Net Promoter Score Guide: Everything You Need to Know and How to Improve it
There are many ways to measure customer satisfaction.
In fact, you may already be using a few simple metrics to monitor how happy your customers are. These metrics can help you ensure that your brand consistently provides a great experience.
If you’re looking for an easy way to gauge overall sentiment, though, these metrics can be a bit complex.
Lengthy, in-depth surveys can certainly yield valuable insight if you’re willing to put in the time to comb through responses and identify patterns.
But if you’re looking for a simple indicator of how satisfied your customers are with your brand, it can be challenging to get a straightforward answer from these types of data sets.
And in that case, one of the best metrics to use is Net Promoter Score or NPS.
What is Net Promoter Score?
If you’re unfamiliar with NPS, it’s one of the simplest measures of customer satisfaction — as well as one of the most popular.
It utilizes an index ranging from -100 to 100, based on the question, “How likely are you to recommend this company?”
In an NPS survey, customers answer with a number on a scale from 0 to 10.
But these numbers aren’t just used to create an average.
Instead, respondents get divided into 3 groups based on their answers.
– Customers who answer with a 6 or lower are “detractors.”
– Customers who answer with 7 or 8 are “passive.”
– Customers who answer with 9 or 10 are “promoters.”
Then, you use this information to gauge overall sentiment, based on how likely your customers are to recommend your company to their peers.
But again, this number is not an average. In fact, “passive” customers who rate your business a 7 or 8 aren’t even counted in your score.
And with that in mind, it’s essential to address a question that comes up often with this metric: is NPS a percentage?
And the answer is no.
The NPS scale ranges from -100 to 100.
So as you calculate and evaluate your score, remember that anything above 0 means your company has more promoters than detractors — and that you shouldn’t compare it to metrics that are measured using standard percentages.
How to Calculate NPS
As we’ve established, NPS isn’t merely a percentage. But at this point, you’re probably wondering, “What’s the formula?” Fortunately, it’s a simple one.
You can calculate your company’s NPS by subtracting your percentage of detractors from your percentage of promoters.
Passive respondents, then, have no impact on your score.
So, for example, let’s say you survey 100 of your customers. In the results, you learn that 15 of them rated your business 0-6, 25 rated it 7 or 8, and the remaining 60 gave you a 9 or 10. Since the sample size in this example is 100, each group represents a percentage. So to calculate your score, you’d subtract 15 from 60 — and get an NPS 45.
Even for those of us who aren’t fans of math, this is a simple calculation. The more challenging part of calculating NPS, then, is often collecting data. If you don’t have a process in place for surveying your customers, it can take time to create one.
What is a Good NPS?
If you’re hoping to use this metric as a benchmark of your performance, you might be wondering what a “good” NPS is. According to CustomerGauge’s 2016 NPS Benchmarks report, the average NPS is 44.
That said, it’s important to note that it varies by industry.
In retail, for example, the average is 56. That number drops to 27 for telecommunications.
Of course, this doesn’t mean that if you’re in an industry with a low average, you should settle for a low score.
Still, these numbers can be helpful for getting an idea of where your business stands in relation to your competitors — and giving you a clear benchmark to work toward if you’re currently below your industry’s average.
How is NPS Different from CSAT?
Another popular metric for measuring how customers feel about a brand is CSAT.
If you’re unfamiliar with the term, CSAT, or customer satisfaction benchmarks, is another way to measure customer sentiment. But these two metrics provide very different types of information.
The main difference between them is that while NPS is measured using one single question, CSAT can be used to measure anything from a customer’s overall satisfaction with a brand to how happy they are with a specific product, service, or interaction.
This makes it much less consistent. For a retail brand, for example, a particular product may have a low CSAT score, while the brand as a whole has a relatively strong one.
And if you’re interested in learning how customers feel about specific aspects of their experience with your company, that’s helpful. But it’s not intended to serve as a comprehensive measurement of customer satisfaction.
It also won’t help you see where you stand in relation to your competitors. Comparing your CSAT for a particular product line against a competitor’s CSAT for their brand as a whole, for example, would be useless — but given that this number can represent a variety of things, this would be an easy mistake to make.
So if you’re serious about monitoring customer satisfaction levels, it’s a good idea to use both NPS and CSAT. NPS is a higher-level indication of customer satisfaction, and CSAT scores can tell you how satisfied those customers are with particular aspects of your business.
This way, you can gauge how your customer base as a whole feels about your business — then dig into more granular data to learn how to improve.
How to Use NPS Results to Improve Customer Service
NPS is an extremely popular metric for measuring customer satisfaction.
But when it comes down to it, your score alone won’t necessarily help you improve how well you serve your customers. That’s because the basic NPS question is simple. It only requires customers to provide a number ranging from 0 to 10.
And while this tells you whether they’re satisfied, it doesn’t tell you why.
So if you want to get more value from your NPS surveys, you might consider adding another optional question to collect additional insight.
The simplest way to do this is to ask for the reason behind their score, ideally in the form of an open-ended write-in question. This will tell you what your promoters love about your brand, as well as what your detractors dislike. And that can yield some extremely valuable insight for your company.
First, you’ll want to ensure that all of your customers experience the positive aspects of your business that led your promoters to give you a high score.
Then, you can use feedback from your detractors to address any issues that damaged their perception of your brand — and prevent those same issues from creating problems for other customers in the future.