What is Net Promoter Score?
How satisfied are your customers with your products and services? What do you need to do to make them happier, to the point that they’ll recommend you to family and friends? And how is your business viewed relative to your direct competitors? All of these questions can be answered through the use of a simple, widely-used metric: the Net Promoter Score.
In this blog, we’ll answer the question: what is a Net Promoter Score? We’ll also discuss what it’s used for, and how you can improve yours within your organization.
What does Net Promoter Score mean?
A Net Promoter Score (NPS) is a simple way of measuring customers’ perception of your company, and quantifying the level of loyalty or satisfaction they have with a product, service or your business as a whole. It’s determined through the answer to one simple question: “How likely are you to recommend this product/this service/our company to a friend or colleague, on a scale of zero to ten?”
Customer responses are then grouped into three categories, based on the scores that they provide. Those who respond with a nine or a ten are classed as ‘Promoters’, who are highly likely to recommend. Those who respond with a seven or an eight are ‘Passives’, who may possibly recommend but equally might not. All those who respond with a score of six or lower are classed as ‘Detractors’, who are not likely to make recommendations.
What are Net Promoter Scores used for?
NPSs are used as an initial headline indicator for the health of a business, product or service, helping summarize customer sentiment into an easily digestible and trackable figure. They are often used for benchmarking and target-setting, where businesses can work over time to achieve a defined goal of greater customer satisfaction.
It’s worth mentioning, though, that they shouldn’t necessarily be used on their own; instead they can be used as a gateway to drive more detailed feedback from customers. If a customer gives a particularly low score, for example, then a survey can go on to ask them why they’ve given that score, helping your business understand exactly where it’s going wrong. Equally, you can also learn what you’re doing right by finding out why high scores are given.
What are the benefits of Net Promoter Scores?
The NPS is useful in part because it’s an easy metric to understand and quantify, and the success (or otherwise) of any changes you make within your business can potentially be reflected in the score fairly clearly.
It can also be used to predict growth rates for the future. That’s because companies with a high NPS score know that they’re being recommended to a wider audience and therefore are more likely to receive an influx of new customers.
The Net Promoter Score formula
Learning how to calculate a Net Promoter Score is easy: it’s the percentage of customers that are classed as Promoters, minus the percentage that are classed as Detractors. Any customers who are categorized as Passive are regarded as neutral and so aren’t included in the calculation. As an example, if you have 60% of your customers as Promoters and 20% as Detractors, your NPS would be +40.
This means that, theoretically, the highest possible NPS is +100, when every single customer is a Promoter; similarly, the lowest possible score is -100, when every customer is a Detractor. Obviously, neither of these scores are realistically likely (although as of 2020, Tesla had an NPS score of 97), but any score over zero means you have more Promoters than Detractors. What a good score looks like for your business is relative, depending on how it compares to competitors in your industry.
How to improve your Net Promoter Score
There are lots of different strategies you can explore to improve your Net Promoter Score. Which ones are right for you will vary depending on your goals, your industry, and the products and services you offer: every business is different, after all. But speaking in more general terms, we recommend these three tips that can be applied by the vast majority of organizations:
Improve your customer support
Support is perhaps the biggest area where customers can be impressed – or irritated. If they have a problem with a product or service, they want to get all the help they need from you, as quickly and as easily as possible. Failing to respond to emails or leaving a caller on hold is a sure-fire way for their customer satisfaction score to trickle all the way down towards zero. Implementing a live chat solution can help address this, giving customers immediate online access to personalized support, without over-stretching your support team.
Segment your marketing based on NPS scoring
The generation of an NPS score gives you three segmented groups of customers, some of which are naturally happier with your organization than others. You can then leverage this information to vary your marketing and communications strategy to each group. For example, Promoters can be sent loyalty-based offers that demonstrate that their repeat custom and satisfaction is valued, while Detractors can be targeted with marketing that addresses their specific concerns, which can help generate improved NPS scores from them over time.
Look for trends in feedback
It’s possible to spot patterns in good or bad ratings that customers give and notice some interesting trends. For example, you may find that many of your Detractors only buy from you at Christmas, or that your Promoters generally spend more time browsing your online store than anybody else. You might also notice the same compliments or criticisms coming from certain customer demographics. This level of analysis, in conjunction with your NPS score data, can be incredibly useful in working out how to address issues and take the right actions to improve your score.
Increase customer success and enable more customers to adopt your products
Taking the time and effort to improve your Net Promoter Score can play a key role in driving better customer success within your organization. At Influitive, we have the expertise and the solutions to help you achieve your NPS goals. Find out more about how we can help, including through our customer advocacy platform.
Related Terms: Customer Retention Program, Advocate Marketing Program, Customer Relationship
Related Resources: The Evolution of Net Promoter Scores: Advocate Mobilization Scores, The Evolution of NPS, Part II: Measuring Actual Advocate Activity