Net Promoter Score: What is it Good For?

July 7, 2015 Jiordan Castle

net promoter scoreYou want to know what your customers think of your business and its offerings — how your products and service rank, if customers are happy, and if they’ll recommend your business to others in the future. But how can you effectively measure customer satisfaction?

A good standard measure is the Net Promoter System, which uses Net Promoter Scores (NPS) to survey and examine customer relationships. Here we’ll go beyond the numbers and explain how NPS informs improvements that drive better Customer Experience.

How NPS works

Customers being surveyed are given the question “How likely is it that you would recommend [Company X] to a friend or colleague?” Generally speaking, both groups are given a standard scale that ranges from 0 (not at all likely) to 10 (extremely likely). Based on how they respond, they’re put into one of 3 categories:

  • Promoters = 9s and 10s
  • Passives = 7s and 8s
  • Detractors = 0s through 6s

NPS is a simple way to take stock of promoters of your brand, as well as detractors. (As for those passives in the middle, there’s a place for them too.) Promoters have especially high numbers, indicating a deep level of commitment and enthusiasm, whereas passives are indeed fans but may be swayed by the competition. Detractors have the widest, lowest range because they have the potential to damage your brand if they’re left to their own devices without company outreach.

Tracking customer satisfaction

NPS is calculated by subtracting the percentage of detractors from the percentages of promoters. Ultimately, the percentage is lopped off of the final score, and the end result is a single number (the NPS). As Forrester explains, “The score is calculated by subtracting the percentage of detractors from the percentage of promoters — hence the Net aspect. It is a best practice to couple the NPS question with a follow-up question that asks customers why they gave a certain rating.”

Simply put, NPS tracks how customers position a company to their colleagues, friends, and family. Based on a general perspective on the company or a follow-up question about a more specific experience, companies can gain greater insight into their customers’ satisfaction. NPS has become increasingly popular with companies for a few simple reasons:

  • An easy, actionable concept — By averaging responses from customers, it’s easy to see where your brand stands… and how many detractors and passives need to be converted to promoters.
  • Increased survey response rates — Net Promoter surveys are much shorter than other types of surveys, so they tend to draw more people in. With less time-consuming surveys, the number of participants typically increases.
  • Offers benchmarking opportunities — The Net Promoter System is known for its easy-to-follow scale and score calculation, which provides companies a way to compare themselves to competitors known for exceptional Customer Experience.

The process of using NPS is interactive, which is part of what makes the Net Promoter System such an asset to companies at every level — the ease of sending, securing, and ultimately interpreting responses from customers.

NPS as more than a metric

In the interest of closing the loop and gaining as many insights as possible, follow-up is necessary for customers at every point on the spectrum: promoters, passives, and detractors. Simply finding out why an 8 wasn’t a 9 or a 10 or why an experience warranted a sharp 3 can help management reevaluate or reinforce different methods of doing business.

Of course, your company should always be more concerned with Customer Experience than NPS. Brand recognition and better business operations don’t happen overnight; it’s a ripple effect involving every customer you serve. You can begin to build better Customer Experience by closely examining the experiences your customers report. As an added benefit, using those insights to drive better Customer Experience can typically boost your NPS — a sign that you’re giving the people what they want. And happy, surveyed customers can turn into referrals or even case studies… provided you ask the right questions at the right times.

Learn more about surveying customers to gain actionable insights from our ebook, Creating an Exceptional Customer Experience.

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