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Net Promoter Score Explained (NPS)

Net Promoter Score Explained (NPS)
Maria Martin

7 min

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Net Promoter Score Explained

NPS is the best way to measure the quality of your service. Find out what it means, how to measure it, and how it could benefit your business.

Net Promoter Score (NPS) definition

A Net Promoter Score (NPS) measures customer satisfaction and loyalty. It's calculated by asking one question: "How likely would you be to recommend [your company] to a friend or colleague?" The answer is either "definitely not," "probably not," "maybe not," "yes definitely," or "yes probably."

NPS is often touted as the gold standard for measuring customer satisfaction. It measures whether companies are doing well or poorly delivering a good customer experience.

It measures loyal customer perceptions by asking them a single question: "How likely are you to recommend us?"

How likely can you recommend [Organization X / Product Y / Service Z] to a friend?

Depending on their responses, respondents fall into one of three categories for establishing an NPS score: Excellent, Good, and Poor.

  • Customers who respond with a 9 out of 10 are usually loyal and highly enthusiastic.
  • Passives respond with a score of 7–8. They are satisfied with the quality of your services but not happy enough to consider promoting them.
  • If someone gives you a negative review, respond by explaining why they're wrong. Don't let them get away with their bad reviews!

Start your own NPS survey today!

How do you calculate Net Promoter Score?

Net Promoter Score measures how likely a customer will recommend your brand or product to others. In short, it helps companies understand how satisfied customers are with their experience with your company. You can use the formula to measure your overall satisfaction level.

To calculate your NPS score, subtract the percentage of detractors from the percentage of promoters. So if 10% of respondents say they're dissatisfied with your products/services, 20% are passives, and 70% are promoters, your NPS score is -20 + 20 + 70 50. If we apply this same logic to our previous example, where 10% of respondents are detracting, 20% are passive, and 70% are promoters, your NPS score becomes -10 + 20 + 70 40.

The difference between the scores tells us whether there's room for improvement. A positive number indicates that you've got room to grow; a negative number suggests that you need to make some changes.

Detractors

(0-6) An unhappy customer can harm your business by spreading negative word-of-mouth.

Passives

(7-8) are satisfied customers who aren't enthusiastic about your product or service.

Promoters

(Score 9-10) are enthusiastic fans who keep buying and spreading word-of-mouth referrals for their brand.

If you want to see how turning detractors into supporters can help increase customer satisfaction and loyalty to your company, look no further than these examples.

There are two types of NPS programs: transactional and relational.

The difference between transactional and relational NPS programs is essential because it helps you identify what type of information you want to receive from your customer journey. You'll likely want to focus on relational NPS to improve customer retention. However, if you're interested in understanding how satisfied your customers are with your product or service, you might want to opt for transactional NPS.

Relational NPS Surveying is done regularly ( i.e., every quarter or yearly ). The objective is to get an ongoing view of your customer's feelings about your business overall. This information can be used to track the health of your customers year-over-year and provides a benchmark for your business's performance. Transactional NPS Surveying is sent out after the consumer engages with your business ( i.e., a purchase/support interaction ). It's used to understand consumer satisfaction on a granular scale and give feedback about a particular issue. It's best to utilize both methods to understand your consumers at the macro and micro levels.

What can you measure by asking for feedback?

You can measure almost any aspect of your business using Net Promoter Scores (NPS). With these scores, you can gauge whether your company is growing or shrinking, whether your employees are happy or not, and whether your marketing efforts are practical. To get started, go to npsmarketing.com/nps-free-templates/ and download one of our pre-made templates. They include instructions on calculating your NPS scores, so you can start tracking them immediately.

Measuring employee satisfaction using Net Promoter Score (eNPS) surveys

Most NPS surveys are designed to gather customer loyalty satisfaction information. However, they can also be used as a measurement tool for employees. Qualtrics suggests avoiding using NPS to gauge worker morale because it does not provide enough insight into why people may feel pessimistic about working for your organization. In addition, NPS surveys do not capture the full range of opinions employees hold about your business. Engaging workers through qualitative methods such as focus groups or interviews provides a much deeper understanding of how they view your brand and what they think about your products or services.

