If there were one KPI to measure customer satisfaction and predict future behavior, which one would it be? The Net Promoter Score combines these two qualities, and companies in all domains use it to measure customer satisfaction and loyalty (some use it for employee satisfaction, too).
What is the Net Promoter Score (NPS)?
The Net Promoter Score (NPS) is a metric used to measure customer satisfaction and loyalty. NPS helps you predict how likely your customers are to recommend your company, products, or services to other people.
Some people refer to the Net Promoter Score or NPS as the “NPS score,” forgetting or not knowing that the “S” stands for “score.”
The NPS is considered one of the north-star metrics in eCommerce because it offers insights into how customers might behave in the future.
In 2003, Fred Reichheld, the creator of the Net Promoter System, wrote in an article on NPS for Harvard Business Review. In that material, he said that NPS is “the one number you need to grow.” Reichheld showed that companies focusing on the customers’ happiness are more likely to become leaders in their fields.
Business excellence and top customer experience go hand in hand. There’s no better proof than the fact that 2/3 of Fortune 1000 companies are using NPS for measuring customer satisfaction and customer loyalty.
Does your company have more promoters, passives, or detractors? If you don’t know the answer yet, let’s see how you calculate the Net Promoter Score.
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How to calculate the Net Promoter Score?
The formula for calculating the Net Promoter Score is simple: you need to subtract the percentage of detractors from the percentage of promoters.
NPS = %Promoters – %Detractors
The answers from your NPS surveys help you calculate the number of promoters, passives, and detractors.
The standard scale used in Net Promoter Score surveys is from 0 to 10, where 0 reflects the lowest satisfaction, and 10 is the maximum score.
Based on NPS survey answers, you can split your customer database into three categories:
NPS = 9 – 10
A promoter is a customer who is highly satisfied with the experience they had with your store and is more likely to become one of your brand ambassadors.
NPS = 7 – 8
A passive customer is satisfied with their experience but isn’t as happy as a promoter. You need to identify what it takes to become your promoters and prevent them from leaving or becoming detractors.
NPS = 0 – 6
A detractor is a customer who isn’t happy with their experience, and you need to treat them carefully. Find the source of their dissatisfaction and solve their complaints right away.
Percentage of promoters, detractors, and passives according to the NPS (as seen in REVEAL)
NPS can be calculated in multiple ways.
Some companies calculate it manually, using a spreadsheet. Others have an NPS tool that automatically calculates the NPS and allows them to analyze NPS data from multiple angles.
After you subtract the percentage of detractors from the percentage of promoters, you’ll find if your NPS is negative or positive.
Low and negative Net Promoter Scores show that the company has a problem delivering pleasant customer experiences.
What is a good Net Promoter Score?
A good NPS is a positive score, meaning that your company has more promoters than detractors.
Comparing your Net Promoter Score to the NPS benchmark can be misleading even when looking at NPS within your industry.
The NPS could be -15 in your niche, but you want to aim for a positive score.
Generally speaking, looking at the average Net Promoter Score is also misleading as the score might vary from one customer segment to another, one product to another, etc.
There are three principles you want to pay attention to when monitoring and analyzing NPS:
1. You should always measure NPS before and after delivery.
What people experience while buying from your company might vary heavily from what they experience while using your services or products.
Measuring pre and post-delivery NPS allows you to evaluate if your company follows the “under-promise, over-deliver” principle.
Minding the gap between what happens before and after delivery helps you keep a good NPS for both phases in the customer journey.
> Here’s a case study that reflects how vital measuring Net Promoter Score pre and post-delivery is and how different NPS results call for different action plans.
2. Analyze NPS from different angles
In addition to measuring pre and post-delivery NPS, you can make a comparative analysis of NPS results by:
- RFM segment
Going more in-depth with the NPS analysis helps you identify the source of your problems and your biggest opportunities.
NPS by RFM segment (as seen in REVEAL)
3. Address complaints and objections in real-time
The worst things you can do for your business are to ignore detractors or have a considerable delay between receiving their complaints and the time you respond.
One of the most significant advantages of using an NPS tool is setting email flows triggered depending on the client’s score and acting accordingly.
Do you have a top customer who is unhappy with their latest experience? You have to treat them instantly if you want to keep them close and happy.
Go beyond average values to find whether you’ve got a good or a bad NPS. You’ll find your sources of growth, but also what causes decreases in revenues and customer retention rates.
How do you create an NPS survey?
In terms of structure, NPS surveys can have both quantitative and qualitative questions. The key is to keep NPS surveys as short and straightforward as possible.
The quantitative question for collecting customer feedback could be the classic one:
“On a scale from 0 to 10, how likely are you to recommend our product/ company to your friends and family?”
Based on their answer to this first question, you could add a follow-up question using advanced branching logic. In other words, you display a different follow-up question for promoters, passives, and detractors.
Here are some ideas of how you could formulate the follow-up question:
- Promoters: “We’re happy you enjoyed your latest experience. What did you appreciate most in your latest experience with our brand?”
- Passives: “What could we do next time to offer you an excellent experience?”
- Detractors: “We’re sorry about your latest experience. What exactly did we do wrong?”
You can implement the NPS surveys with the help of NPS software, where you can design the surveys according to your needs.
NPS software allows you to send NPS surveys via email or display them on the website based on the rules you set for each channel.
The advantages of using a dedicated NPS tool for surveys are that you can:
- Automate measurement of customer satisfaction and forget manual work or any other NPS calculator;
- Build a follow-up email flow based on customer answers;
- Improve customer experience management;
- Gather insights on optimizing the customer experience to boost retention rates and decrease churn.
> Learn more about how you can create an NPS survey using Omniconvert’s tool.
So, are you ready to use NPS as an essential technique in your growth strategy?
Keeping track of your promoters, detractors, and passives helps you better understand future customer intent and act in advance to keep customers satisfied.
The path to sustainable growth starts when companies understand that we’re living in an experience economy, where customer experience makes or breaks a business.
If you want to explore more about Net Promoter Score and learn how to make it part of your company’s strategy, we invite you to discover the courses in the CVO Academy.
Frequently asked questions about Net Promoter Score (NPS)
To calculate NPS, you have to apply NPS surveys and find the number of promoters, passives, and detractors. Then, you use the NPS formula: you subtract the percentage of detractors from the percentage of promoters.
Any score above 0 is considered a good NPS. But don’t get fooled by the average value of NPS. While you might have a good overall NPS, you need to track it separately pre and post-delivery, and analyze it per segment.
Your NPS mirrors how healthy your customer relationships are and predicts future customer behavior. Companies track NPS to help them improve customer satisfaction and loyalty and act immediately if things go the wrong way with customers.
An NPS of 50 means that the company has a positive score, therefore more promoters than detractors. According to the general NPS benchmark, an NPS of 50 is an excellent score.