Net Promoter Score, or NPS, What is it exactly?

How does Net Promoter Score (NPS) work?

NPS is measured through NPS surveys and is calculated with scores ranging from -100 to +100. The higher the score, the higher the likelihood that your customers are recommending you to others. In fact, NPS surveys all boil down to this million-dollar question:

How likely is it that you would recommend [Company X/Product Y/Service Z] to a friend or colleague?

The respondents answer the NPS survey question by providing a rating between 0 and 10, with 0 being “not at all” and 10 being “extremely likely.” The ratings they give help companies segment and categorize their customers into the following groups:

• “PROMOTERS” with 9 or 10 NPS scores are considered loyal and enthusiastic.
• “PASSIVES” respond with 7 or 8, these are satisfied clients/customers but not enough to be evangelists of the company, product, or service.
• “DETRACTORS” give NPS scores of 0 to 6 as they are unhappy customers that are least likely to buy or avail your services, and perhaps even spreading negative feedback about your offerings.

How do you calculate the NPS?

To find out the final NPS score, you take the difference between the percentage of promoters revealed in your survey to the from the percentage of detractors.

For example, having 20% of respondents as Detractors, 10% as Passives and 70% as Promoters, your final NPS score would be 70-20 = 50.

Scores land somewhere between -100 and +100 with +100 being the highest possible score and -100 being the worst.

What is a good NPS?

A positive NPS is good for a company, brand, product, or service. This means that there are more Promoters than Detractors, thus higher customer loyalty and likelihood that your customers are spreading the word about you.

The closer the score is to +100 is, the better, but this isn’t to say that a negative score is immediately terrible. A score of -5, for instance, may look bad at first glance. But looking into other factors may also provide more insights. If industry average is -10, then the NPS does not look so bad after all.

How to create an NPS Survey

Many companies also include additional NPS survey questions that help them collect qualitative feedback in addition to their NPS.

Qualitative feedback is gathered by additional questions that follow the rating scale. This feedback mechanism aims to dig deeper into the reasons why respondents provided the ratings as such.

The qualitative survey may explore more interactions along the customer journey, and may be open-ended questions about their experience with the company, brand, products or services. In addition to assigning a general score, respondents can share specific feedback about the offerings and what can be improved on.

NPS Survey Questions

Here are some examples of NPS survey questions that can elicit quality feedback. [1] The examples include those aimed at collecting a numeric score and others that are open-ended.

1. On a scale of 0-10, how likely are you to recommend our business to a friend or colleague?
2. On a scale of 0-10, how likely are you to recommend (product/ service name) to a friend or colleague?
3. On a scale of 0-10, how likely are you to recommend (company name) as a potential workplace to your friends?
4. What is the primary reason for your score?
5. How can we improve your experience?
6. Which product/ service features do you value and use the most?
7. What was missing or disappointing in your experience with us?
8. What can we do to make you a happier customer?

How can you implement an NPS survey?

1. Include a survey on your website.
   Landing pages and pop-ups allow you to present your survey questions and capture customer’s qualitative feedback while on your site. You can either set the survey up on your main conversion pages, i.e. thank you page after completing a purchase, or an exit survey before they leave your website.
   When doing this, make sure that the survey is short and sweet. Start by getting quantitative feedback (“On a scale of 0 to 10, how likely are you to tell your friend about our product?”). Then follow up with one or two questions to get qualitative feedback, i.e. “how can we improve” or “what do you like most about our product?”
   Website surveys work if you want to take advantage of the time your customers are on your site. However, as this is usually done as the last step – right before exiting your website – the answers may be rushed and not thought through. Short pop-up surveys may also give less insights compared to a list of a few questions done outside of the purchase cycle.
2. Email a survey to your customers or directly after a purchase.
   If you are collecting data during the customer journey, or already have a customer database, you can also email a survey. Email allows you to include a longer list of questions than a website survey and gives your customers more time to answer. However doing this may have some time delay in getting answers and, inevitably, some recipients will choose not to respond to it.

Why NPS is important

1. NPS tells you about customer loyalty.
   NPS is a metric to measure customer loyalty and how much of your customer base is willing to spread the word about you. It also gives you an idea of your customer churn rate – or how many of them may stop using your product or fail to renew their business.
   According to Bain & Company, a spike of 5% in customer retention can lead to an increase in profit by 25-95%. [1] Customer retention and loyalty is just as important, or even more important, than acquiring new customers.
   NPS helps you identify how high your customer loyalty is and allows you to recalibrate your strategies if you uncover data that suggests a higher churn rate.
2. NPS helps identify which areas need improvement.
   NPS provides an idea how many of your customers are Promoters, Passives or Detractors. If you have a higher number of Promoters than Detractors, then you can leverage those happy customers and create social media campaigns highlighting them as brand ambassadors. On the other hand, if you have more Detractors, then you know additional qualitative feedback could give you an idea on where to improve. Whether it is terrible User Experience (UX) or poor customer service, NPS can help you identify areas to zero in on.
   NPS gives you a way to better understand your customers and dive deeper into what you can do to address their specific needs.
3. NPS builds up your referrals.
   Higher NPS means there are more people that could be driving referrals. According to Hubspot, almost 70% of consumers are likely to use a product or service if someone they know shares a positive recommendation. By having a high NPS, you can build up and leverage referral marketing campaigns.
4. NPS data can be a predictor of business growth.
   A healthy NPS means a stronger relationship with your customers. Having a solid base of loyal customers strengthens your customer retention rates and decreases churn. Plus, when your customers are more likely to recommend you, referrals increase and the cycle creates positive growth.

Create promoters and build customer loyalty and satisfaction

Growing companies need to build a positive and solid relationship with their customers. NPS helps you benchmark and measure this somewhat intangible business goal. Tracking this number over time gives you a chance to spot trouble spots early, decide which strategies to implement, and identify what’s working.