Net promoter score or NPS is a widely used, trusted customer service metric for evaluating customer satisfaction. NPS gives your business insight into whether you have created a strong base of loyal brand advocates.
What does NPS mean for customer experience?
Your NPS score is a valuable type of customer feedback that measures customer loyalty in the form of willingness to recommend (promote) your product to others.
This indicator of customer satisfaction is measured based on the responses to a single NPS survey question: “how likely are you to recommend our [product, service, organization] to a friend, family member, or colleague?”
Respondents indicate the likelihood on a scale of one to ten. Your NPS is the percentage of positive responses adjusted for the percentage of negative responses.
How to calculate NPS
The NPS score transforms hundreds or thousands of survey responses into one easily interpreted number. In order to calculate NPS, you must be familiar with the terms promoter and detractor.
Promoters are customers who submitted positive responses to the NPS survey question. This means they ranked the likelihood of them recommending your product to someone else as nine or ten out of ten. These are happy customers who will continue to buy and/or recommend your products, thus fueling growth.
On the other hand, detractors are unhappy customers. They submitted responses to the NPS question ranging from zero to six. These customers are unenthusiastic about their customer experience and may even damage your business through word of mouth. (Anyone who answered 7 or 8 is considered neutral).
NPS ranges from -100 to 100. The formula for calculating the NPS score is rather simple:
Take the percentage of total respondents who qualify as detractors and subtract it from the percentage who qualify as promoters.
A score of -100 indicates that 100 percent of respondents to your NPS survey were detractors (0 percent promoters – 100 percent detractors = -100). Conversely, a score of 100 indicates that 100 percent of respondents qualified as promoters (we’re not sure if this has ever happened, but one can dream!).
Related Read: NPS + CES: Harness The Power Of Your Customers
How to acquire NPS survey data
NPS surveys are commonly conducted via text, email, phone call or on a website.
In order to be an accurate representation of customer satisfaction, the NPS question is generally made available after the customer has received and used the product or service for some time
To be able to calculate a statistically relevant NPS from your NPS survey data, you need to receive around 250 responses on the low end.
Most customers who receive the survey will not respond, so it’s a good idea to assume a response rate of around 10–15 percent and attempt to gather results from at least 1,500 customers.
These customer responses can, of course, be spread out over time as long as you have enough to make a robust analysis.
There are multiple templates for NPS survey questions available, and many NPS software products will run surveys and make the calculations for you.
What is considered a good NPS?
Bain, the consultancy that created the NPS, considers anything above 0 to be “good”, 20 as “favorable”, 50 as “excellent” and 80 as “world-class”.
However, NPS scores vary depending on which industry and location you do business in. The same score could be a bad sign in one market or set you apart as an industry leader in another. Therefore you’ll want to take a look at competitors in your space and location for an accurate NPS benchmark.
Since most companies do not publish their NPS results, you may need to gain access to an NPS benchmark by purchasing NPS software. Some guidelines are available online but, if your industry is more niche, you may need to pay for guidance.
How NPS reflects your company’s health
A higher NPS score—relative to your NPS benchmark, of course—indicates that your customers are likely to contribute to your future growth.
This is the defining feature of NPS that separates it from other evaluations of customer satisfaction.
Respondents to your NPS survey who qualify as promoters are beyond just satisfied with their experiences with your product; they are likely to either purchase the product again themselves or lead others to do so by word of mouth.
In this way, NPS can be one of the metrics factored into your growth predictions.
A relatively lower NPS score, on the other hand, indicates your customers are detractors who are unlikely to be contributing to growth. For one reason or another, they were not satisfied enough with their experiences with your business to recommend it to others.
This does not mean that they were necessarily unsatisfied overall, but it does indicate that these customers are not as likely to repeat their purchases and spread the word about your product. A lower NPS score means that you cannot count on your existing customers to contribute to your growth.
Improving your NPS
While your NPS score is a good indicator of how customers view you, in order to plan and execute a targeted response you need to collect more information.
Product reviews are a great place to start looking. Combing through your negative reviews, as painful as it may be, will allow you to take note of a specific feature or aspect of customer experience that comes up again and again.
If the problem is one that interferes with customer experience enough to motivate customers to go out of their way to leave a negative review, then it is definitely contributing to a negative NPS.
Improving your NPS score, depending on how many sales your company completes, may take some time.
As mentioned previously, NPS survey data can be somewhat difficult to collect. Accumulating enough customers to ensure a decently sized pool of respondents will take some companies longer than others because of the generally low response rate of NPS surveys.
But continuing to collect this data is paramount to seeing improvement. Tracking trends in NPS compared to the timeline of customer experience improvements allows you to see whether they are making a difference. If your score is increasing, tracking NPS over time allows you to see which improvements to your customer experience strategy are having an impact.
Getting started with NPS
NPS is an essential metric for any customer-experience-focused business to track and is used by thousands of organizations worldwide.
The NPS score contributes to growth predictions and can fuel further research into the aspects of your product or customer experience strategy that may be detracting from customer satisfaction.
If you feel ready to begin your journey with NPS, check out this article where we break down the best NPS software for conducting your NPS survey.
Part of making and maintaining a good impression, is having the right tools. Check this list out: 10 Best Chatbot Software In 2022