The Net Promoter Score is a metric that was introduced in 2003 by Fred Reichheld of Bain & Company. It is based on the idea of measuring customer loyalty and customer satisfaction.
NPS was created by Reichheld as a way to measure customer loyalty that is generated by the experience a business offers. It has become the standard customer experience metric.
A majority of the Fortune 1000 companies use NPS to gauge customer loyalty, including big names such as Apple, Intuit, GE, and American Express.
What is the Net Promoter Score (NPS)?
Net Promoter Score (NPS) is a customer satisfaction benchmark that shows how likely your customers are to recommend your business to a friend.
NPS is commonly used by companies as a benchmark to measure, evaluate and improve customer loyalty. NPS is different from other benchmarks, such as customer satisfaction score or customer effort score, as it measures a customer’s overall sentiment about a brand, rather than their perception of a singular interaction or purchase.
You can also ask your employees how satisfied and happy they are with their work for your company to gather NPS results.
NPS will help you gauge:
- Customer satisfaction levels
- Growth potential
- Customer experience quality
- Brand perception
- Organizational performance
Typically distributed in a survey form, the main question is usually a form of this single question:
What is your level of satisfaction with [Company]? Would you recommend [Company] to a friend or colleague? What is your level of satisfaction with [Company]?
0 is Not Likely, and 10 is Very Likely.
The NPS allows businesses to compare how loyal their customers are and what their purchasing and referral habits are likely to be.
Why Is NPS Important?
The Nielsen Global Trust in Advertising Report showed that a large majority of online respondents, 83%, reported trusting the recommendations of friends and family.
It is important to look at recommendations and reviews before making any decisions about spending.
It measures customer loyalty.
The NPS score for a brand measures customer loyalty and the likelihood of customers recommending the brand to a friend. It also helps evaluate the likelihood of customers churning – canceling their subscription or not repurchasing and seeking out a product or service from a different company.
Retaining and empowering your current customers is more important than attracting new ones when considering ROI. Identifying customers who are at risk of leaving is vital to this process, and measuring customer NPS over time is the best way to do that.
Identifying Changes in NPS
The NPS provides companies with an indication of how likely it is that the average customer will recommend them to a friend. However, changes in the breakdown of the scores between promoters, passives, and detractors also give customer success teams an indication of which direction the overall NPS is trending.
essentially, if the number of people who actively dislike your brand decreases while the number of people who are indifferent to your brand increases, that could be a sign that customer opinion of your brand is becoming more positive. However, if the number of people who actively like your brand decreases while the number of people who are indifferent to your brand increases, that could be a sign that customers are at risk of becoming dissatisfied with your brand or that they are leaving negative reviews.
The NPS for customers could be a good way to measure customer satisfaction and the risk of them leaving.
NPS surveys were used to cut the churn rate in half in just two months.
Mention sent out Emails and offers to customers based on how satisfied they were with the responses they received.
After that, those who were in favor of the program were given an extended free trial period, and those against it were thanked for their feedback and asked how things could be changed to make it better.
It identifies ways to improve.
When customers give a low score on the NPS question, it can be difficult to take, especially if it happens multiple times. However, it also provides an opportunity to get customer feedback and improve the product or service.
We suggest an NPS survey to allow customers to leave specific comments about why they gave the score they did. This qualitative feedback can pinpoint specific things you can change to improve the customer experience.
Even though some feedback may not be helpful, specific notes about bugs, poor user experience, or a bad call with a customer success manager can be quickly routed to the appropriate team to fix the issues.
At Magoosh, NPS helped to identify a customer complaint which resulted in a lower score. Once the mismatched algorithm was identified, Magoosh was able to improve its NPS by nine points.
It boosts referral marketing.
The customer NPS lets companies know how probable it is that they will get recommendations from satisfied customers – which is apparently very important.
- Consumers who rate a company’s service as “good” are 38% more likely to recommend that company.
- Nearly 70% of respondents were more likely to purchase a product if a friend talked about it on social media or by email.
- Referred customers have a 16% higher lifetime value — and greater ROI — than others.
Companies can use referral marketing to get customers to write case studies, testimonials, and online reviews. They can also use brand ambassador and incentive programs to give customers gift cards, swag, or discounts.
You need to make sure you have happy customers before referral marketing can work, and NPS results can help identify those happy customers.
Airbnb used NPS data to predict customers’ future interactions with the service. It found that customers who were promoters (NPS score of 10) were 13% more likely to rebook and 4% more likely to refer a friend than detractors.
After analyzing feedback from sources such as host reviews and value ratings, Airbnb determined that the NPS is the biggest predictor of future rebooking and referrals.
It helps you prioritize reaching out to detractors.
Detractors are people who would not likely recommend your product or service to others. It is important to focus on them as well as promoters (people who would likely recommend your product or service).
After you receive NPS results, it is important to follow up with your valued customers. This is especially true if they have indicated a problem or issue they are having using your product or service. By dividing the responses into three categories, you can more easily analyze the reasons for the customer’s feedback.