How do you create an NPS survey?

NPS surveys are relatively straightforward to create (we offer widgets), but you should consider what kind of information you're collecting before choosing a platform. Survey software limits your ability to act on the collected information because it only tracks one metric. We recommend taking advantage of a customer experience monitoring platform or NPS software to collect all of your customer feedback across channels. These tools give you an overview of every interaction you've had with your customers — whether they're currently active or not. You can then analyze each channel separately to identify where you may have room for improvement.

Demographic questions

Surveys should only ask what matters to the business. Don't waste precious resources collecting information about demographics unless it's essential to know who your customers are. You'll likely find out through other means, anyway.

NPS Question

This is the core survey question that we discussed earlier. Other questions are designed to help us understand the context of the answers provided by respondents.

What reason for your score?

In this open response section, you should explain why customers gave the numeric scores they did. You may also wish to explain how you plan to take action based on your survey results. A good example would be that if you find out that only 10% of your respondents gave your product a 5-star rating, you might decide to make changes to your website to improve the experience for those who rated your product poorly.

What can we do to improve your experience?

The respondent asks how you can help them get better scores in this question. This can be useful if you're planning to do close-looped follow-ups and ticketing with your responses because it gives you an idea about where to focus your efforts. Remember that not every case needs the "why" and "what can we do?" sections; often, the same response will apply to either section. For instance, if the person said they didn't like the service because they had to wait too long for someone to pick them up, then improving the service might involve shortening the wait times.

Please let me know if there's anything else I can help you with.

Ask the respondent if they would mind providing their email address or phone number if you need to reach out to them later. Some customers won't feel comfortable talking to strangers online, especially if you're asking sensitive questions. Please make sure you have permission to collect this data before collecting it. You might also consider asking for an opt-in box where respondents can indicate whether they'd like to receive future emails or calls from you.

You can use your NPS score to determine whether you're doing something right or wrong.

Remember, NPS (Net Promoter Score) is an indicator. It gives an overall metric to measure and allows you to monitor product, service, or organization improvements. However, there is so much that affects NPS. For instance, consider phone agents; one person can have a Net Promoter Score of 78 while another has a Net Promoter Score of 32. Considering only the numbers alone, it's hard to tell why. When we consider the environment each person works in, it starts to become apparent. One person could be working with old, unhappy, and demanding consumers, while the other is working with new, happy, and easy consumers. These two people would naturally have very different experiences and, thus, different NPS ratings.

You may also be tracking things like average handling time (AHT), first call resolution (FCR) or even requesting feedback on specific characteristics like was the agent polite and helpful. These data points can help explain why your customer satisfaction score has changed. When you look at the data, you can identify what's affecting and changing your customer satisfaction score.

Key drivers vary by segment, so if you want to improve customer satisfaction, you need to know which are most important to each group.

Collecting as much data as possible alongside your Net Promoter Score (NPS) allows you to understand better what drives your customer experience, enabling you to prioritize your improvement efforts, so they have the most significant effect on your customers.

I am using Customer Satisfaction Surveys (CSUs) as inputs into a Customer Churned Model (CCM).

Suppose you layer together your own internal user/customer voice analytics with external metrics, such as Net Promoter Score (NPS). In that case, you can begin predicting which users will most likely abandon your product or service. You can then use this prediction to create a plan for winning back these lost users. With Qualtrics' new predictive capabilities, you can now set up models and begin tracking users who are most at risk of leaving. Then, you can assign a team member to reach out to each of these users individually.

Segmentation in NPS surveys

Segmenting your customers' Net Promoter Scores (NPS) is an effective way to understand their experience and identify opportunities to improve specific touchpoints or experiences. Segmenting can be performed by behavior, demographics, social class, or marketing channels. You can segment using NPS scores across the entire journey to ask for feedback from your customers via their preferred channel at the right moment and monitor them throughout the relationship.

Updated

November 15, 2022

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