NPS is a simple, scalable metric that can be tracked for a specific business unit, product line, or store location. It’s a clear indicator of how happy your customers are right now, and it can alert you to challenges that could hurt growth in real-time.
It’s based on one question and uses a 0-10 scale: How likely would you recommend this brand or product to a friend or colleague?
It Measures Customer Loyalty
Customer loyalty is a key driver of growth and sustainability for a business. You must check in with your customer base and ask them questions that help you understand their loyalty toward your product or service. Measuring your Net Promoter Score allows you to do just that. This simple metric gives you the intelligence to drive loyalty and better long-term revenue results.
The NPS question is a way to measure customer satisfaction by asking them how likely they are to suggest your products or services to their friends or colleagues on a scale of 0 to 10. Based on their score, they are classified as Promoters (9-10), Passives (7-8), or Detractors (0-6). To calculate the NPS, you subtract the percentage of detractors from the percentage of promoters.
You can use a survey tool to collect your customer NPS responses, although you may want to survey customers at different points in the purchase process, depending on what you’re trying to measure. For example, if you’re looking to gauge customer loyalty after they’ve made their purchase, it’s best to send the survey right after the transaction is complete so that the experience is still fresh in their mind.
Surveying customers to see how their opinions about your brand change is also helpful. Depending on the trend, you can take action to make positive or negative changes in your products or services.
It Measures Word-of-Mouth Traffic
The Net Promoter Score (NPS) is a commonly used marketing metric based on a single question asked in a survey: “How likely are you to recommend our company/product/service to a friend or colleague?” So, how to calculate your net promoter score? The score is calculated by subtracting the percentage of detractors from the percentage of promoters and dividing the result by the total number of respondents.
Respondents who answer with a rating of 9 or 10 are considered promoters and provide the highest level of loyalty to your brand. Those who respond with a seven or eight are known as passives and are satisfied but unenthusiastic customers. Competitive offers easily sway them and can damage your brand through negative word-of-mouth. The lowest-scoring customers are detractors (score 0-6) who will discourage others from buying your product or services.
The standardized NPS ratings provided by the survey give a quantitative benchmark that can be tracked over time and compared with your competitors. Respondents can also share more information in a free-form follow-up question, which provides additional context for their rating. This allows them to explain their reason for selecting a particular number, avoiding any bias a targeted question may introduce. This enables companies to gather more detailed information about what is working and what isn’t.
It Measures Customer Satisfaction
NPS is one of the most widely used metrics to measure customer satisfaction. It’s a well-established and reliable metric to help you identify loyal customers, create loyalty programs, and drive growth. However, it’s important to remember that NPS is a relative metric. Your NPS can only be measured in comparison to others in your industry. If your NPS is high, it can be challenging to understand what exactly makes you stand out, especially if most of your competitors also have high NPS.
To determine your NPS, you need to ask two questions: “How likely is it that you would recommend this company to a friend or colleague?” and “How likely is it that you would repurchase this product?” Respondents are then categorized into three groups: Detractors (scores of 0-6), Passives (scores of 7-8) and Promoters (9-10). Your NPS is calculated by subtracting the percentage of Detractors from the portion of Promoters.
Measuring your NPS over time lets you see how your customer perception evolves and whether you’re improving. For example, if you start getting more Passives than Promoters, something is amiss, and you must take action. Likewise, if your NPS dives, it’s an excellent opportunity to gather qualitative feedback and identify why your customers feel negatively about their experience.
It Measures Customer Service
Tracking your NPS provides a quick and easy way to gauge customer loyalty, an essential indicator of your business growth. It’s also a helpful indicator of how well your company is doing in terms of overall service.
Unlike traditional surveys that can bias feedback results, NPS polls allow customers to tell you exactly what they want to say in their own words. This will let you identify and understand areas of your business that need improvement and close the gap between customer expectations and reality. NPS surveys are easy to administer; customers can complete them in just a few minutes. This makes them more efficient in data collection than focus groups or one-to-one interviews.
The NPS metric is calculated by asking, “How likely are you to recommend this product or service to a friend or colleague?” The score is then calculated as the percentage of promoters (those who voted 9 or 10) minus the percentage of detractors. The NPS metric is widely used by businesses of all sizes and industries, from Fortune 500 companies to small startups looking to grow into the companies of tomorrow.
Aside from measuring your NPS, tracking changes in the breakdown of scores between passives and detractors can be a good indicator of your company’s health and current customer satisfaction. A shift towards more detractors and fewer passives could signal that you risk losing customers.