Net Promoter Score (NPS) is a Customer Experience metric that measures customers’ loyalty. It varies from -100 to 100 and measures the customers’ willingness to recommend a company, its products, or services to others. The Net Promoter Score allows you to benchmark the
customer’s loyalty and predict their buying and referral behavior.
To learn how NPS is determined, let’s understand the question; it’s the scale and its components.
In the NPS question, customers show their willingness to endorse the company and its products and services on a scale of 0-10. Based on their responses, customers will be segmented into three categories:
Once you identify the Promoters, Passives, and Detractors, measuring NPS becomes easy.
All you have to do is to subtract the percentage of Detractors from the percentage of Promoters to calculate your Net Promoter Score. The NPS can range between -100 to 100.
In case of more detractors, your score will be less than 0, and you have more promoters, your score will more than 0. The aim, of course, should be to have more promoters than detractors to have a good Net Promoter Score.
There are many ways through which you can do the NPS Calculation:
For instance, you’ve given NPS Survey with the NPS questions, and you’ve received 200 responses from your customers. To measure Net Promoter Score in Excel, follow the below steps:
Step 1: Record all of the survey responses into an Excel spreadsheet.
Step 2: Based on their range of willingness, classify the responses into three categories. Promoters (9-10), Detractors (0-6), and Passives (7-8).
Step 3: Now sum up the total responses from every group and get the percentage by dividing the total number of the group from the total number of survey responses.
Step 4: You will get your Net promoter score by subtracting the percentage total of Detractors from the percentage total of Promoters.
For instance, suppose you got 200 responses to your NPS survey.
20 responses were in the 0–6 range (Detractors)
140 responses were in the 9–10 range (Promoters)
40 responses were in the 7–8 range (Passives)
When you start calculating the percentages for each group, you will get 10%, 70%, and 20%, respectively.
Net Promoter Score = % of Promoters – % of Detractors
NPS = 70% – 10% = 60
So, your Net Promoter Score is 60.
A nifty-free NPS Calculator is an effortless and quick way to measure your Net Promoter Score. Add the number of detractors, passives, and promoters, or even simpler, add the number of people who gave you a score of 0, 1, 2 till 10, and the calculator will present you the score instantly!
NPS Software is a tool that allows you to set up and send NPS Surveys and take feedback from customers utilizing multiple channels like Tablets, Kiosks, Online, Website, Web Widgets, Email, and SMS. The software also tells you NPS responses in real-time, stores NPS results, provides insightful NPS Reports, changing trends, and the ability to take action to turn Detractors into Promoters.
Net Promoter Score is always represented as a number that ranges from -100 to 100; when it shows a negative score, it means the company has more detractors than promoters and is positive in the opposite situation
In the Net Promoter system, average scores vary considerably between industries:
Understanding NPS averages by industry helps to know how key competitors in a particular market are doing and provides extra context to what counts as a ‘good’ or ‘bad’ score.
Given the available -100 to +100 range, any score above 0 reads as ‘good’ because it symbolizes that a business has more promoters than detractors.
Top-notch companies usually have an NPS of 70 and above, but if you think this is the domain of big, global companies only, think again: in 2018, Netflix had an NPS of 64, PayPal scored 63, Google 53. Amazon 54, and Apple 49.
A perfect score of 100 means that every survey respondent would recommend a company to someone else—a score that nobody has ever achieved.
Any score below 0 means that a business owns more detractors than promoters. Here’s where industry NPS benchmarks like the ones mentioned above are helpful: while an NPS score of -3 may look bad in isolation, it’s hard to understand it without comparable scores from key industry players—if the industry average were -10, suddenly the score would not look as poor.
Even if the bar is set low, a negative NPS signifies that a business has some serious work to improve the situation, diminish the number of unhappy customers, and produce more promoters.
The NPS Survey is utilized for taking both quantitative and qualitative feedback. It allows you to find out the NPS Score as well as the basis for the score.
While the NPS question is the easy one — ‘How likely are you to recommend us to a friend or colleague?’, the NPS Survey is a two-question survey.
The first one being is the NPS question, and the second question is trying to know the reason for the score. It is usually an open-ended question where you can request the customer to tell you the reason for the score and what they like or dislike about your company, product, or service.
