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What Is Net Promoter Score

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What is Net Promoter Score

Net Promoter Score or NPS is a simple metric that yields powerful insights into two important aspects of a business — loyalty & brand advocacy. NPS is measured by asking customers/employees the likelihood of recommending a product/service to family or a friend. The respondents rate their score on an opinion scale of 0-10 with 0 being very unlikely and ten being extremely likely. Based on the score, they fall into three categories- Promoters, Passives, and Detractors. And here’s how,
Having a responses pool consisting of promoters is good news for your business. On the other hand, if the majority fall in the ‘Passives’ & ‘Detractors’ category, then it is an indication that you must invest in customers/employees more. Needless to say, NPS is one of the best loyalty metrics any organization can put to use. Today almost every company across the globe relies on NPS to measure the confidence of the customers or their teams in them. But how did all begin? Here’s a little history on who founded the NPS metric and the company that holds the IP of Net Promoter Score. Back in 2003, Fred Reichheld, a partner at Bain & Company, came up with the idea of Net Promoter Score. He, along with a team, worked on a project to research & understand an alternate approach to CSAT surveys that yields meaningful insights in an organized manner. And that too, without any delay.
Net Promoter Score FAQs

Definition of Net Promoter Score (NPS)

Net Promoter Score is defined as, “A customer loyalty metric that analyzes customer sentiments in order to understand their inclination towards recommending a company to a friend or colleague.”

A high NPS is indicative of the strong connection a customer has towards a brand. It goes without a say that Customer Relationship is the key to the success of any business. In an ideal scenario, the percentage of returning customers would give you a clear picture of their loyalty towards your brand or company.
To elaborate a little, Promoters are the folks who are loyal to the brand and who do not have second thoughts about recommending it to a friend or family. On the other hand, Passives are the customers who are neither happy nor unhappy with the product; they remain neutral and can easily switch brands. Detractors are bad news. They are thoroughly displeased group of people who can easily bring down a brand with their word-of-mouth criticisms. Many brands have tumbled down their pedestal with detractors posting a negative review, tweet, or post, online.

How to Calculate your NPS?

PNPS calculation is pretty straightforward. Follow these steps to calculate the Net Promoter Score for your business.

NPS = % Promoters – % Detractors

Suppose you have 70 promoters, 30 detractors, and 0 passives. Your promoter percentage is 70, detractor percentage is 30, and your overall NPS is 70-30=40. Let’s see what happens when you have 50 passives as well. The total= 70+30+50= 150. Your promoter percentage is 46.6% while the detractor percentage is 20%. The NPS is 26. Do you see the change? The NPS has dipped significantly in the latter case. Therefore, you must give much attention to the passives & detractors and ideally, convert as many as possible into your promoters pool.

Net Promoter Score Vs. Customer Satisfaction Score (CSAT) Survey

CSAT score is a popular tool used for measuring customer satisfaction. CSAT surveys are sent to the customers after they interact with a brand, for instance, after a support query. These surveys are capable of measuring how satisfied customers are with a product or services a company offers. A high CSAT score indicates a higher level of satisfaction. However, being satisfied doesn’t necessarily guarantee if the customer will make recurring purchases in the future. Therefore, what’s the best way to know this? By using the net promoter score, of course!

Net Promoter Score uncovers the likelihood of a customer recommending the brand to a friend or family. Consequently, it throws light on how loyal the customer is and the probability of a long-term relationship. How are the two different? NPS measures long-term customer happiness while CSAT focusses on short-term happiness. The Net Promoter Score measures the loyalty a customer has towards a brand while CSAT measures the level of satisfaction. NPS helps to predict the likelihood of customers making recurring purchases, while CSAT gives insights into customer satisfaction alone

