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Net Promoter Score(NPS)

What is a Net promoter score(NPS)?

Net Promoter Score (NPS) is a valuable metric for gauging customer loyalty, satisfaction, and enthusiasm. It’s calculated by asking customers one simple question: “On a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?”

Aggregate NPS scores provide businesses with key insights that can be used to improve service, customer support, delivery, etc. to earn more loyal customers.

NPS is an important metric for companies of all sizes as it provides a clear and quantifiable goal—increasing the score by earning more enthusiastic customers—that can be easily tracked over time.

Why is NPS important?

NPS (Net Promoter Score) is a popular metric used by businesses to measure customer satisfaction and predict business growth. A high NPS score (or, at least, a score higher than the industry average) indicates that a company has a healthy relationship with its customers who are likely to act as evangelists for the brand, fuel word of mouth, and generate a positive growth cycle.

While NPS is a valuable metric on a strategic level, the score alone is not enough to be useful or paint a complete picture. The overall NPS system is important because it allows businesses to:

  1. To get a deeper understanding of customer sentiment, include follow-up questions as part of your standard NPS survey. By asking customers why they gave a certain score, you can quickly identify areas of improvement and understand what you’re already doing well.
  2. Track and quantify your NPS score over time to create internal benchmarks and identify trends.
  3. Encourage all employees to rally around the mission of earning more enthusiastic customers. By focusing on this one key objective, you can improve customer satisfaction and loyalty across the board.

How to calculate NPS?

NPS is calculated by subtracting the percentage of customers who answer the NPS question with a 6 or lower (known as ‘detractors’) from the percentage of customers who answer with a 9 or 10 (known as ‘promoters’).

Net Promoter Score scale:
-Detractors are customers who answer the NPS question with a 6 or lower
-Promoters are customers who answer with a 9 or 10
-Passives are customers who fall in the middle, answering with a 7 or 8

How to interpret NPS?

The Net Promoter Score (NPS) is a number that indicates how likely it is that customers will recommend a company’s products or services to others. The score ranges from -100 to 100; a negative score means that more customers are detractors than promoters, while a positive score indicates the opposite.

NPS scores vary widely between industries. A 2018 study by the Temkin group found that average NPS values in the US ranged from 0 (for internet and TV service providers) to 39 (for auto dealers). Another 2018 US-based study by the Temkin Group found that NPS averages ranged from -1 (for Internet service providers) to 65 (for department/specialty stores).

What does it mean to have a good NPS score?

The NPS range is from -100 to +100, so any score above 0 is good because it means that there are more promoters than detractors. Companies that are considered to be the best usually have an NPS of 70 or higher, but it’s not just big global companies that can achieve this. In 2018, Netflix had an NPS of 64, PayPal scored 63, Amazon 54, Google 53, and Apple 49. Even though a perfect score of 100 would mean that every survey respondent would recommend the company to others, this is a score that nobody has ever achieved.

What is bad NPS?

A low NPS score is nothing to scoff at. It’s quite serious. A business needs to have more promoters than detractors to have a positive score. Anything below 0 indicates that a business has more detractors. Comparisons to industry NPS benchmarks can be useful to get a better understanding of where a business stands about others. Even if the industry average is low, a negative NPS score for a company is still not ideal and is a sign that the company has some work to do to improve customer satisfaction and generate more promoters.

How do I run surveys and collect NPS feedback?

If you want to calculate and track NPS for your business, you need to run an NPS survey to collect customer feedback. You have the option of asking for feedback at the moment or collecting it after a customer has had any experience with your company.