Everybody’s talking NPS – but what’s all the fuss about? I’ll tell you!
NPS stands for Net Promoter® Score, which refers to the fact that it measures how many of your customers are categorized as promoters.
This basically means that NPS is a great indicator of customer loyalty and therefore also the potential for growth in your business.
NPS is pretty easy to use in any kind of business – hence the popularity! Let’s take you through it:
How to calculate your NPS value
Ask one simple question
NPS questionnaires more often than not only consists of one question: “How likely is it that you would recommend our company/product/brand/service to a friend or colleague?”
Give your customers a scale of 0-10 to choose from, where 0 is ‘not at all likely’ (or similar) and 10 is ‘extremely likely’ (or similar). Make the descriptions of 0 and 10 fit your general tone-of-voice.
If you include an option for free commentary, you can get extra insights into why your customer has given you the rating they have. You shouldn’t make this a required field, though, but you can encourage your customers to write down their thoughts by adding a nice headline, like: “We would love to know why you gave us this rating – we always strive to improve!”
Group your customers
When your customers have answered your question(s), you can now divide them into three categories: detractors, passives and promoters.
Detractors (0-6)
This bunch ranks your company from 0-6 and can be categories anywhere from haters to just mildly dissatisfied. They are a tough crowd and they are the least loyal segment of your customers. Something has gone wrong somewhere in their interaction with your brand and you need to reach out to them and try to convince them that you are normally way better than this. This can be resourceful, but it’s crucial to your business that the number of detractors is at the bare minimum.
Passives (7-8)
The passives-category is a group of people who are just that; passive. They are right in the middle and it can be hard to discern whether they are leaning towards the ‘nay’-group or the ‘yay’-group. They are generally satisfied with your company’s practices, services and products, but they don’t feel particularly connected to you as a brand and are therefore more likely to go to another brand without any specific reason. Consider asking them the open-ended ‘why’-question which will give you more insight.
Promoters (9-10)
Promoters are big fans of your work! They are the most likely to buy more, have a longer ‘life’ as a customer, refer family/friends to you, and provide feedback and development ideas. Meaning, that the work doesn’t stop there – you need to squeeze every last drop of insight out of them. Ring them, have them rate/review you on Trustpilot, and remember to pass the feedback on to your colleagues – it’s always nice to hear the success stories!
Calculate results
Calculating your NPS is quite simple: You take your percentage of promoters and subtract the percentage of detractors.
Like this:
(no. of promoters/total submissions)*100 – (no. of detractors/total submissions)*100
For example, imagine you surveyed 100 customers. If 40% were detractors and only 50% were promoters, your NPS would be 10, because:
(50/100)*100-(40/100)*100
(50% – 40% = 10)
But if you surveyed your 100 customers and only 20% were detractors, your NPS score would jump up to 30 – representing a 20% greater chance your customers will recommend you to a friend. That means that your NPS score will always be between -100 and +100.
What score should you strive to achieve?
Of course, the easy answer here is +100, but let’s face it – that’s not gonna happen!
Instead, you should focus on comparing your company’s score to those in the same industry as you.
Here’s a (not exhaustive) list:
- Department/Speciality Stores: 58
- Tablet Computers: 47
- Brokerage/Investments: 45
- Auto Insurance: 44
- Home/Contents Insurance: 42
- Grocery/Supermarkets: 39
- Hotels: 39
- Online Entertainment: 39
- Online Shopping: 39
- Smartphones: 38
- Credit Cards: 37
- Laptop Computers: 37
- Shipping Services: 35
- Banking: 35
- Airlines: 35
- Life Insurance: 31
- Cellular Phone Service: 30
- Drug Stores/Pharmacies: 28
- Software & Apps: 28
- Health Insurance: 18
- Travel Websites: 16
- Cable/Satellite TV Services: 7
- Internet Service: 2
There has been a lot of speculation as to why the numbers aren’t higher. Maybe companies just aren’t doing a good enough job? Maybe it’s because detractors are more likely to review than promoters?
The latter explanation seems to make the most sense since 75% of the general population claims that they would share a negative customer experience with friends/family, while only 42% would recommend a company with which they had a positive experience (according to Colloque).
Generally, any NPS score above 0 is considered a ‘good’ score, since you have more promoters than detractors. Any score above 50 is great, and if you manage to get over 70 you’re golden. You should know, though, that anything above 50 is pretty rare and takes an immense effort (challenge accepted?).
The silver lining? It’s an opportunity for you as a company to stand out from the crowd. If your company redefines it’s KPIs to focus more on improving customer experience (by measuring NPS), you can become a market leader – and of course, have more happy and loyal customers.
Conclusion
NPS® stands for Net Promoter Score and is a common customer experience metric that measures the overall customer experience with the company. It is a useful general feedback indicator that can be placed at various interaction points to be monitored.
The customer is asked the following question (or a variation thereof): “On a scale from 0-10 how likely is it that you would recommend our company to a friend or colleague?”
The respondents are then divided into 3 categories: detractors (0-6), passive (7-8) and promoters (9-10).
You calculate your NPS score by subtracting the percentage of detractors from the percentage of promoters, like so: NPS = (% Promoters) – (% Detractors)
You then get a number between -100 and +100 and the higher your number, the better your customer experience is.
If you focus on implementing NPS as a Key Performance Indicator, you can set yourself apart from others in your industry and get a lot more happy customers (well, that is if you act on the information that is given to you).
When we are calculating our NPS, we use Surveypal to do it, because it integrates with Zendesk and makes it a whole lot easier to track our CX performance in real-time. On top of that, you can connect with the different tools and apps you are already using, like Slack, Keap (formerly Infusionsoft), Pipedrive, Hubspot and many others.