

Anne brought together a team, all of whom recognised that after the financial crisis in 2008, so much had changed – but not in banking. Our vision is to ensure that banking goes through a revolution, putting customers at the centre of everything we do and giving them digital tools to help them manage their money, all from one app.

In early 2016 Starling secured funding of £48 million ($70 million). Later that year, we were granted a banking licence by the Bank of England, enabling us to build the UK’s first mobile-only current accounts. Less than a year after launching in the App Store in May 2017, we were voted Best British Bank and Best Current Account Provider at the Smart Money People awards. We currently offer mobile-only personal accounts and business accounts and have plans to launch a euro account in the future.

Starling Bank recently became the first mobile-only bank to offer a business banking account: in your opinion, what are the challenges associated with being a first mover in offering new types of customer experiences?

There’s no doubt that being the first to offer a completely new product presents challenges. As a first mover there is no previous example of process to follow, or previous mistakes to learn from. It’s also harder to anticipate customer response to a new product launch that they perhaps haven’t come across before or feels unfamiliar to them.

However, being groundbreakers is also very exciting. We have an incredibly talented team at Starling who are brilliant problem solvers. Our key to understanding customer response is our Community – the platform through which Starling customers can discuss new features, updates and tell us what they like and what’s missing.

To provide innovative solutions for businesses, we’ve tried to smooth out all the friction associated with traditional business bank accounts – customers can open a business account in 10 minutes, not 10 days.

As Starling Bank is at the forefront of digital banking, how and who do you choose to benchmark your experience against? Do you even believe benchmarking is important with Starling Bank’s current position?

Looking forward is always better than looking sideways. We’re the first mobile-only bank to offer personal accounts, business accounts, connect to the Current Account Switching Services (CASS), become a direct member of the Faster Payments Scheme and SEPA, use 100% cloud based technologies and gain approval for our Marketplace enabling API integration with third-parties. We are also the first and only digital bank to offer all of the following: Google Pay, Samsung Pay, FitBit Pay, Garmin Pay and in-app provisioning of Apple Pay. We’re creating our own benchmarks for the industry.

Based on your experience, what are the main pain-points that customers usually experience when banking online and/or via mobile?

Even the simple action of taking laptops out of the equation instantly makes digital banking easier. Managing your money from one app is transformative. All you need is your smartphone – no more card readers, spreadsheets or frustrating phone calls waiting to speak to your bank to cancel a card or tell them you’re going abroad. You can set up new payments, split bills, check your monthly spend, lock your card if you’ve lost it and send a message to our 24/7 customer service in-app, with only a few taps.

Are there any key trends and/or technologies that you feel will impact the customer experience element in banking (and any other industries) over the next year or so?

The rise of online banking and of digital challengers has already had a huge impact on traditional banks who are closing more and more branches every week. However this also means that there is a gap in service. Physical branches are closing, but the online services and banking apps are not being updated and improved at the same rate – not even close. Starling has been built from scratch by the digital generation – we are able to deliver the fast, intuitive, secure service that people are looking for. Our focus on faster banking, keeping customers updated on payments with features such as real time notifications, and an attention to detail when it comes to UX and UI is transforming the customer experience of banking. We expect these features to become the norm and as such we are raising the game for the other industry players or customer expectations.

In terms of specific technologies that will impact banking in the next year, Artificial Intelligence will be key. Further down the line, we believe that we will move towards a cashless society in which banking will become more invisible. For example, people will be able to walk into a store, do their shopping and be charged on their way out without having to queue and pay at a till.

About the Author:

As Chief Operating Officer, Julian Sawyer oversees business operations, including payment systems, card operations, customer service, human resources and supplier relationships. Julian worked as a management consultant at Andersen Consulting (now Accenture) and EY, specialising in large-scale transformation in the cards and payments industry.

He set up his own financial services consultancy, Bluerock, which he ran for thirteen years before selling it in 2012. After many years as a consultant, joining Starling gave Julian the opportunity to put all his learnings into practice, to build a bank with an amazing team of true professionals. He enjoys working at a fintech business since he loves delivering things, making things happen and moving things forward at pace.

More about the Vantage Series:

This post is part of the Vantage series by KAE that provides a fresh perspective and hears first-hand from various players across the FinTech & CX ecosystem.

KAE will be posting a number of interviews with companies that share their candid viewpoints and to really get under the skin of the FinTech world and Customer Experience within various industries.