After a customer expresses dissatisfaction with a purchase, it is important to follow up with them to try and resolve the issue. This could be due to a misunderstanding or user error on their part, or it could be a larger scale complaint that one person cannot solve on their own. By following up with detractors, you can make them feel heard and valued, which may make them less likely to churn or tell others not to purchase from you.
To align business plans with customer expectations
Customer feedback that is qualitative in nature will help to identify what improvements and features customers think a business needs.
If you want to know how to make your customers’ experience better, ask them what you can change. They will usually be happy to share their suggestions, which can then be analyzed for further insight.
To reduce the customer churn rate
Churn is when a customer cancels their subscription or account, or moves to a different business.
It is cheaper to keep an existing customer than to attract a new one, so profitability increases when customer retention rates improve. NPS is a good metric to use to spotting which customers are at risk of leaving.
NPS can tell us if customer relationships are improving, worsening, or staying the same.
improvements can be seen when there are fewer people who actively dislike the company and more people who are neutral about it. The goal is to then turn more of those neutral people into people who actively support the company.
How To Calculate Net Promoter Score?
The question that is asked in order to calculate a net promoter score is “How likely are you to recommend us to a friend or family member?” The scale goes from 0-10, with 0 being the least likely and 10 being the most likely. The components of the scale are promoters, passives, and detractors. promoters are people who answer 9 or 10, passives are people who answer 7 or 8, and detractors are people who answer 0-6.
The customer rates the company on a scale of 0-10 with 10 being the highest recommendation.
The response will put the customer into one of three categories:
Promoters (scores of 9 or 10)
The customers who are most likely to recommend you to others are the most loyal to the company.
Promoters are people who help to increase awareness of a brand and encourage others to buy its products. They may do this by regularly buying from the brand themselves, or by talking to others about it.
Passives (scores of 7 or 8)
These customers are neither thrilled nor upset with the company, and may be enticed to switch to a competitor brand if given a better option. They are typically satisfied but not passionate.
Detractors (scores of 0 to 6)
People who are unfaithful to their employers and likely to speak badly about them.
Detractors are customers who are unhappy with the company and are likely to switch to a competitor. Their negative opinions could dissuade potential customers from using the company’s services.
The Net Promoter Score is a number that is determined by subtracting the percentage of Detractors from the percentage of Promoters. This number will range from -100 to 100.
A score of 0 means that there are an equal number of promoters and detractors. A score of less than 0 means there are more detractors than promoters. A score greater than 0 means there are more promoters than detractors.
Net promoter score formula:
NPS = % Promoters – % Detractors
We can calculate the net promoter score in several ways:
- In an Excel spreadsheet
- Using a free online calculator
- With NPS software
Net Promoter Score is important because it is a way to gauge customer satisfaction. It is a number between -100 and +100 that helps businesses determine how likely their customers are to recommend their products or services. A high score means that customers are happy and are likely to recommend the business to others, while a low score indicates that customers are unhappy and are not likely to recommend the business.
Examples of NPS Survey Questions
It is important to think of follow-up questions to ask customers based on their score. The way the question is worded, the tone, and how it is phrased will all affect the response, just like it would in a face-to-face conversation.
The purpose of an NPS survey is to find out if customers are likely to continue using a product or service and recommend it to others.
The survey will ask customers to rate the business/product/service on a scale of 0-10, followed by an open-ended question asking why the specific score was given.
Let’s look at some net promoter score question examples.
Net promoter score survey questions
When first getting started with Net Promoter Score surveys it’s a good idea to use the default survey question. This is simply:
How likely are you to recommend our business to a friend or colleague on a scale of 0-10?
This question is designed to capture customer satisfaction with the business in order to establish better communication with customers. It offers them the opportunity to speak their minds.
This question is effective at measuring customer loyalty, tracking the results of a particular marketing campaign, and supporting long-term growth strategies.
This text suggests that sending a regular newsletter to customers is a good way to start communication and that the newsletter will give customers a consistent overview of the company.
We can make the classic NPS question more specific by replacing the word “company” with the name of the product or service. This allows us to get feedback specifically on that product or service.
Qualitative, open-ended questions
The following questions need to take into account the 3 categories that customers fall into following the first rating question in order to get open-ended feedback. Promoters, Passives, and Detractors are the 3 categories.
Most NPS services use a standard format for open-ended, qualitative questions, but they can be customized to fit the needs and goals of the business.
The goal of the NPS survey should be to find the question that will elicit the most useful customer feedback.
Some important factors to take into account when preparing an NPS survey are:
- Targeted customer segment
- Touchpoint in the customer journey
- Triggering event
- Behavior over time
- Customer pain points, or the one thing that could convert them into Promoters
- Survey channel
Compared to other types of surveys, NPS surveys tend to be shorter, easier to do, and more flexible, which results in higher response rates.
Use NPS to Grow Better
Once you have analyzed your NPS data and found many happy promoters, you should not stop there. You should open up a dialogue with these happy customers and see if they would be interested in taking part in a referral program. This will help to keep them satisfied and help you to acquire more customers.
The terms “Net Promoter”, “Net Promoter System”, “Net Promoter Score”, “NPS” and the “NPS-related emoticons” are all registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
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