SWOT analysis and NPS

Magical guide about #product management. Article #43

SWOT analysis is a strategic planning tool that allows you to describe the realistic state of affairs of any company. The abbreviation “SWOT” is formed from four English words: “strengths, weaknesses, opportunities, threats”. They are translated accordingly as “strengths, weaknesses, opportunities, threats”. The advantage of SWOT analysis is to conduct a comprehensive study of the company, competitors and the industry as a whole.

What is SWOT analysis used for?

The main task is to develop a business strategy for the development of an enterprise or facility, making sure that all the main factors have been taken into account — the driving forces for successful growth. Opportunities within the company and external factors are also considered.

SWOT analysis is suitable for designing the strategy of a new enterprise, company, service, product. Often the algorithm is also used for introspection of personal and professional growth. It is also used for competitive intelligence in a niche. For example, the analysis helps to segment the available offers on the market according to the degree of their demand from the target audience.

For any business, it is important to really see the levers that it can control — the internal resources of the company, as well as to understand the factors outside the impact zone — external threats. A simple understanding of these points already saves budget and time.

SWOT analysis suggests that for the successful development of a commercial project, the following characteristics must be taken into account:

S — strengths

. These are advantages, values, unique skills. Due to this, the company increases sales, presence in the market, feels confident in the competition.

W — weaknesses

. Disadvantages, where and in what you lose to competitors. These characteristics slow down profit growth, hinder development, pull back.

O — opportunities.

?These are levers that are in the hands of business and are amenable to direct influence. For example, professional development of employees, etc.;

T — threats.

?Difficulties, external factors that do not depend on the decisions you make.

There are three characteristics that a business can affect. For example, eliminate shortcomings (weaknesses) through the introduction of new technologies, solutions (opportunities) and strengthen their competitive advantages (strengths). SWOT analysis also takes into account the category of external causes — threats to growth. These are natural disasters, the climate of the region, the exchange rate, the adoption of new laws, the political situation in the country, demography and a number of other factors.

When making a SWOT analysis, it is recommended to adhere to the following rules:

1. Focusing on a specific business area. It is necessary to discard everything that does not directly relate to the company’s field of activity.
2. Identification of “their” strengths and weaknesses.
3. Identification of opportunities. It is necessary to focus on internal factors, the company can manage them.
4. A SWOT analysis of an enterprise is carried out by a group of people in order to obtain objective results. Entrust the work to the marketing department.
5. Use precise formulations of characteristics, avoid lengthy, ambiguous definitions. The more specific the goal, the clearer the ways to achieve it.

Types of SWOT analysis

In practice , three options are used:

Express is used everywhere in business to identify strengths. The emphasis in this form is on the existing advantages and opportunities for improving internal factors that will successfully resist external influences. The main advantage that express SWOT analysis gives is the visibility of business characteristics.

Summary — operates on the main indicators of the company’s activity at a specific time and for the future period. It allows you to get more accurate quantitative values of strategic analysis factors. The advantage of this type is the immediate transition from research to the development of a business development strategy. The disadvantage is the complexity of the conduct.

Mixed SWOT analysis is a variant that uses the characteristics of the express and summary type. The algorithm assumes at least three strategic studies. Quantitative assessment is not performed. All data is tabulated for cross-analysis. Plus in the depth of study.

Advantages and disadvantages of the method

SWOT analysis has the following advantages:

• Determining the strength and weakness of the business, identifying growth factors and external threats.
• Ease of implementation and efficiency for all forms of commercial activity.
• Express analysis can be carried out by any entrepreneur or a group of employees without the help of professionals.
• Identifying the company’s capabilities that affect working with real business problems.
• Identification of links between weaknesses and strengths in the context of growth opportunities, taking into account external risks. This is one of the main tasks that SWOT analysis solves — to find levers of influence on shortcomings and become better.
• There is no need to collect arrays of information for calculations. Quite often, all the data is already at hand, you just need to systematize them.
• Designing the prospects of a company, enterprise.
• Quantitative calculation of factors, options for effective development, taking into account all the realities of the market. A consolidated or mixed calculation algorithm allows you to study the growth characteristics in depth.
• Assessment of the profitability of the project in the existing realities.
• Strengthening competitive advantages, market intelligence.
• Assessment of the internal potential of the company, the resources of the enterprise, identification of possible problems and development of measures to level them.
• Identify the threats that are the most critical in the current situation, take measures for effective protection.

