Net Promoter Score Basics

What Do your Customers Really Think of You? The Basics of the Net Promoter Score

In 2003, business strategist and employee of consulting firm Bain and Company, Fred Reichheld, in conjunction with Satmetrix, proposed an ingenious method to analyze and measure customer loyalty. His idea? Just ask one simple question:

‘How likely would you be to recommend this company to your family and friends?’

Reichheld’s theory (which continues to be upheld today) was that there lied a missing link between customer satisfaction, customer loyalty and a company’s ability to grow. While this may seem obvious to some, prior to Reichheld’s unique approach, there was no way quantifiable method to tell how loyal a satisfied customer was or not. This meant that while customers may have been happy with an existing product or service, their likelihood of being converted to another competitor was never properly recognized before.

This idea of measuring customer loyalty was revolutionary, because it bridged the gap between those who would recommend a product or service to their peers, and those who, while satisfied, would be less likely to sing their praises from the rooftops.

How likely would you be to recommend this company to your family and friends?

What is a net promoter score and how does it work?

The Net Promoter Score (NPS) is the result of this theory being put into practice and given a measurable value. That value is measured against how people respond to the above question, which they answer on a scale from 0-10.

According to the NPS method, customers can be categorized into three different entities: Detractors, Passives and Promoters.

Those who respond between 0-6 are ranked as dissatisfied customers, therefore they’re Detractors. Detractors are a powerful threat to a brand’s reputation and integrity, not only because they will choose not to use your product or service again, but they will also tell other people not to do so either. Through negative word-of-mouth, this can result in affecting a company’s growth and create a negative impact on one’s brand or image.

Respondents who answer either 7-8 are Passives. Passives are typically satisfied customers, although they’re also not overwhelmingly enthusiastic about it either, and are therefore more likely to convert to a similar competitor. From a company’s perspective, this places them in a vulnerable position. Passives are also less likely to partake in positive word-of-mouth. This means that action should be taken to address any issues a Passive customer may have, in order to increase the likelihood of turning them into a Promoter.

As you guessed it, Promoters reply with either a 9-10 to the question, “How likely would you be to recommend this company to your family and friends?” Promoters are customers who simply love what you do, the product or service you provide, and the experience they get from interacting with your brand. Promoters will climb to the highest mountaintop to sing your praises, they will tell stories to their grandchildren about your company and possibly even put you in their will. These are the people who have the power to help your brand grow, and it is absolutely vital that you keep it that way.

The final NPS score is a percentile value, which is calculated by subtracting the Detractors % from the Promoters %. The equation can be more easily observed this way:

What is a net promoter score and how does it work?

This result can be as low as -100% (which is obviously bad) to +100% (which is extremely positive). Generally speaking, a score of anywhere between +25% to +50% is generally pretty good, although a lot of complex factors can influence the final score. So, how do you incorporate the NPS method into your survey?

How to put the NPS into your next survey

The NPS approach can be seamlessly incorporated into any online survey. Most online survey providers offer you a basic template that contains the question, along with a separate calculation that automatically provides you with yours NPS score. The NPS calculator is its own distinctive process that’s performed irrespectively of other calculations within your survey, which allows you to accurately analyze and interpret the results it gives.

How to put the NPS into your next survey

The follow-up question

Once you put in your NPS question, you can also add in a follow-up question, which will allow respondents to elaborate on why they chose their answer. This section will provide a valuable source of information, because not only will it tell you what your company is doing wrong, but it will also tell you what you’re doing right. This is important, because sometimes it’s not always obvious what the positive aspects are about your product or service, so you will often receive answers that may surprise you.

Where the NPS question should be placed

Where you decide to place the NPS question in your survey is entirely up to you. It depends on how new your brand or entity is, and how you wish to present yourself to respondents. Given the breadth of information your survey seeks, you will likely have a whole range of questions that you’re desperate to have answered. This will require experimenting with different formats, layouts and question orders, in order to accurately gauge where the NPS question belongs. The feedback given by your test respondents will also allow you to make necessary adjustments, in order to have the question placed in a suitable section of the survey.

Acting on your NPS results

Having a neatly organized set of results is nice to look at, but they won’t do you any good if you don’t act upon them. Most major companies take their NPS results very seriously, even going as far as contacting participants in order to receive more information about their responses (this usually applies to Detractors and Passives, as they’re the ones who pose a threat to the business). Depending on how in-depth you wish to go with this process, it is hard to deny the value of honest feedback, so it may be worth investing the time and resources to pursue this kind of avenue.

Overview

By taking advantage of the NPS approach, it will provide you with a better understanding on how your customers perceive your brand and company. While it is not a full-proof effective solution to gauging customer satisfaction, it is one of many tools that can be utilized in order to improve the customer service experience, along with the benefits and features of your existing product or service. Get to know your customers better and use the NPS method in your next survey.

By Øyvind Forsbak


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