Why is Net Promoter Score important

The net promoter score is a customer loyalty index whose value ranges from -100 to +100. If your company has an NPS value that lies above 0, it is deemed as a good score. An NPS of 50 and above is great, while a score above 70 is top-notch. However, a score below 0 is bad news. It means that you have fewer promoters in your customer pool. Let’s dig a little deeper. What can a business infer from the net promoter score? A higher Net Promoter Score indicates that you have more promoters as customers while a poor score points towards a pool of passives or detractors. Therefore, it is always essential to have a high net promoter score. More promoters mean, more happy, loyal customers. Loyal customers help to bring in new customers with positive word-of-mouth and referrals. As a result, the revenue and growth of the company increase notably. In addition, the cost of acquiring new customers is significantly reduced. Loyal customers do more than what even your most ingenious advertising strategies can do. Therefore, it is essential to monitor your Net Promoter Score continually and take the right steps to improve it constantly.

To put things straight, the Net Promoter Score can help you understand how loyal your customers are, what are the reasons behind customer churn, and take the necessary steps to enhance customer experience.

Collect feedback, analyze data, compute NPS, and improve continually.

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How to Improve your Net Promoter Score?

Improving your net promoter score is a continuous process that requires diligent planning and execution. Since NPS comes with many positives, it is vital to get things right. For this very purpose, we bring you six NPS strategies that can turn the table for your business in no time.

Powerful brand promotion

Make brand promotion easy so that your customers can spread the good word via referrals & recommendations, thereby enhancing the brand image.

Focus on Detractors & Passives

Pacify your detractors & passives with incentives, extra care, and outstanding engagement. Turn them into promoters and better your Net Promoter Score.

Don’t forget the Promoters

Engage with promoters regularly and maintain good relations. Make them spread the good word about you. Learn from your promoters & improve.

Reduce Average Resolution Time

Resolve issues quickly and give prompt responses. Offer a temporary solution while handling issues. A reduced average resolution time increases your net promoter score.

Involve all teams

Ensure that all departments in your organization is focussed on customer satisfaction & happiness. Bring your entire team on board; this directly results in better customer experience.

Monitor your NPS continually

NPS is not a one-time process. Therefore, set a continuous feedback system to analyze, track, and improve your net promoter score. Watch your business thrive.

When’s the right time to measure NPS?

As NPS measures the overall customer sentiment towards, it is better to measure it after a customer has had a proper interaction with your brand. Based on the time and the nature of the interaction, you can categorize NPS surveys into two:

Relationship NPS Surveys

Relationship NPS surveys seek to uncover the overall loyalty a customer has towards a brand. Also known as on-demand surveys, it is designed to calibrate customer relationships and customer engagement. In this case, the overall experience and satisfaction are considered. Relationship NPS surveys are conducted at regular intervals, for instance, once in a quarter, and they help to spot the gaps in the customer experience journey.

Transactional NPS Surveys

Transactional NPS surveys bring out the customer experience at a particular touch-point. Contrary to relationship surveys, transactional surveys indicate the satisfaction associated with a particular event- sales interaction, product quality, support assistance, etc. Thus, these are administered immediately after the interaction. Transactional NPS surveys are designed with the intent of measuring customer loyalty associated with a specific touch-point.

NOTE: Be it transactional or relationship NPS surveys, ensure you don’t reach out to the same customer more than once, within a defined time period. This can avoid the effect of spamming and help you get untampered data.

Benefits of an NPS program

How can your business benefit from using the net promoter score metric? Here are five reasons why implementing NPS for your organization can bring in massive returns.

Give Better Customer Experience

With the help of an NPS survey, you can understand what your customers think of your product or service. You can go one more step and find out why they gave a particular rating. This will help you understand the gap between what you provide and what customers expect. Maybe they didn’t like a feature, or the support was poor- find out and rectify it, right away.

Maintain Great Customer Relationships

Use NPS to know which of your customers require more attention and cajoling- naturally, the detractors & passives. You can interact with your promoters periodically to ensure they are happy. However, you may need to go an extra step to turn the frowns of passives & detractors upside down. For instance, you can give special discounts or coupons to engage with them better.

