What is the Net Promoter Score?
Net Promoter Score (NPS) is a Customer Experience metric that measures customer loyalty, satisfaction, perception, and enthusiasm to track, analyze and improve the business metrics like service, customer support, and delivery of the business. By measuring the loyalty of customers to a company, businesses can assess the satisfaction and how likely the customers would recommend the products/services/company to a peer or colleague.
Companies of all sizes can use the Net Promoter Score to
- Analyze customer satisfaction
- Benchmark customer loyalty
- Predict future purchase and referral behavior
To put it in simple words. NPS is the core measurement for the customer experience that helps the company in business growth.
NPS measures customer perception and customer loyalty towards a business based on a single survey question to gauge customer satisfaction with a product.
We would have definitely come across this question— “On a scale of 0 to 10, how likely are you to recommend [our product or company]?”—at various stages of the customer’s journey. The score (on a scale of 0 - not at all likely to 10 - extremely likely) is derived from the responses.
How Did the Net Promoter Score Originate?
Net Promoter Score, now used by millions of businesses is popularly hailed as the gold standard customer experience metric across the world. It was first developed in the year 2003 by Fred Reichheld of Bain & Company with the goal of letting businesses do a quick pulse check on how well they generated customer satisfaction and loyalty.
Net Promoter Score is not only a benchmark to measure a customer’s loyalty. Businesses can use NPS to measure customer as well as employee loyalty to understand their satisfaction and happiness working for your company.
NPS is different from other customer surveys that measures the overall sentiment about a brand. NPS is mainly used by businesses to gain feedback/know customer’s perceptions of a singular interaction or purchase.
Organizations in all types of industries can use the NPS system to gauge customer satisfaction. Customers might receive the NPS question after shopping at a grocery store, renting a car, or purchasing a product in a shopping mall, customer using product for the first time. They might also send it out after a certain time period to understand and collect feedback regarding the product/service experience.
Measuring your Net Promoter Score gives you a number with which you can have track of the metrics regularly like many of the other fortune 1000 companies and leading brands who use NPS to measure customer loyalty and engagement.
How is the result categorized in an NPS System?
Based on the willingness to recommend the company, it’s products, and services on a scale of 0- 10, customers will be segregated into three categories:
Promoters: Highly satisfied, Loyal and enthusiastic customers who gave a score of 9-10.
Passives: Satisfied and customers who are moderate towards the company who gave a score of 7-8. These customers may or may not recommend to others as they are not highly satisfied with the experience.
Detractors: customers who gave a score of 0-6. They are unhappy customers are disloyal customers who will not buy from the company again and are likely to badmouth about the organization.
How To Calculate Net Promoter Score?
Now you know the Promoters, Passives, and Detractors. So, calculating NPS is the next simple step.
To determine your Net Promoter Score “Subtract the percentage of Detractors from the percentage of Promoters” for which the result can range from -100 to 100.
For Example –
Company XYZ sends out an NPS survey email to 500 Customers who purchased their product in the black Friday sale.
The survey results come back with the following distribution of responses:
- 400 customers fall under promoters
- 60 customers fall under passives
- 40 customers fall under detractors
We can then calculate the Net Promoter Score:
- 100 * (% of Promoters - % of Detractors)
- 100 * (80% - 8%)
An NPS below 0 is a bad score. If you are
- Above 30 = good
- Between 0-30 = you are doing OK
- Over 70 = extremely well.
Importance of Net Promoter Score
Besides doing online research, we rely on the recommendations and reviews of friends and family in deciding on any spending in general. don’t we all trust the recommendations of friends and family?
A few important reasons to measure and track NPS are
- To measure Customer Loyalty
- To identify reasons for dissatisfaction & areas to improve
- To align Business Plans with Customer Expectations
- To reduce Customer Churn Rate
- To boost referral marketing
How to Create an NPS Survey?
Though you can build your own survey with Google Forms there are several different tools in market to collect the actual survey data.
Suggesting a few great tools to help you get started.
With Survey Monkey you can quickly create and deploy NPS surveys in just three steps
- Log onto the platform,
- create your survey
- Share the link with your audience in any of these mediums - web, email, and even SMS.
Another exceptional tool is Ask Nicely which has earned the trust of over 10,000 leading companies in collecting their crucial CX (customer experience) data. This can be an excellent option to integrate your NPS data collection with Salesforce.
Retently with its robust survey campaign features help you in capturing the response of the target audiences with its powerful features which allow you to schedule in advance and also allows you to create powerful workflows (scheduling action for events).
Gozen Forms is an intuitive form builder with dynamic templates that allows capturing responses with customized forms. Gozen Forms being a beginner and user-friendly tool to capture responses effortlessly with a variety of ready-made templates and other great features is definitely going to be your go-to option to create surveys.