If you would like to share your views and participate in the Vantage series, feel free to reach out to us at

Written by:

Julian Sawyer

January 22, 2018

FinTech vantage: Bud

The technology platform brokering a new deal between people and their money. We find out more from Bud...

Bud is a technology platform that links financial services together and strives to make banking better. We recently spoke to Jamie Campbell, Head of Awareness, to help understand more about Bud and how the PSD2 regulation and the rise of open banking could impact FinTech companies like them.

1. Tell us more about Bud, including what makes the company and its vision unique. What do you think are the critical components that will make Bud successful?

Bud is a technology platform brokering a new deal between people and their money. From the start, we wanted to create a platform that allows people to use any financial services in one easy to use app or website – the steep innovation curve of FinTech creates more choice and more complexity in the market which we aim to solve.

Our platform is harnessed by banks to create win/win collaborations with FinTechs, that in turn, create great experiences for their customers. Banks want to build better relationships with their customers, FinTechs want to reach new audiences, and customers want hassle-free finances that look after their interests. Bud is the only platform in the world that connects those three things.

Critical components that go into making Bud are threefold:

Aggregation. Beyond simple account aggregation, Bud pulls together multiple data sources, financial and non-financial, to create a digital picture of an individual’s finances. We perform our proprietary analytics and programmes over this data which leads to the next stage…

Journey recognition. Using all of those data sources to piece together an understanding of what that customer is doing with their money and signposting key events where Bud can help limit fees or cover with better services. For example, this can manifest as bill switching, finding more effective ForEx, sourcing new investment options, etc…

Marketplace. The final component involves providing the customer with the most relevant product at the right time to take advantage of those events. We currently have close to one hundred partners with enough variety to ensure that we can serve customers across all areas of the financial ecosystem.

2. Where is Bud currently on its journey and what barriers have you encountered along the way?

Bud has been running for two and a half years and has proven its model, initially with a customer-focused product launched via the FCA sandbox, and now with distribution partners such as HSBC here in the UK.

We have also been lucky enough to be involved in a scheme set up by Nesta, the innovation charity. Their Open Up Challenge was a push to get companies, such as us, to develop open banking-based solutions for SMEs. Following a successful six month build, we were delighted to win. There will be a ‘Bud for Business’ proposition in the market soon – plenty of banks are interested.

We are fully regulated by the FCA and are growing massively. Last year we increased the team by 400% and we have just moved into new premises that will allow us to double in size. We have roughly twenty job posts open (so if you are a developer looking to work with an award-winning company in the FinTech space, get in touch).

The barriers that we come up against won’t surprise anyone. Regulation is a barrier for everyone entering financial services. Regulation is a part of the fabric of Bud, it’s integrated into our operating model. The fact that everyone at Bud understands where we sit with regulation means that we can innovate quickly and help our banking partners better.

3. PSD2 has been heralded by many as a pro-FinTech piece of regulation. Are there any parts of PSD2 that FinTechs need to avoid being tripped up by?

PSD2 covers account aggregation services and payment initiation services. The main areas to look out for are in getting regulated and having the insurance necessary to conduct the activities. For some companies, it won’t make sense to get licences of their own in this space and will look to firms like Bud to ‘borrow’ the service.

But PSD2 isn’t just pro-FinTech. For banks daring enough, it can be a huge asset to help develop new services and experiences for their customers. That’s what we have found with the partners we are working with: those with a strong strategy will perform well – bank or FinTech.

4. Where will the impact of PSD2 and open banking be most felt – will this be in the consumer or commercial payments worlds? Why do you think this is the case?

Open banking use cases I think are more developed in the retail aggregation world. But the commercial banking experience today is way below par, and most banks have SME banking high on their agendas for change. I think that the biggest impact will be in uncovering a market-leading SME banking experience as a direct result of innovations, brought about by open banking.

Ultimately, the impacts of open banking will be judged on data gained vs data lost in both aggregation and payment services. The immediate impact will likely be low, just like any adoption curve, but as people start to see, use and share more of the features open banking provides the uptick will become more dramatic.

5. What do you feel is the most important differentiator for FinTechs now and how will this change post PSD2 implementation?

