Net Promoter Score

Net promoter score (NPS) is a highly used metrics that helps companies to measure customer satisfaction and loyalty to gauge overall experiences. It was introduced by Fred Reichheld, Bain & Company, and Satmetrix in 2003, since then it has become a structured tool assessing customer sentiment and the likelihood of the customers to recommend an organization’s products and services to others.

What is a net promoter score?

A net promoter score (NPS) is used to measure the customer overall experience and satisfaction towards the organization. It follows with the numeric values that quantifies customer’s sentiments and likelihood to recommend a company’s products or services to others and make new customers.

NPS basically involves in customer surveys on the scale of 0 to 10, how likely are you to recommend or spread a word of mouth about the company, product or services.

After the responses the customers are divided into 3 categories:

Promoters (score 9-10): The highly satisfied customer who are enthusiastic about the brand and have high chances to recommend the business to others and considered as loyal advocates.
Passive (score 7-8): Passives are usually satisfied but not enthusiastic about the brand to promote, they are content with the product and services but may not consider promoting it.
Detractors (score 0-6): These rae the dissatisfied clients or customers with the brand are won’t recommend the company and are likely to spread a negative word of mouth and that may also harm the reputation of the company.

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Why is net promoter score important?

Net promoter score is important because of several reasons:

Customer loyalty
Proactive insights about the business growth
Customer centric focus
Determine the area for improvement
Performance analysis
Word of mouth

Customer loyalty: NPS allows a structured and standard way to measure customer loyalty and satisfaction as it helps the organization to understand how the customers feel about the products and services.
Proactive insights about the business growth: Researchers have shown that there is a strong correlation between NPS and business growth. Companies with higher net promoter scores tend to experience higher revenue growth, as loyal customers and repetitive customers.
Customer centric focus: Net promoter score encourages a customer centric approach to the business. By considering customers how likely they are to recommend the company and pouring their perspective at the center of the decision making process.
Determine the area for improvement: NPS feedback allows highlighting the areas where the company can improve and this data can guide product development, customer service enhancements, and other strategic decisions.
Performance analysis: Net promoter score helps to analyze the performance over time and against competitors. This helps to assess the company’s performance and set targets for better working and improvements.
Word of mouth: Promoters are not just loyal towards the company but are likely to spread a positive word of mouth in favor to the company/brand to business, family or coworkers.

What is a good net promoter score?

A good Net promoter score can vary according to the industry and company size, and other relevant factors. NPS are interpreted as follows:

Positive net promoter score (above 0)
NPS above competitors
Align with your goals
Customer feedback
Stable across segments

Positive net promoter score (above 0): A positive NPS score indicates the brand has higher promoters (customers to spread a positive word of mouth) than detractors (customers who are unlikely to recommend business).
NPS above competitors: A good NPS should also be higher than or at least on par with your competitors NPS scores. This helps to perform well relative to others in the industry.
Align with your goals: Your NPS should align with the specific business aims. If the goal is to reach a certain level of customer loyalty, then it somewhat becomes a benchmark for a good NPS.
Customer feedback: Pay attention to the quantitative feedback you receive along with the NPS score, that may be valuable feedback that suggests areas for improvement.
Stable across segments: It's important to assess net promoter score within different customer segments. A good NPS should be consistent across various customer groups, indicating a consistent customer experience.

How to calculate net promoter score?

Calculating the net promoter score have various steps:

Collect survey responses
Categorize responses
Determine percentage
Calculate net promoter score

Collect survey responses: Start a surveying your customers by asking the net promoter score question:
"On a scale of 0 to 10, how likely are you to recommend our company/product/services to a friend or colleague?"

Categorize responses: Categorize respondents into various categories based on score such as, promoters, passives and detractors.
Determine percentage: Calculate the percentage ratio of the respondents in each group by dividing the numbers of respondents in that group by the total numbers of respondents.
Calculate net promoter score: Deducting the percentage of detractors from the percentage of promoters to calculate the NPS.

The formula:

NPS= % Promoters - % Detractors

Note: The result in the NPS score can range from -100 to +100.

For Instance:

Promoters: 60 respondents (60%) scored 9 to 10.

Passives: 20 respondents (20%) scored 7 to 8.

Detractors: 20 respondents (20%) scored 0 10 6.

To calculate NPS: 60%(Promoters) - 20%(Detractors) = 30.

How to create a net promoter score survey?

To create a net promoter score survey:

Define objectives and goals
Select your survey platform
Craft the NPS question
Add demographic questions
Add a thank you page
Design the survey
Test the survey
Distribute the survey

Define objectives and goals: Determine the goals and objectives of the net promoters survey. The specific insights or actions that can be taken to gain from the survey.
Select your survey platform: Choose a survey platform that suits your needs. Many online survey tools, such as Google forms, or SurveyMonkey, offer NPS question templates and can help you distribute the survey and analyze the results.
Craft the NPS question: Create the core NPS question that will be the focus of the survey .
Add demographic questions: Depending on your objectives, you may want to include demographic questions like age, gender, location, or job role to segment and analyze NPS score by different customer groups.
Add a thank you page: Create a thank you page that respondents will see after completing the survey. Express your gratitude for the feedback and reassure them that their input is valuable.
Design the survey: Use your chosen action platform to design the survey, making it visually appealing and easy to navigate.
Test the survey: Before launching the survey, rigorously test it to ensure that it works correctly and that there are o technical issues.
Distribute the survey: Determine how you’ll distribute the survey, to send the email and embed it to your audience. Make sure you collect responses in a accurate manner for correct responses.

How to improve net promoter score?

To improve net promoter score (NVP):

Engage with detractors
Capitalizing on promoters

Engage with detractors: It goes beyond simply acknowledging negative feedback. Businesses should provide concrete solutions to address the issues that led to negative feedback. By allowing resolutions to customer complaints, demonstrate commitments to supporting them and have the potential to change their percentage of the services.‍
Capitalizing on promoters: This is the structured way to attract the business and further enhance your net promoter score. Promoters already recognize your strengths, but it’s crucial to seek detailed feedback from them and understand the business stands out and how to continuously meet their expectations.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.

eNPS:

eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

Promoters
Employees who have responded positively or agreed.
Detractors
Employees who have reacted negatively or disagreed.
Passives
Employees who have stayed neutral with their responses.