What is NPS or Net Promoter Score?
What is NPS or Net Promoter Score?
Understanding the Net Promoter Score – NPS
Just one question can help your business understand how well you are serving your customers!
Asking your customers how likely they are to refer you to a friend or colleague will help you establish your Net Promoter Score (NPS), developed by Satmetrix.
This composite score will tell you how you are doing!
- Read this article on the Harvard Business Review Website to learn more.
You don't have to GUESS how customers feel about your product or service, you can know as well as:
- identify your successes
- reveal your weaknesses
- discover opportunity for improvement
How NPS Is Determined
Customers respond on a 0 to 10 point scale for how likely they are to recommend you to someone and their responses help form your Net Promoter Score. To calculate your company’s NPS, take the percentage of customers who are Promoters (rate you 9 or 10) and subtract the percentage who are Detractors (rate you 6 or below).
Responses are categorized into 3 types:
- Promoters rate you a 9 or 10 and are happy, loyal customers that will keep doing business with you and refer you to others. They provide and fuel growth for your business.
- Passives rate you a 7 or 8 and are satisfied customers but less likely to refer you and more likely to be swayed to another business if reached with the right offer or message.
- Detractors rate you at a 6 or lower and are unsatisfied customers that can damage your brand and business with negative word-of-mouth and even negative online reviews.
How do I Calculate My NPS (Net Promoter Score)?
- If you have 100 customers respond to your request for feedback,
- and 70 of them were promoters - that is equivalent to 70%.
- Let's say 10 are passives, that is equivalent to 10%. Ignore this number.
- That leaves 20 that are detractors - equivalent to 20%.
- Subtract: 70% - 20% = 50%
- Resulting in a NPS of 50
How do I Know if My NPS (Net Promoter Score) is Good or Not
There are several ways to look at this.
- If your NPS is above ZERO, you've got more promoters than detractors and the developers of the NPS would say that is "good". Hey, it may not be great, but it is not zero and it is not a negative number.
- If you can COMPARE your NPS to your competition's NPS, that gives you another guage. If your NPS is higher that your competitors, that is certainly good. How your NPS compares to others in your industry that are your competition is more important than the NPS number by itself.
- Detractors are twice as powerful than Promoters, so we suggest that you introduce one additional factor that will impact the true VALUE of your NPS. So double the number of detractors before doing your calculation to get a more accurate NPS.
A 2011 American Express survey revealed that an average American will tell an average of 9 people about good experiences, but will tell 16 people about poor experiences.
- Detractors are invisible by a factor of 25X. According to TARP research, for every customer who does complain to customer support, there are 26 others who have the same complaint but will “remain silent”.
- You can be providing the very best product or service that you can and not get all of the promoters that you deserve. Consider the life of Jesus for this one. Jesus Christ healed ten lepers but only one returned to him to thank Him.
- Do everything you can to provide OVER THE TOP customer experiences. If a customer gets what he expects, he will only be a passive. Passives won't cause you to lose business, but they won't send anyone your way, either.