How to calculate Net Promoter Score (and what to do next)
Measuring customer experience has always been a top priority for businesses. For decades, surveys have been a tried and true way for receiving feedback for services and products. Early forms of customer satisfaction surveys suffered from their length. The short and decreasing attention spans of individuals required a better solution for soliciting consumer opinions, and Net Promoter Score was the answer.
What is Net Promoter Score?
Net Promoter Score, or NPS, is a metric designed to measure customer loyalty. For business decision makers, it’s a single number that can provide insight into the health of a business. NPS is easy to compare across time as well as across businesses and products.
How do businesses get a Net Promoter Score?
Usually NPS surveys are delivered through an online survey platform. Customers are asked to complete the survey shortly after making a purchase or interacting with the company.
It asks the question “How likely are you to recommend Company X to a colleague or friend?”
Respondents rate this question on a scale from 0 to 10, 0 being not at all likely and 10 being extremely likely. Respondents are then categorized by their responses: 0-6 are Detractors, 7 and 8 are Passives, 9 and 10 are Promoters.
The Net Promoter Score is derived from the equation: (%Promoters) - (%Detractors) = NPS; NPS will be a number ranging from negative 100 to positive 100.
Not just a score
The biggest benefit of the Net Promoter Score lies in its simplicity. It’s a single metric that allows businesses to monitor the health of their brand and predict growth. The score can be used to drive a customer experience management strategy aimed at improving consumer satisfaction and retention. It can be easily explained to frontline managers and employees alike. However, for all its benefits, it’s not without critics.
Some question the utility of the single Net Promoter Score. They argue that it provides an easily understood assessment of your current position but does not provide any insight on how to improve your performance.
In order to uncover opportunities to improve the NPS score, it is now widely recommended to ask an open-ended follow-up question: “Why did you provide that rating?” This provides companies a rich source of feedback from their customers, including items that they do particularly well and things that need improvement. This second question provides the action steps that lead to improvement.
Putting your Net Promoter Score into action
NPS was considered revolutionary because it allowed for very short surveys (one or two questions) that would give businesses the information they needed to project growth, compare themselves to others and identify improvement opportunities.
Rather than rely on a single metric to drive business improvement, adding just a few questions can go a long way in providing actionable insight. An additional analysis of pain points can give companies one more opportunity for their customers to point out the obstacles that impact the perceptions around their business. At Bellomy, we partner with our clients to develop the right questions and analysis needed to grow their business and improve customer perceptions.
We’d love to discuss your objectives and needs to ensure you are getting the most from your customer feedback.