Get the Big Picture

While customer health metrics like CES & CSAT focus on the customer’s most recent interaction with a product, NPS helps you ascertain the big picture. As a result, you can gather an idea about the customer experience journey a client has with you, rather than isolated touch-points.

Assess Business Health

A poor net promoter score indicates that your business is not coursing in the right direction. A pool of grumpy customers is not something a company must have, at any point of its lifecycle. Therefore, keep collecting NPS data to find out where your business must improve, and make the required amends without delay. This will help to improve the overall customer experience and NPS.

Net Promoter Score: Best Practices

NPS is a reliable metric that analyzes in-depth customer behavior and trends. To use the full potential of the net promoter score system, it is vital to know of the following key points. Implement them, and great results are en-route.

#1: Follow-up

Golden rule #1 while implementing NPS lies in what you do after calculating the score and analyzing the NPS data. And this must be, without doubt, following-up with customers and building stronger client relationships. Always reach out to your customers after they submit the NPS survey, thank them for their time & valuable inputs, and assure them steps are in order based on their feedback.

#2: Pick the right time

Don’t bombard your customers with NPS surveys and that too at the wrong time. Plan it over the entire year and send out NPS surveys once every quarter. This is the case for relationship NPS surveys. In the case of transactional NPS surveys, the right time to share the survey is shortly after purchase or interaction. Consequently, you can build a routine feedback loop to know how your company is performing.

#3: Monitor the Progress

Don’t stop your NPS journey after the first time. How your net promoter score fares with time is just as important as the score itself. A plummeting NPS is an indication that your strategies need rethinking and reworking. Therefore, you can understand if your business is coursing in the right direction by tracking your NPS with time. Also, it goes without saying that your NPS graph must always have an upward trend.

#4: Perform Segmented Analysis

While you analyze the NPS data, make sure you do it right. Very often, companies have volumes of data but aren’t able to use it well. Therefore, filter your responses based on specific parameters to understand the top reasons why customers like/dislike your brand. Consequently, you can even develop a new feature to address and remove the major customer pain-points.

Choosing an NPS Platform

Net Promoter Score brings companies and customers closer. NPS is a way to understand what customers feel about your brand without having a face-to-face interaction. In addition, when a company scales quickly, it is necessary to ensure that it keeps the promises made to customers. And with a continuous feedback system like NPS, your company can do this with ease. What can make this process even simpler, is an NPS platform that can bring out the best of the net promoter score system. Your NPS platform must:

Capture Feedback Efficiently

The NPS platform you pick must be adept at capturing customer feedback and their opinions. There must be multiple options to share the NPS surveys so that customers can give feedback whenever they can, as per their convenience. Once customers enter their responses, the NPS platform must store the data in a database securely.

Dig Deep into the Data

The NPS platform must contain a smart analysis module that can dig deeper into the data and give your company rich insights. With advanced filters, NPS platform helps to pinpoint the data you wish to peruse. Get the data and turn it into useful information with your NPS platform.

Follow-up and Engage

It is always important to close the loop when it comes to feedback or data collection. With data collection tools like NPS platform, you can gather customer feedback easily. It is equally important to follow-up with customers and let them know your company listens to their voice to improve.

Key Features of NPS Platform

In this section, we’ll walk you through the key features any great NPS platform should offer to its clients.

Schedule Automated NPS Surveys

The NPS platform you pick must help to create personalized NPS surveys to get the right feedback from customers. Since the NPS is a process that must be implemented continuously, it is wise to pick a platform that helps to automate the process. Once you hit the configuration button, the NPS platform should share the NPS surveys at your preferred time and day.

Easy Audience Management

Very often, as the number of active customers increases, companies find it difficult to handle them and eventually stop doing so. And, this ultimately leads to high customer churn rates. To avoid this scenario, it is wise to categorize your customers into various groups and follow-up with them differently. The audience management feature offered by NPS platform helps in this.

