What is a Net Promoter Score?

NPS is a simple measure of customer loyalty based on how many customers are likely to promote your business to others or not.

It is calculated by asking customers to rank the question “How likely are you to recommend (the brand) to a colleague or friend” on a 0-to-10 point rating scale.

Responses are categorized as follows:
• Promoters (score 9-10) are enthusiastic customers who are the key to driving growth through promoting your brand to others. They are loyal and willing to put their reputation on the line to recommend you.
• Passives (score 7-8) are satisfied but unenthusiastic customers, whose expectations have been met, but are neutral about recommending you to others. They are vulnerable to switching brands.
• Detractors (score 0-6) are unhappy customers who are more likely to talk negatively about your brand thus detracting from future growth.

To calculate your company or brand’s NPS, the percentage of Detractors are subtracted from the percentage of customers who are Promoters.

Why Should I Add It To My Research Mix?

The NPS is a simple metric to understand and calculate, and is one of the very few indicators that correlate to business growth.

There is also a strong correlation between other brand measures.
Research conducted by “Soup” in 2011 found a clear positive correlation between 2 key brand measures:

1. Brand sentiment: “How likely are you to purchase a brand/product” and
2. Brand conversations: “How many people have you spoken to about the brand/product”

As the NPS increased, so increased the likelihood to purchase.

Advocates speak to more people about a brand than Neutrals, who in turn speak to more people than Detractors.

Interestingly, in combining the results of brand sentiment and conversations from the graphs above, the old customer service mantra of “give people a good experience and they’ll tell 5 people, give people a bad experience they’ll tell 20” doesn’t stand up; on the whole people are much more likely to talk about things they like.

How do I use it?

NPS can be used in many ways, but two of the common approaches are:
• Top-Down NPS measure the customers’ perception of several competitors over a period of time to monitor overall changes in the market.
• Bottom-up NPS measure loyalty changes after particular events or transactions’ NPS such as after a sale, or are relational to an anniversary date. This helps to identify granular service factors that drive NPS or customer loyalty.

Used in conjunction, they allow the company to make specific changes to its process and service delivery to lift NPS both at the Bottom-Up and Top-Down level.
Critical to improving the NPS is asking a number of questions to understand why they have rated you that way. These can include identifying best practice drivers by asking Promoters why they scored the way they did. And asking all others “What is the most important improvement that would make you rate us closer to 10”, to determine other needs that are not being met.

Traditional customer satisfaction ratings can also be used to measure how well the business is meeting key customer needs, together with a Customer Effort Score (CES) which measures the ease of doing business where customer service is an important part of the customer experience. This can be done by ranking from 1 (very low effort) to 5 (very high effort) “How much effort did you personally have to put forth to handle your request?”

What is a good NPS score?

A good NPS score depends entirely on your industry and country. In many respects it is better to consider your company’s NPS score as a target that you want to try and exceed each quarter or year. Trying to compare your score to other companies, especially in other industries, is often not a useful tactic.

Is there anything to consider when using the NPS?

It is important to note that some customers may be satisfied and willing to repurchase a product themselves, however certain elements can influence their likelihood to refer:
• the product or industry;
• how much the person perceives others having a need or interest in information about the product; and
• how predisposed the person is to referring people product information, given the perceived risk of it reflecting poorly on them if it doesn’t work out.

These elements can be measured when undertaking the NPS research.

Further, customers who have had recent experiences (within 6 months) with the brand provide a more accurate score; NPS ratings generally drop over time.