Although NPS questions provide you with a lot of information like recognizing promoters, passives, and detractors, using a follow-up question and the NPS is a great way to understand the reason behind the score. This reasoning provides you with more actionable data to determine what works and what is not working in your company.
It is popular for the follow-up question to be an open-ended one to seek free comments; you can also utilize an NPS Tool to set up logic-based closed-ended NPS follow-up questions.
Businesses can modify the NPS Survey Question based on what you’re employing it to measure — customer loyalty, employee loyalty, and regarding what — the company, brand, product, or service.
You can apply a standard open-ended NPS Survey question or practice survey logic to ask different and modified questions to promoters, detractors, and passives to know their reason for the score.
Standard Open-Ended NPS Survey Question
Alternative Open-Ended NPS Survey Questions
The NPS Surveys can be used in multiple ways — as a loyalty measurement based on the relationship and measurement of loyalty based on a transaction or event. This gives us two distinct types of NPS Surveys (or two distinct ways in which you can utilize the NPS Surveys) –
Transactional NPS Survey
Transactional NPS Survey is conducted to instantly determine the customers’ perception after particular interaction or transaction, or event like placing a new order, booking tickets, making online payment, etc. Since the Transactional NPS Surveys are triggered on an event, the Net Promoter Score estimated from these is considered specific to the event and not the relationship as a whole.
The Transactional NPS Surveys assist companies in determining what event caused dissatisfaction to the customer.
A modified Transactional NPS Survey would be — Based on your current purchase, how likely are you to recommend shopping on our website to your friends and family?
Use Cases for Transactional NPS Surveys
Relationship NPS Survey
A Relationship Survey is conducted to measure the general experience of customers and employees of being associated with your organization. A relationship survey can be done frequently, like bi-annually or quarterly, to get a pulse of the relationship and loyalty.
According to the Nielsen Global Trust in Advertising Report, 83% of online respondents state they trust the recommendations of friends and family than any sales representative.
That data itself speaks volumes about the value of recommendations and reviews of friends and family in choosing any spending in general.
Apart from doing online research, don’t we all also refer to friends while making a new laptop purchase, while considering which car to buy, which hotels to book for a vacation, which apartment to check out, which doctor to visit, and almost everything else? There are several reasons why you should measure and track NPS, but a few important reasons are:
1. To Determine Customer Loyalty
The most significant reason to start using NPS Surveys is, of course, to gauge Customer Loyalty. According to research by Yotpo, 59% of customers are more willing to suggest brands they like to their friends and family, and 36% are likely to spend more. 66% of US consumers agree that they spend more on brands to which they are loyal.
Loyalty is an essential determinant for customers continuing to do business with you and improving their spending. It is also a metric that is difficult to measure. Most companies calculate Customer Loyalty by measuring repeat purchases, average order value, referrals, and churn rate. However, none of these is straight indicators of loyalty.
Regularly measuring NPS helps you quantify customer loyalty and compare it over a period to understand business health and growth further.
2. To recognize reasons for dissatisfaction & areas to improve.
While measuring NPS does not support identifying the reasons for dissatisfaction of detractors and passives, utilizing NPS Surveys to get quantitative and qualitative data (as we mentioned above) can be very useful.
By asking follow-up, open-ended questions, you can recognize issues and work towards closing the feedback loop.
3. To adjust Business Plans with Customer Expectations.
Asking for qualitative feedback from consumers after the NPS Survey question helps you to identify what enhancements and features customers expect from the business. For instance, when you follow up NPS questions with a question like ‘What is the one thing we can change to make your experience better?’, customers are likely to give their suggestions. These, when analyzed, can give excellent insights into customer expectations.
Aligning business plans and expansion with Customer Expectation is a great way to turn your detractors into promoters.
4. To overcome Customer Churn Rate.
It is 5%-25% more costly to obtain a new customer than retaining an existing one, and by improving customer retention by merely 5%, you can raise profits by 25% to 95%.
When you measure NPS, you can discover which customers are likely to Churn (not repurchasing from you, canceling their account, canceling renewal, moving their business to a different organization). Classifying them enables you to work on restricting Customer Churn.
