What is NPS?
NPS, or Net Promoter Score, is a customer satisfaction and loyalty metric that is used to measure how likely customers are to recommend your products/services to others. A variation of the following question is asked on NPS surveys; “On a scale of 0-10, how likely are you to recommend our products and services to others?”.
Sometimes an NPS survey contains more than one question. These additional questions are used to identify why customers scored the question the way they did, or to collect feedback on the ways service can be improved.
Types of Respondents of an NPS Survey
NPS survey responses are used to categorise respondents into the following three groups:
Promoters are those respondents who choose a score of 9 or 10 and they can be described as highly satisfied customers. Promoters are very happy with the customer experience and may prove to be advocates for your brand as they may recommend your products/services to others. They are very good for your brand image as they can bring in a lot of new customers.
Passives are those respondents who choose a score of 7 or 8. These respondents didn’t have a particularly good or bad experience with your company and are indifferent toward your brand. They do not have any effect on your brand image, neither positive nor negative.
Demoters are those respondents who choose a score between 0 and 6 and they can be described as unhappy or dissatisfied customers. Demoters can be harmful to your brand image as they may share their negative experiences with others, dissuading them from purchasing your products or services.
How to Calculate NPS?
Once respondents are categorised, you can use the following formula to calculate your NPS score:
NPS Score = % of Promoters – % of Detractors
NPS is always a value between -100 and +100. A positive score implies that a company has more promoters than demoters, whereas a negative score implies they have more demoters than promoters.
What is a Good NPS Score?
An NPS score can be interpreted in two ways; the absolute method and the relative method.
1. Absolute Method
Using the absolute method, any positive score is thought to be good as it denotes that the company has more promoters than demoters. Scores below zero (negative scores) are thought to be bad because it denotes that the company has more demoters than promoters.
2. Relative Method
The relative method involves interpreting scores based on industry standards. Therefore, if a company’s NPS is higher than industry standard, they are thought to have a good score, but if its NPS is less than industry standard, they are thought to have a bad score.
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Types of NPS
NPS surveys can be divided into two broad categories:
1. Relationship NPS surveys
Relationship surveys are sent to customers on an interval basis, whether that be monthly, quarterly, or yearly. They are focused on identifying the degree of customer loyalty among their customer base.
2. Transactional NPS surveys
On the other hand, transactional surveys are sent to customers after key interactions, or touchpoints, with the company. These surveys are more focused on identifying the degree of customer satisfaction after a specific interaction.
Why is NPS Important to Track?
1. Information from Detractors can be used to improve CX:
NPS surveys allow you to identify your unhappy customer, or detractors, clearly outlining the customers that need to be focused on. Once detractors have been identified, you can try to find the reasons behind their dissatisfaction. This information can be used to improve CX.
2. Promoters can be encouraged to increase their referral volume:
As NPS surveys help you identify your most satisfied customers, these customers can be encouraged to increase their referral volume. This could be done by simply asking them to share their positive experience on social media or on your website.
3. Creates a channel for communication:
NPS surveys create a channel of communication with existing customers. This helps you better understand them and their expectations in order to give you an idea of where improvements can be made.
A quicker and easier alternative to the NPS formula, is an online NPS calculator. Voxco’s NPS Calculator calculates your NPS score for you, and all you have to do is input your promoter count, passives count, and detractor count.
Additionally, our NPS Calculator allows you to compare your NPS score to your industry averages, showing you where you stand in respect to industry competition.