Analyze Data, Derive Insights

Once the score is obtained, the next step is the plan of action a company takes to rectify the flaws and improve the score. An NPS platform must help to drill down the data and extract valuable insights to guide your business. Compare your net promoter scores over a period, view and filter responses, and segment data based on custom fields.

Integrate with other tools

Connect the applications you use with your NPS platform using webhooks, APIs, workflows, or the popular Zapier Integration. For instance, when a ticket is closed in your helpdesk software, you can trigger an NPS survey from your NPS platform seeking customer satisfaction. For this, your NPS platform must support third-party integrations. Once a customer fills the NPS survey, the respective teams can be alerted to follow-up.

Role of Net Promoter Score in Industries

A few years ago, when a customer wanted to make a purchase, he/she would look at the tangible aspects, stepping into the shop, physically feeling the product or talking to a salesperson, face-to-face. But the scenario in today’s fast-paced world is super different. Today’s hi-tech customer simply goes online and does a thorough research about the product. They read reviews from existing customers, compare features/price from compare sites and also ask their friends/family for recommendations. It wouldn’t be too much to say that Sales teams today are rather expected to handle an over-informed prospects base.
With that said, it becomes mandatory for every industry to focus on their Online Reputation Management (ORM), if they want to stand a chance to be successful against their competitors. Each industry functions differently. Consequently, it has its own set of NPS values. Therefore, once your brand computes its net promoter score, benchmarking it against industry value helps to know where you stand.

SMALL BUSINESSES

Get real-time customer data, analyze trends, and reduce customer churn rates.

AGENCIES

Organize, manage, and optimize sales processes with accurate insights.

HOSPITALITY & TRAVEL

Deliver a memorable experience to each client and stand apart from your competitors.

HEALTHCARE

Care for your patients’ real needs and provide world-class healthcare service.

EDUCATION

Understand student satisfaction, staff engagement, and enrich the learning experience.

RETAIL

Battle competition, spike customer conversion rates, and get the big customer-picture.

GOVERNMENT AGENCIES & CONTRACTORS

Know the pulse of the public and set up a fully-functional political system and active administration.

SOCIAL MEDIA

Understand customer behavior, engage with them, and create strong brand presence.

FINANCIAL SERVICES

Identify customer pain points, enhance the quality of customer service, nurture client relationships.

POLITICS

Step into the grass-root level and understand the needs of the public and voter behavior.

Getting Started with NPS Platform

Looking for an NPS platform for your business? Begin the journey to create a niche for your company, stand out from the competition, and make your business flourish with SurveySparrow’s NPS platform. An intuitive software that collects NPS data efficiently from customers, inspects it in-depth and gives rich insights, SurveySparrow helps you improve your net promoter score continuously. B2B or B2C, any and every company needs NPS to match the high customer expectations. You can choose from our flexible pricing plans and our ever-available support team works round-the-clock for any assistance. Apart from these, we have a free NPS calculator that instantly calculates and gives you your Net Promoter Score. Why waste your time when we can do it all for you?

Hop on board, and we can’t wait to do our bit for your NPS journey!

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Net Promoter Score FAQs

NPS surveys are short and crisp. Therefore, they have higher completion rates compared to other online surveys. A company that has great relations with their clients can expect a response rate above 75%. The average value lies around 60%. Grab a great NPS platform to create personalized surveys to increase the response rates.
To increase NPS response rate, it is necessary to create NPS surveys that are engaging and personalized for each customer. It is equally important to pick the right time to share the surveys. Avoid sending surveys to the same customers multiple times. Spread it across the entire year and send one per quarter to get actionable data.
NPS gives an idea about what customers feel about your business; however, it doesn’t give an idea about what must change so that your business can grow.
Just like customer NPS, you have what is called the eNPS or Employee Net Promoter Score. It gives how loyal and engaged employees are in your organization. All the calculation remains the same. Employees come in place of customers, that’s it!
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