Remember when eCommerce was new and acquiring new customers was a piece of cake?
Yes, the decades of growing by acquiring customers that never come back are over.
Traditional retailers are going digital, and the customers are more potent than ever: they have plenty of alternatives to choose from.
If customer-centricity is your goal, NPS calculation is your first step to getting there.
Not sure where to start, though?
Read this article, and you’ll learn everything you need about the NPS calculation formula, survey design, and methods of calculating your NPS.
What is the Net Promoter Score (NPS)?
The Net Promoter Score (NPS) represents the likelihood of your customers recommending your products/ services to others.
The term was coined in 2003 by Fred Reichheld, who called the NPS “the one number you need to grow.”
An interesting fact about the NPS: today, 2/3 of companies in the Fortune 100 are measuring NPS and not just measuring but also creating customer loyalty programs based on the NPS analysis.
Data tells us that companies end up with higher margins when they focus on customer loyalty, NPS analysis, and customer retention – instead of investing in acquisition alone.
Long story short: NPS measures customer happiness.
Some customer experiences will feel satisfactory for some. Happy customers will willingly recommend you to their peers.
Others will be disappointed and will never buy from you again.
Now, it’s up to you to listen to customer feedback, uncover the WHYs behind their sentiments, fix what’s broken, and enhance what works best.
The Net Promoter Score is one of your greatest allies in this endeavor since it does what you need most: gives a voice to your customers.
Use a Survey to collect your Net Promoter Score Data.
Satisfaction surveys (like the NPS surveys) are the best, non-intrusive way to collect your NPS data.
However, there’s a specific science behind questioning your customer base, and you need to keep certain things in mind before you calculate your net promoter score.
There are two types of NPS surveys: relational and transactional.
Relational NPS (rNPS) surveys are used regularly after the customer reaches a specific milestone.
Because they aren’t so exact, rNPS surveys help you collect general feedback, such as the overall satisfaction of a client over a set period, the helpfulness of your CX department, and the relationship with your brand.
With rNPS surveys, you get an adequate view of customer loyalty and satisfaction. Still, you can’t go in-depth with your analysis (unless you follow up with more open-ended questions, which might lead to lower response rates).
rNPS surveys also provide data for YoY comparison or industry benchmarks.
However, the timing is delicate with rNPS surveys. If you send them too soon, the customer will be biased. If you wait too long, the experience won’t be fresh. The ideal frequency is quarterly or bi-annually, so you can improve your net promoter score and measure your progress in time.
Transactional NPS (tNPS) surveys are a different kettle of fish.
With tNPS, you measure satisfaction at a specific time after a particular interaction.
tNPS gives clear-cut feedback on certain products, stores, and even employees.
You can trigger tNPS surveys to identify friction points inside the customer journey – and, of course, to find solutions to any possible problems.
These surveys are quick to respond to, so you can expect a high response rate.
The great thing about tNPS surveys is that they help you understand how interacting with your brand (or a specific product) creates customer happiness (or unhappiness) and then improves the customer journey.
The initial buzz around NPS was that you could grow your business with a simple question:
On a scale of 0-10, how likely are you to recommend [Product / Store / Business]?
However, the NPS also evolved as times got more complicated and businesses more complex.
Not necessarily in terms of the questions, but definitely in terms of analysis and segmentation.
If you only look at NPS as an average metric, you risk looking at a random number and not doing anything with it.
The real magic of NPS happens when you analyze it by RFM segments and look for anomalies in the data.
“If you track the Net Promoter Score, you must look beyond the average score and go granular by segmenting the NPS responses.
The challenge is that calculating the average Net Promoter Score removes the most interesting facts from your analysis.
Therefore, you need to know which customer segments, products, brands, cities, or strategies provide the most Promoters or the most Detractors, and the truth is that the average NPS model hides all that data.”Valentin Radu – CEO @Omniconvert
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Even if RFM segmentation isn’t possible, at least design your surveys to measure NPS from a product perspective, brand, or category.
An important principle here is to measure NPS in two key moments: pre and post-delivery.
After you measure the NPS check the difference between the two scores. Did the Promoters change their minds after they received their order?
In other words… did you deliver the value you promised?
If not, it means you need to tweak your marketing in terms of messaging & timing. At the same time, you can use the valuable customer feedback you’re getting to improve your business and fix problems that actually bother your customers.
A thorough NPS analysis should reveal weaknesses inside your organization and highlight challenges your customers face.
How to Calculate the Net Promoter Score
To calculate your NPS score, you first need to know how NPS surveys come to life.
Step 1 – Define the objective of measuring the NPS.
Firstly, you must decide why you want to calculate your NPS score: what’s the outcome?
Average testing without a strategy won’t make much of a difference inside your business.
There’s no point treating NPS as another vanity metric. NPS is your customers’ voice, so treat it wisely.
Maybe you want to test a random shop or a new product – so you’ll deploy ad-hoc surveys.
Or, if you’re looking for more general feedback, you will send scheduled surveys to get a constant view of your customers’ happiness.
So, as Simon Sinek famously put it: start with the Why.
Step 2 – Choose an NPS tool.
After you pinpoint the purpose of your survey, you should pick an NPS software that can help you meet said goal.
This software should allow you to measure customer satisfaction through NPS surveys sent at specific points in the customer journey.
Several features your NPS software should have, but the most important is saving your resources and preventing you from losing time, customers, and overall business.
If don’t know how to select an NPS software that suits your needs, check out this helpful guide – discover the features you should be after in an NPS solution.
Step 3 – Create your NPS survey.
According to the objective of your survey, now it’s time to decide on the actual NPS questions you’re going to ask your customer base.
Your NPS survey should already contain a template you can use, but you’re always free (and encouraged) to customize the survey and ask precisely what you need.
