What is Net Promoter Score (NPS)?
Net Promoter Score or NPS is one of the key customer experience metrics that shows your customer’s overall loyalty, satisfaction, and enthusiasm through first-hand feedback. NPS indicates how successful you were at delighting your customers, leading to strong word-of-mouth and a boost to sales and customer base by a simple scoring question.
Fred Reichheld, a partner at Bain & Company, developed the net promoter score system in a 2003 article published by Harvard Business Review to measure customers' perceptions through initial survey questions on a 0-10 rating scale.
On a scale from 0-10, how likely are you to recommend this product/service to a friend or colleague?
Respondents to the Net Promoter System rate their satisfaction between 0 (not at all likely) and 10 (highly likely), and based on their response, they fall into three categories:
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Promoters (score of 9 and 10): Most loyal and passionate customers who will likely act as brand ambassadors and help you grow the business.
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Passives (score of 7 and 8): Customers who don't necessarily advocate for your brand but are satisfied enough to stick around and possibly become promoters in the future (specifically ones who give a score of 8). Therefore, looking for ways to win them over can be a good strategic move for the business.
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Detractors (score of 0 to 6): Customers you were unable to convert, and they likely won't stick around or repeat their purchase, or worse, they may actively steer potential customers away from your business.
How do you calculate Net Promoter Score?
You can calculate your Net Promoter Score by deducting the number of customers who answered your question with a six or lower score (The Detractors) from the number of customers who responded with a 9 or 10 (The Promoters).
% Promoters - % Detractors = Net Promoter Score
For example, if 20% of users are detractors, 10% are passives, and 70% are promoters, your NPS would be 70-20 = 50.
Furthermore, they recommend that you add an optional blank space for participants who wish to elaborate on their choice if they want to. The information provided will help you make better choices to improve your brand and customer satisfaction.
Why is NPS so important?
The NPS system can shape cultural changes and improve brand experiences, which contributes to a happier long-term customer experience and ultimately a positive impact on a financial level for the business. Listed below are some additional reasons why your business should be using a Net Promoter Score:
NPS is a simple and easy-to-understand metric and can offer you so much valuable information about your customer’s satisfaction and your business success.
- NPS provides data on repurchase probability that allows you to estimate your brand’s potential success rate and profitability.
- NPS can help you improve customer satisfaction and reduce churn rate by giving you data to keep your customers happy.
- NPS can provide you with comprehensive data about the performance of your team.
- NPS survey is user-friendly and will not take too much time so that customers can give feedback quickly.
- NPS is one of the most influential metrics to track progress over time to know when to resume and re-evaluate your actions.
We hope this article has given you a clearer picture of the Net Promoter Score metric to help you improve your customer service and business success. You can also find more information on how to grow your market on our blog and encyclopedia pages. Feel free to browse them!
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