Net Promoter Score
Net Promoter Score (NPS) measures customer loyalty and satisfaction of how customers would recommend a company’s products or services to others. It is a valuable indicator of overall customer experience and potential business growth. It also indicates the room for improvement.
How to calculate NPS?
Survey questions
Ask only one question to the customer - On a point of 0 to 10, how likely are you to recommend our product/service/brand to a friend or colleague?
Categorizing the respondents : Categorize the people who responded to the above question in three groups:
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Promoters (With points 9-10): Loyal customers who will continue buying from your brand while referring others.
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Passives (Within 7-8 points): Satisfied customers but are also really interested in what your competitors have to offer.
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Detractors (0-6): Unsatisfied customers who can damage your brand through negative word of mouth marketing.
NPS Calculation:
Remove the percentage of detractors from the percentage of promoters.
NPS = % of promoters - % of detractors
The score will range within the window of -100 to +100
Interpretation of the score
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Positive NPS (>0)
Demonstrates that there are more promoters than detractors which is a great sign of customer loyalty.
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Negative NPS (<0)
Involves securing external financial assistance, such as loans or investments, to fuel business growth and expansion.
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Low NPS (0)
Signifies sufficient dissatisfaction amongst your customers regarding your brand.
What are the benefits of calculating NPS?
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Offers a straightforward insight that can be communicated within the organization.
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Provides you an understanding of customer’s perception of your brand and the areas for improvement.
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You can compare your brand and growth with the existing industry standards and customer retention that serves as a benchmark for your future business performance.
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NPS helps you analyze the feedback to understand the reason behind the dissatisfaction behind and address the areas of improvement.
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The NPS score lets you measure and monitor changes over the time period and impact of any changes.
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Sharing NPS score with the employees can help build customer-centric culture to motivate the employees to improve and enhance the customer service.