Use the survey tools available in the software to customize:
- the design – you can use the company logo or brand colors to make it yours,
- the logic – ask relevant questions to promoters, detractors, and passives alike,
- and the questions – add open-ended questions to get customer feedback in customers’ own words.
The more customized the survey, the more relevant NPS survey results you’ll get.
Step 4 – Choose where and how frequently you want to send the NPS.
Nowadays, there are countless ways to send an NPS survey: through SMS, emails, web pop-ups, etc.
You can trigger NPS surveys offline if it suits your business.
Step 5 – Set up NPS Alerts.
In this step, you should automate flows that trigger the right action when a customer responds negatively to your survey.
Your NPS Software should integrate CX tools that allow you to contact unhappy customers or set automated email campaigns to help convert detractors into promoters.
NPS alerts stop you from wasting precious time contacting Detractors. If you take action immediately, you can prevent customers from leaving your business.
Of course, it all depends on the feedback and how quickly (and satisfactorily) you can solve a problem.
However, first things first: before reacting to feedback, you must obtain that feedback.
This brings us to Step 6.
Step 6 – Send the NPS Survey
Send your NPS surveys and start collecting NPS data of customer feedback.
Step 7 – Analyse NPS Responses
The final step is where you analyze customer feedback, calculate the net promoter score, and draw the necessary conclusions.
This is not a one-person show, mind you. Ensure the NPS reports are accessible to all parties involved (CX teams, sales, marketing, etc.), not only the customer support team.
You should also keep your data over a more extended period, so you can compare your results over time and see whether you improved the customer experience or not.
If you’re serios about improving the Customer Experience, check out the CVO Academy! Learn how to optimise Customer Lifetime Value through advanced eComm strategies – brought to you by global leaders and eCommerce pioneers.
Net Promoter Score calculation formula
According to their answers, your customers will fall into three categories:
- Promoters (gave a 9-10 score),
- Passives (scored 7-8),
- and Detractors (scored 0-6).
The net promoter score formula is the percentage of promoters MINUS the percentage of detractors.
Let’s look at an NPS calculation example.
Suppose you sent your surveys and the results are in: you have 20% Promoters, 50% Detractors, and 30% Passives.
You won’t include passives in the formula, so your NPS Score will be 20-50, so -30. Yes, a negative NPS is possible – and a sign of alarm that your business isn’t treating CX as a priority.
However, this is an example because we don’t advise calculating NPS manually.
It would only be a waste of time and resources – and moving towards a customer-centric approach requires a lot of help.
Just another reason to choose an NPS software like Omniconvert Reveal that calculates NPS automatically, thus freeing you to fix broken journeys and integrate customer feedback inside your business.
NPS calculation methods
CX experts use three main calculation methods to calculate their NPS scores.
Method 1 – Use a spreadsheet (Excel or Google Sheet) to calculate your score.
If you still rely on spreadsheets to store your data, you can definitely use them for NPS calculations.
Remember that you will have to first export your NPS data into a .CSV or .XLS file, then copy the data into an excel (or Google) sheet.
Then count the responses in each category (Promoters, Detractors, Passives) and calculate the percentage each type represents.
When you’re done with this, apply the NPS formula in your sheet (% promoters – % detractors), and you’re done.
Method 2 – Use an NPS calculator for calculating your score.
However, maybe you want a more straightforward method, so you might want to try an NPS calculator.
There are countless free NPS calculators online you can use for convenience.
Method 3 – Use an NPS Software that also calculates your NPS.
Of course, if you’re looking for more advanced insights (such as NPS per Store, Location, or even employee), you should definitely consider using software that calculates NPS.
The bigger your customer base, the more heavy-lifting necessary to upload, calculate, and analyze your data.
So, if you aren’t running a mom-and-pop shop, consider investing in a tool that calculates your NPS score and does all the heavy work.
An NPS tool is also handy if you don’t like moving data around or if you love being organized and the idea of multiple data silos is giving you a headache.
However, a tool isn’t worth it if your shop is small or you don’t have enough NPS responses.
Another instance where you shouldn’t yet pay for an NPS software is when your strategy isn’t yet set in stone.
Before you buy a tool, decide on the ROI you’re trying to get out of it.
Do you want to increase customer happiness? Decrease churn?
Or maybe you want to improve your product assortment, empower your CX department, or improve the CLV altogether?
There are many possible outcomes of an NPS analysis – and the insights that follow – but they can only happen if your strategy is clear.
(example of an NPS strategy)
Simply calculating NPS as an average won’t cut it.
Omniconvert Reveal is an intuitive tool – the first platform dedicated to CLV – that you can use to calculate your NPS score and combine it with advanced customer segmentation. Check out its integration and capabilities and install it for free – here.
While the NPS calculation formula is pretty intuitive and straightforward, what you do after matters most.
Comparing your score with an NPS benchmark inside your Industry, monitoring NPS by product or RFM group, and taking actionable steps to become a more customer-centric business; these are the steps that bring sustainable growth.
Yet, calculating your NPS is a great place to start. NPS gives your customers a voice, and that voice can be your guide in the journey towards customer-centricity.
Frequently Asked Questions about the NPS Calculation
The Net Promoter Score (NPS) represents the likelihood of your customers recommending your products/ services to others. You calculate it by subtracting the percentage of Detractors (unhappy customers) from the percentage of Promoters (satisfied customers).
Generally speaking, everything about 0 is a good score – it means you have more Promoters that Distractors. However, in eCommerce, an NPS above 50 is considered good, while an NPS about 70 is fantastic.
The net promoter score formula is the percentage of promoters MINUS the percentage of detractors. You can calculate your NPS with spreadsheets (Excel or Google), an NPS Calculator, or an NPS software.