You can do this by following NPS regularly and tracking detractors, passives, and promoters. To know the health of your relationships with customers, you can look at NPS Trends to know an increase or decrease in detractors, passives, and promoters. If you notice a decrease in detractors and an increase in passives, this indicates that a positive trend has started. Your goal should be to drive these passives to be promoters gradually. Alternatively, if promoters are on a decline, it symbolizes the possibility of a higher percentage of Customer Churn.
5. To boost referral marketing.
Ninety-two percent of customers say they believe recommendations from friends and family over all other sorts of advertisements. Promoters from NPS Surveys can be your brand ambassadors. Once you recognize your promoters, you can leverage them by soliciting testimonials, online recommendations, case studies, and referrals.
By gauging NPS, it becomes simple to recognize your happy customers, and then you can collaborate with them in marketing your business and brand.
Apply NPS to Grow
While recognizing detractors in NPS helps you progress on issues and close the feedback loop, classifying promoters helps your marketing and referral programs further. Therefore, NPS is a metric you should measure even if you reach your goal Net Promoter Score as it will encourage you to grow more and grow better.
Understanding the key benefits to gauge Net Promoter Score is the next step to use this robust Customer Experience Metrics to measure your customer loyalty and utilize this score to facilitate business growth. Implementing NPS Survey System is simple if you follow the proper steps.
Step 1 — Identify your Customer Touchpoints
Whether you require to run Transactional NPS Surveys or Relationship NPS Surveys, you can utilize imperative first to recognize all customer touchpoints where customers interact with your company, employees, and brand.
Step 2 — Choose an NPS Software
While it is feasible to run NPS Surveys independently without any software, it is not perfect. With an NPS Software, you not only save time but get the benefit of too many features — like creating NPS Surveys with intelligence and ease, distributing NPS surveys to your customers across various survey channels, triggering NPS Surveys based on events and transactions using integrations and APIs, viewing real-time responses and Net Promoter Scores in one place, accessing in-depth NPS Reports and Analysis, and more!
Step 3 — Customize your NPS Survey
As we have discussed thoroughly above, the NPS Survey is ideally a two-part survey with the Net Promoter Score Question and the Reasoning Question. Before distributing the Survey and starting to take feedback, it is important to customize your NPS Survey to exactly ask what you’re looking for to get accurate results.
Step 4 — Distribute your Survey via various Channels and Get Responses.
The best way to share your NPS Survey is to reach your customers wherever they are. If your customers are in your store, on-premises, then set up Kiosk Surveys for them; if they are in touch with you remotely, then Email Surveys and SMS Surveys work best. For customers on your website, you can set up Website Surveys and take feedback online. Printing QR Codes to scan and give feedback, distribute survey links, use iPad Surveys and Android Surveys, or even Mobile Surveys are other options to take Customer Feedback and measure NPS.
Step 5 — Identify Key Drivers of Customer Loyalty in your Business
When you start receiving responses, you can utilize the NPS Reports to identify the key drivers for customer’s happiness and disappointment with your business and understand what influences their behavior and loyalty. With follow-up questions and Text Analytics reports, you get transparency about key drivers and behavior influencers.
Step 6 — Create a Closed-Loop NPS System
Guide your team to your NPS Software and build an effective closed-loop NPS System involving your Front-line Staff, Middle Management, and Top Management. The technical support team and front-line staff play a pivotal role in dealing with detractors firsthand and encouraging promoters. Their communication with the customers is the most immediate and influences the most. Middle management plays a role in training the front-line staff and creating the right ground to improve customer experiences. The top management develops an approach and builds the right environment, system, and incentives for teams to put customer experience and happiness at the top.
NotifyVisitors NPS is the simplest way to accumulate actionable customer feedback to accelerate growth and drive Brand Promotion.
Customers can rate your products on a scale of 0 to 10. Here 0 will mean the customer is not satisfied with your product, and ten means the customer is highly satisfied with your product.
Based on their responses, we classify them into three categories: Detractors, Passives, and Promoters. By classifying them, companies can improve their customer relationship and improve their brand image.
Detractors and Passives are not satisfied with your products, and you have to work on the problems they are facing with your product.
Promoters are those who are happy with your products, and you can ask them to write a public review of your products. NotifyVisitors calculate your NPS by a standard formula.