Term
Net Promoter Score (NPS)
noun
Net Promoter Score (NPS) is a market research metric used to measure customer approval, loyalty, or enthusiasm for a brand.
What Is Net Promoter Score?
Net Promoter Score (NPS) is a market research metric used to measure customer approval, loyalty, or enthusiasm for a brand. You calculate NPS by asking: How likely, on a scale of 1 to 10, are you to recommend this service/product? NPS provides companies with valuable insights to improve their product or service.
Why Is NPS Important?
NPS is a big indicator of business growth. If your company’s NPS is high or higher than the industry average, you can maintain a healthy relationship with buyers who spread the word about your business.
NPS also helps businesses:
- Ask follow-up questions as part of the survey. By asking a customer why they gave a particular score, companies of any size can find out what they are doing well and where they can improve.
- Quantify and track scores over time. This can help you create benchmarks you can use to evaluate your performance over a period.
How to Calculate Your Net Promoter Score
Calculating NPS requires you to subtract Detractors (those who gave a 6 or lower score) from Promoters (those who gave a 9 or higher score). So, if 10% of people were Detractors and 30% were Promoters, your Net Promoter has a score of 20.
Net Promoter Score Scale
In the Net Promoter Process, customers are grouped into three categories: Promoters, Detractors, Passives – all depending on how they answered the standard ‘how likely are you to recommend us to others’ question.
Promoters
Giving a score of 9 or 10, these are your most enthusiastic and loyal customers. They are most likely to act as ambassadors for your brand, enhance its reputation, and increase referral flows to your business. The promoters help fuel your brand’s growth over time.
Detractors
The ones who give a score of 0 to 6 are unlikely to recommend your product or service to others. These people probably won’t stick around for additional purchases and will not return for a repeat purchase. Plus, they may actively discourage potential customers from shopping with you.
Passives
Those who give a score of 7 to 8 are passives. They do not actively recommend your brand but are unlikely to damage its reputation with negative word of mouth. Although passives do not become a part of the NPS calculation, they are very close to becoming promoters. So, it’s wise to spend time investigating what to do to turn these people into promoters.
Interpreting Your Net Promoter Score
The NPS score is always expressed in numbers. It is positive when there are more promoters than detractors, and vice versa. The average scores differ greatly between each industry. Knowing industry averages helps you understand how key competitors are doing and gives you additional context on a good or bad score for your brand.
What is a good score?
Given the range of -100 to 100, any score over 0 reads as good for the company. This is because it shows that more people are vouching for their company than harming its reputation. A perfect score of 100 indicates that every respondent will recommend your business to someone, but it’s something no company has ever achieved.
What is a bad score?
Any score under 0 shows that the business has more detractors than promoters. This is where NPS industry benchmarks are important to consider. It is not always bad until you cross-check your NPS score with an industry average. Getting a -3 score might look bad, but if you compare it with an industry average of -10, you’ll realize that all is not lost.
Even if the score is not too bad, having a negative score is something a company should work on and never ignore until it becomes positive.
How to Collect NPS Feedback?
If you are interested in calculating NPS for your business, the first step is to run a survey to collect feedback. You can do it in two ways: collect it as soon as the customer purchases or send it to them after some time.
Website Surveys
Website surveys let you gather feedback while users are still on the site. You can also add surveys on your main conversion pages (like the thank you page after a user completes a purchase) or trigger a survey when the customer is about to exit the website.
To run the survey, you ask the standard question: “on a scale of 1 to 10, how likely are you to recommend us to a family member/friend”? You can also follow up with questions to achieve maximum value.
Email Surveys
Instead of asking customers on the website, you can send them email surveys to collect NPS data. Email surveys require more work on the customer’s end, and there is a time delay between sending the form and getting results. On the positive side, giving customers the time to experience the product or service might help them develop a stronger sense of whether they’ll recommend it or not.