Net Promoter Score (NPS):
What Exactly Is It?

Net Promoter Score 101

Every brand looks for ways to grow and boost its bottom line; however, not all companies go about it the right way.  What drives real, sustainable growth for a brand?  The answer is straightforward - happy customers.  The kind of customers who love your company and rave about it to their friends, family and colleagues. Customer satisfaction is an incredibly powerful metric, but it has traditionally been a difficult one to measure.  A typical customer-satisfaction survey can take up to 15 minutes to complete, so it's not surprising that response rates are usually dismal.  Fortunately, there's a better way.  In this article, we'll introduce you to the Net Promoter Score (NPS) - a survey that takes just seconds to complete and can assess customer satisfaction with just a single question. 

Understanding Net Promoter Score

Before diving into the uses and benefits of the Net Promoter Score, it's important to understand what it is.  The concept was developed by Fred Reichheld and a team from Bain & Company in 2003 as an alternative to the traditional customer survey.  In a landmark paper published in the Harvard Business Review[1], Reichheld argued that conventional customer-satisfaction surveys were overly complex, requiring too much time and effort on the part of customers and often focusing on the wrong yardsticks.  Instead, Reichheld advocated asking a single critical question:

"How likely are you to recommend this company to a colleague or friend?"

Customers are prompted to answer this question on a scale of 0 to 10, with 10 being very likely to recommend and 0 being not likely at all to recommend.  These responses are used to calculate your Net Promoter Score.  Most NPS advocates recommend following up this pivotal question with a second inquiry:

"What is the main reason for your score?"

Asking this secondary question can help you understand your customers' motivations and pain points so that you can take the appropriate actions.

Calculating Your NPS

After the key NPS question has been asked, individual responses are classified based on the following criteria:

Net Promoter Score Calculation
  • 0 to 6:  Detractors:  These customers aren't happy with your products or services.  Not only are they unlikely to be repeat customers, but there's a good chance they could damage your company's reputation through negative word-of-mouth comments.

  • 7 to 8:  Passives:  These customers were somewhat satisfied with your brand, but they're not necessarily loyal - they'd probably switch if presented with a more attractive option.  Passives are not likely to spread negative publicity about your brand, but they're not excited about promoting it either.

  • 9 to 10:  Promoters:  These loyal customers love your brand and its products.  They're very likely to be repeat buyers, and there's a good chance they'll refer your brand to others in their network.

To calculate your Net Promoter Score, you first calculate your percentage of promoters and percentage of detractors.  Subtract the percentage of detractors from the percentage of promoters to arrive at your NPS:

NPS = (Percentage of Promoters) - (Percentage of Detractors)

NPS is expressed as a numerical score that can range from -100 to 100.  What does this number mean?  Let's say you had an NPS of 100 - that would mean all your respondents could be classified as promoters.  A score of -100 would be a worst-case scenario, implying that all your respondents were detractors.  While the benchmark for a "good" NPS score can vary greatly among different industries, it's generally best to keep your score above zero.

Closing the Feedback Loop

When you calculate your Net Promoter Score, it's easy to get a bit too focused on that number, especially if your NPS is lower than you expected.  However, the real power of NPS doesn't lie in the score itself - it's all about what you do with it.  Closing the feedback loop can help you convert detractors into satisfied promoters; it can transform likely-to-churn passives into loyal repeat customers, and it can also help you nurture your promoters to develop enthusiastic brand advocates.  A few effective strategies include:

  • Nurture your promoters:  Your promoters are your ideal customers, but that doesn't mean you should take them for granted.  Expressing your gratitude for their positive feedback can help you build valuable relationships with these budding brand advocates and encourage future growth.  Try these tactics with your promoters:

    • Invite them to your referral program:  Your promoters are already glad to recommend your brand to colleagues and friends; let them know about your referral campaign if you have one.  Offer them incentives for referring friends to your company.

    • Offer swag:  Send promoters fun personalized items or gift cards that they can share on their social networks.  These gifts help keep your brand on promoters' radar and can make them more likely to recommend you. 

    • Give upgrades:  If a customer has responded to an NPS survey with a score of 9 or 10 after completing a trial period, they're a great candidate for an upsell.  Offer personalized upgrades that they'd be particularly interested in, or cross-sell some of your other products or services.

  • Reach out to your detractors:  Don't make the mistake of viewing your detractors as hopeless cases who would never re-engage with your company; this isn't necessarily true.  Instead, assume that these customers want your products or services to work for them, but for some reason they had an unsatisfactory experience.  Send detractors a personalized email inquiring about their specific issues and asking how you can try to resolve them.  You may also want to follow up with one of these questions:

    • "How can we make things better for you?"

    • "What bothers you about our product the most?"

    • "If you can name one change that would improve our product or service, what would it be?"

  • Engage your passives before you lose them:  Unlike detractors, passives aren't likely to spread negative word-of-mouth that damages your brand, but they're just as likely to churn.  They're just waiting for a better offer.  Reaching out to them with this question can provide valuable insights:

    • "If we could do one thing that would make you more likely to recommend us, what would it be?"

    The problem with this strategy is that passives are less likely to make the effort to offer such open-ended feedback.  Other ways to re-engage and woo your passives include:

    • Special offers

    • Exclusive discounts

    • Emails about new features and updates

Benefits of NPS

There are a number of reasons that companies are choosing to measure and optimize the customer experience using NPS over traditional surveys:

  • Simplicity:  Everything about NPS is simple and easy:  It's easy to formulate the single-question survey without the need for exhaustive research, it's easy for customers to respond to the survey, and the numerical score is easy for your brand's executives to digest.

  • More accurate and actionable feedback:  NPS has proven to offer better insights into the customer experience than traditional customer-satisfaction surveys.  The single-question nature of the survey gets higher response rates in general, especially from passives, who probably wouldn't be bothered to complete a lengthy survey, and detractors, who would be unlikely to respond due to sheer frustration.  In addition, NPS serves as a far better predictor of growth than "transactional" survey questions that ask about a customer's satisfaction with a recent experience.

  • Minimizes customer churn:  NPS can help you identify the customers that are likely to churn and take steps to reach out to them.

  • Competitive edge:  NPS can give your business a huge advantage over its competitors, helping you understand your customers' motivations and pain points and giving you the opportunity to act on the collected insights.

  • Scalability:  Whether you're a large, established brand or a fledgling business with a lean budget, NPS is an effective and affordable way to keep your finger on the pulse of customer satisfaction and predict long-term growth.

A Roadmap for Long-Term Growth

It's clear that delivering a positive customer experience is the best way to drive long-term business growth.  NPS provides a simple and powerful way to measure that customer experience and help you see if your company is moving in the right direction.  Your brand's NPS score won't deliver complex data about performance, but it provides actionable insights that can help you position your brand for growth.  With NPS information in hand, you can work on re-engaging your detractors, turning passive customers into promoters and encouraging your most loyal customers.

References

1. https://hbr.org/2003/12/the-one-number-you-need-to-grow