The disadvantages include:

SWOT analysis is an analytical tool that does not provide clear numerical indicators or guidelines for action. First of all, it is visual, structured information. No one has canceled the high-quality work of analysts.

There is no temporal dynamics. If the market situation changes or changes occur within the company, then calculations should be done anew.

SWOT operates with subjective indicators, which complicates the work.

Any firm faces the question of whether to calculate strengths and weaknesses, risks and opportunities or not. The recommendations are as follows.

“YES

” — there is a need to quickly get information about business prospects that is not tied to changes in time.

“NO”

?— data on the development of the project is needed, taking into account the dynamics of the market. In this case, SWOT is a waste of time. You can’t get an accurate picture because of working with primitive characteristics.

Let’s consider a step-by-step algorithm for conducting research.

Step 1

. We write out the main goals, objectives of the company or project. We find out what the motives are — why you need to develop the business personally or for the company.

Step 2.

?Add strengths and weaknesses to the list. You can use the following questions or analogies to them:

• What are our employees strong in?
• Are there any advantages in technologies, methods of work over competitors?
• The UTP of our brand?
• Why do customers choose us?
• What are the characteristics of the products?
• What do we do better than others in the market?
• What areas have we mastered “perfectly”, in addition to the main activity?
• In what ways are we weak compared to our competitors?
• What prevents innovation in work, technical equipment?
• What are the disadvantages of marketing, advertising, and the corporate environment?
• What prevents you from developing according to the strategic plan?

Step 3.?

Group the answers into a table, give them names — strengths and weaknesses. Discussion of the information received with colleagues, partners.

Step 4.?

We write out the capabilities of the company, enterprise. We look at the advantages. We determine which internal resources will help eliminate the shortcomings.

Step 5.

?Identify the risks that may affect the development strategy. These are external factors — the opposition of competitors, changes in laws, natural disasters, political sanctions, and so on. We find out everything you need to be ready for in the market.

Step 6.

?Enter the opportunities and risks in the table. We analyze how “strength” can be used to overcome “weakness” and effectively protect against uncontrolled factors.

Step 7.?

We design a development strategy based on the data obtained.

Consider a SWOT analysis example: a new chain of fast food eateries in a city with a population of 500,000 people.

Strengths — fast cooking, partnership with local bakeries and food suppliers, service to all groups of CA (children, teenagers, students, employees, pensioners), products from private owners (quality).

Weaknesses — weak brand awareness, competition with McDonald’s, high advertising costs.

Opportunities — to involve active clients among young people as promoters for budget advertising in universities and schools. Food delivery to your home and office. Add useful products to the menu.

Threats — competition with McDonald’s and Burger King. Opposition of supporters of healthy eating.

How to use the results?

Conclusions on SWOT analysis are made on the basis of two methods: quick viewing and matrix compilation. The first option takes 20–30 minutes and is to discard all unnecessary and concentrate on priority tasks. For example, to strengthen a specific product or service at the expense of available capabilities.

The compilation of the matrix involves the breakdown of information into groups:

S-O is a line of strength, that is, strengths and opportunities are being studied in order to become even better.

W-O — improvement line. How to use the opportunities to level the shortcomings.

S-T is the line of defense. How benefits will protect against uncontrolled external factors. Will the company withstand sanctions, with a decrease in demand, an increase in VAT, and so on.

W-T is the warning line. What measures to launch to prevent future risks.

Often these two methods are used together. First, they do a quick review of the results with the identification of priority areas. The next step is to build a matrix along strategic lines.

Example:

Resume

We have studied what SWOT analysis is. We learned what types exist, how to compile it and analyze the results. What do I need to remember? This algorithm allows you to assess the company’s position in the market and determine the ways of development. It does not give instructions on what to do, but it is an incentive for reflection — how to effectively develop the project in the current situation.

NPS

You can work every day to improve the product, but what’s the point if customers leave and remain dissatisfied? The attitude of users towards your company is not just a reason for pride or sadness, but also a point of growth. It is measured using NPS.

