All you need to know about the Net Promoter Score (NPS)
Millions of businesses use this score to keep track of the perception customers and clients have about their experiences with a company.
The efforts put forth in creating a sound business are just a tiny part of what makes a company successful. Gaining and retaining clients is equally, if not more important. In order to maximize your opportunity for success, you will need to collect data. The proper metrics, such as Net Promoter Score (NPS) help provide a clear picture of who your customers are and whether they are likely to regularly engage with your business.
What is Net Promoter Score?
If you have ever made a customer service phone call, purchased a product online, or taken a look at the bottom of a receipt, then you have likely been asked to participate in a survey. This is because successful companies thrive on feedback. They could be attempting to ascertain their Net Promoter Score or a measure of customer loyalty and experience. This score ranges from -100 to +100, with a higher score being the goal. Millions of businesses use this score to keep track of the perception customers and clients have about their experiences with a company. This is based on a singular and essential question: How likely are you to recommend us to a friend or relative? What makes this such an important question? Well, the responses can either help or harm a company. Social proof helps drive sales, makes companies appear more trustworthy, and creates a conversation about what you have to offer. This is the goal of any business: drive sales (growth) and enhance customer retention (maintain).
How to calculate Net Promoter Score?
The Net Promoter Score poses the question of satisfaction on a scale of 0 to 10. These scores break down into three categories:
- Detractors – Those who are not likely to recommend your product or service. They fall into the 0-6 response range. This group is likely to damage your brand because of their dissatisfaction with what they are offered.
- Passives – Customers who provide a score of 7-8 are not likely to help or harm your company. They are indifferent. This group can be persuaded to continue to interact with your business if they have favorable experiences, however. (Think rewards programs, giveaways, coupons, etc.)
- Promoters – Promoters give scores in the 9-10 response range. Consider this group your fans or loyal customers. They are most likely to build your brand’s reputation and continue to seek out your company.
To calculate, one must subtract the percent of detractors from the percentage of promoters.
The Ideal Net Promoter Score
Net Promoter score ranges from -100 to 100+. Negative numbers mean there are more detractors than promoters. The closer one is to 100 the better, although this figure is difficult to obtain. It also depends on the industry. For example, Netflix and Paypal have a score in the range of the low to mid-60s. Companies such as Amazon and Google have scores in the low to mid-50s.[i] While “good” is a matter of interpretation, one wants their company to be in the positive, around at least 30. A Net Promoter score in the range of 0-30 means your company is doing fairly well while anything in the 70 and over range means customers love what you have to offer and are most likely to recommend your business. If you are a B2C company, an ideal benchmark is between 24 and 57.
Factors that Influence a Company’s Score
Consistency – Consider a restaurant near your home or office. You order there out of convenience and quality of their food. However, you can’t help but notice that every third order or so is incorrect, your meal may not be piping hot each time which you find disappointing. Though you appreciate the taste, you cannot depend on your dish to be the same each time you go. This will affect the likelihood of your return and whether you suggest other people check the place out. This can drop Net Promoter score down to passives and detractor range.
Customer service – It is essential that employees provide excellent service because the product alone is seldom enough to carry the day. In fact, according to Forbes, 74% of companies with excellent customer satisfaction perform better than their competition. Also, 96% of people say service is essential to brand loyalty.[ii] This speaks to the essentiality of Net Promoter Score. Make sure your company has a survey program in place to collect this valuable information.
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