What is a Net Promoter Score?
The Net Promoter Score (NPS) is a numerical value from -100 to 100, which determines the chance of a customer recommending a product or service to other people.
Basically, if the customer had a positive experience, they have a high chance of recommending (or ‘promoting’) your product or service. Likewise, if they had a negative experience, they will most likely not recommend your product or service.
Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
How is a Net Promoter Score calculated?
Calculating the Net Promoter Score is very simple. First, you ask the customer a single question:
“On a scale of 0 to 10, how likely are you to recommend this company’s product or service to a friend or colleague?”
Based on the number they choose, your respondent will be classified into 3 categories:
Detractor are people who give a score lower or equal to 6.
These are customers who did not enjoy using your product or service, and will most likely not purchase again from your company. Detractors can spread negative word-of-mouth and damage the reputation of your business.
Passives are people who give a score of 7 or 8.
In general passives are people who are satisfied with your products or services but not to the point that they will promote your brand. On the other hand, they won’t spread any negative word-of-mouth about your brand or product(s) but if given the opportunity they can easily be persuaded to switch to another competitor.
While passives are generally satisfied with your product or service, and they likely won’t spread any negative word-of-mouth – they’re usually not enthusiastic enough about your company to promote you.
Promoters are people who answer either a 9 or 10.
These people are very enthusiastic about your product or service. Promoters will most likely tell their friends, family or co-workers about your company. And will speak highly about the experience they had using your product or service.
Promoters are most likely to be repeat purchasers, and due to their brand loyalty – will be much harder to convert to a similar competitor.
How do you calculate the NPS?
To calculate the NPS, subtract the percentage of customers who are detractors, from the percentage of those who are promoters.
You will get a score between -100 to 100. To put this calculation into perspective, if all your respondents answered with a score of 6 or lower, your NPS would be -100. On the other hand, if all your respondents answered with a score of 9 or 10, your NPS would be 100.
Why use the NPS?
The NPS is a simple and effective way to measure customer satisfaction. It can be applied to any product, service or industry. Plus, it’s a useful tool to monitor and improve the performance of your customer service strategy.
How can the NPS benefit your business?
To get the most from calculating your NPS, your company needs to have leaders who are dedicated to monitoring customer satisfaction, and developing new strategies or approaches to improve the areas where customers interact with the business.
But who should be in charge of this responsibility?
Your senior team members should be at the forefront of instigating this company-wide effort. Without communicating to each department the standards and expectations of customer satisfaction, there can be no progress towards improving customer relations.
All departments – from marketing to sales, operations and customer service – should receive regular, real-time feedback in response to their efforts. Each department leader should remain accountable and use customer feedback to develop new solutions to overcome existing problems. However, before this information can be sent to each department –data from the customer satisfaction survey must be properly analysed.
Behind the simplicity of the NPS, companies need to dissect the data and ask questions about the results.
Why do customers feel this way?
What elements of the product or service converted a customer into a promoter?
What elements of the product or serviced converted customers into detractors?
By observing the reasoning behind the data, companies can learn more about their customers and adapt accordingly to improve their overall experience.
How does Responsive Insight provide valuable information from the NPS?
Responsive Insight is a software tool that goes beyond answering whether or not your customers would recommend you – it explains why, and provides you with advice to improve the satisfaction of your customers.
By combining your NPS data with unstructured data and other structured metrics, you can find out what your Promoters like about you, and what your Detractors have problems with. Then, you can address the concerns of your Detractors and Passives, to deliver a more positive customer experience and raise your Net Promoter Score.
Responsive Insight also provides you with tailored advice, which you can use to take action and respond accordingly based on your situation.