Net Promoter Score (NPS), or Consumer Loyalty Index, is a metric that shows how much users love or hate your company.

The calculation of NPS is based on the responses of users on a scale with points to the question “Are you ready to recommend the company to friends?”

How to conduct an NPS survey

To calculate the NPS, you do not need to do a huge amount of work — this is a huge plus of metrics.

1. Formulate the question. Make it short — so as not to tire the reader. Make sure that it can be answered on a scale with points — otherwise you will not be able to collect exhaustive statistics. Example wording:
2. What is the probability that you will recommend us to someone?
3. Assemble the survey form. There are many convenient services for this, including free ones. For example, google forms.
4. Run the survey and forget about it for 3–4 weeks: you need to collect a sufficient number of responses.
5. Upload the answers and analyze the result.
6. Think about how to achieve better results next time.

How to decipher the NPS scale

0–6 points — critics (detractors). They leave angry reviews about you, and if they haven’t found a replacement for you yet, they will soon find one.

7–8 points — neutrals. They treat you normally, but as soon as they catch sight of someone better, they will happily leave.

9–10 points — promoters. Your long-time customers, “freelance marketers” of your business. It is easier to get in touch with them, they often leave positive feedback and are “responsible” for word of mouth.

According to a study by Temkin Group, promoters:

• 4 times more often than all other customers make repeat purchases;
• they are 5 times more tolerant of your mistakes;
• they are testing your updates 7 times more actively.

How to calculate NPS

It is necessary to subtract the percentage of critics from the percentage of promoters:

To make it easier for you, we have put together a template for calculating NPS. Look for more similar templates and other applied materials in the Carrot quest library.

The result of calculations will vary from -100 — everyone hates your company — to 100 — everyone loves it.

If your NPS:

• more than 50 — everything is wonderful, but you should not relax;
• from 30 to 50 is not bad, but it can be better;
• less than 30 is an unkind sign;
• less than 0 — it’s time to take urgent action.

Do not forget to conduct surveys again. The optimal time interval for each business is different. An online clothing store can conduct a survey of users after each purchase, and a mobile application can do it every 3 months. If the indicator stands still from period to period, then it’s time to do something for its growth.

Advantages of NPS

1. Easy to run. You can collect a survey in special services in 5 minutes. We will tell you about it below.
2. More data in less time. It’s easy for users to take a short survey, and you don’t need to do three-story calculations to analyze the results.
3. Helps to retain customers. It is more profitable to retain current customers than to attract new ones. Loyal customers are more likely to stay with you rather than go looking for someone better.

4 tools for conducting an NPS survey

1. Separate survey pages.

2. Letters.

3. Chatbot for the site.

4. Pop-ups.

Survey pages can be collected in special services, such as SurveyMonkey and Google forms. Their disadvantage is that you will have to strain the user to click on the link to the survey page. In addition, he may leave your site and not return.

Through letters, you can ask the opinion of users unobtrusively — they will read the email and take a survey when it is convenient for them.

With the help of pop-ups and a chatbot, you can ask the user to follow hot on the site.

Examples:

How to increase NPS

The trick is that you need to find your own approach to each group of clients.

With detractors

According to a study by Lee Resources, up to 70% of detractors are ready to cooperate further if you listen and work through their complaints. It is important to establish contact with them: send a personal email or call. Find out the reason for the disappointment, and then act on the situation.

• The client does not understand how to use the product. Implement a noticeable chat on the site, where all questions can be answered quickly by the support team. Connect a chatbot that will automatically answer users’ questions even at night. Implement the product knowledge base. Add hints in the form of pop-ups or chatbot scripts on pages where users may or may already have difficulties.
• Too expensive. Connect the client with a sales manager who will be able to “sell the price” of the service or make a special offer. For example, in a chat for a website from Carrot quest, it is convenient to combine teams: the support manager will be able to quickly connect the sales manager to a chat with the user.
• The client is missing some option. Contact the person who is responsible for the product in your company. Maybe it’s really time for you to make changes.

If you show the client that you want to solve his problems, he is very likely to turn into a promoter.

Conclusion

Today we have sorted out very interesting and complex elements of the study -this is SWOT analysis and NPS. Next we will look at equally useful elements such as 5 WHY and identifying early adopters

Thank you for your attention ??