The beauty of FinTech is that it has created massive amounts of innovation in each product vertical. Whether that is around access to credit, currency exchange, investing, insurance. New providers, freed from legacy systems, are able to leverage more flexible technology stacks to deliver far more personalised services. This kind of innovation is desperately needed in the market – people’s individual financial situations are almost limitlessly diverse and, if it is to meet this need, the market must be able to match this diversity with its offerings.

Post PSD2 differentiation will come in the form of data interpretation and activation; how FinTechs capitalise on this new data set. Whether that be in speeding up on-boarding processes, faster credit decisions, more accurate rates, more personal service. The value and differentiation will come from understanding a customer’s demands and using data to serve those needs in better ways.

6. How important do you consider open banking to be when it comes to building customer relationships? Why?

It depends on what side of the fence you sit. For a FinTech provider, PSD2 will allow you to build a relationship with customers that, in some cases, are not yours – or at least not in the traditional finance sense (they haven’t bought a product from you.) For a bank, it is an opportunity to get a richer picture of your clients and their finances, to offer real benefits and personalised assistance.

It will become more straightforward to shop around for products, right the way down to current accounts, so the focus for most businesses with high customer numbers will most likely be on keeping their customers. To do that, they have to create or deliver authentically useful products and services. Otherwise, people will find them elsewhere.

We are seeing banks adopting a new strategy: offering all services, including competitor products, to their customers. Currently it is regretful if your customer buys from a competitor. But in the future, what will be worse is if they buy from a competitor that is not in your ecosystem.

So, regardless of what you want your relationship to be like with customers, open banking will certainly play a role. If your strategy is to become the brand of choice that people do business with, you have two choices: build competitive services in-house or link those third-party services into your product. Personally, I think the answer is obvious. Different to what has existed in the past, but obvious.

7. What needs are Bud trying to solve for its customers and how will Bud’s value proposition address these?

For a while now, we have been comparing challenger banks and banks on level ground, but it is an unfair fight. I wouldn’t want a bank that has twelve million customers to duck and dive and move as quickly as a challenger can. That is not their role. But they can outsource nimbleness. They can bring in flexibility, technological excellence and the streamlined experiences that customers see elsewhere.

Bud’s role is as middleware for the financial services industry. We connect many products – all of which are suitable for every type of banking customer – into one platform that gets distributed to millions of customers via distribution partners.

8. How will you ensure your business model stands the test of time as competition grows?

Competition in the FinTech space is great for us. The more providers, the more complexity, the more our recommendation engine and marketplace becomes valuable.

The business model is relatively robust; we split marketplace affiliate revenue with our distribution partners and earn a licensing fee from them. And thanks to PDS2 it is understandable that the market will only get bigger. For companies wanting to sidestep into financial services, it has traditionally been challenging. Whereas now, by partnering with a company such as Bud, all of the regulation is taken care of, the services are integrated, and technical upkeep is sorted. It is an off the shelf product available to any company with a large customer base.

9. What is the one pearl of wisdom you would share with anyone starting their journey as a FinTech and why?

Understand the regulatory requirements that your product will need as early as possible. Work with the regulator so they can understand the model/product. It is the ticket to the game in the UK, so make sure you buy it before you compete.

About the Author:

As Head of Awareness at Bud, Jamie raises the profile of the company both in business development and marketing. He was Bud’s first employee and has helped transition the company from B2B to B2C. Previously, Jamie was a senior strategist in Advertising, working on brands such as Coca-Cola and Heineken.

More about FinTech Vantage:

This post is part of the FinTech Vantage series by KAE that provides a fresh perspective and hears first-hand from various players across the FinTech ecosystem.

KAE will be posting a number of interviews with FinTechs that share their candid viewpoints and to really get under the skin of the FinTech world.

If you would like to share your views and participate in the FinTech Vantage series, feel free to reach out to us at

About the Author:

As Head of Awareness at Bud, Jamie raises the profile of the company both in business development and marketing. He was Bud’s first employee and has helped transition the company from B2B to B2C. Previously, Jamie was a senior strategist in Advertising, working on brands such as Coca-Cola and Heineken.

More about FinTech Vantage:

This post is part of the FinTech Vantage series by KAE that provides a fresh perspective and hears first-hand from various players across the FinTech ecosystem.

KAE will be posting a number of interviews with FinTechs that share their candid viewpoints and to really get under the skin of the FinTech world.

If you would like to share your views and participate in the FinTech Vantage series, feel free to reach out to us at

Written by:

Jamie Campell