On a scale of 0-10, how likely are you to share this article?
This would be my Net Promoter Score question to you. These days a lot of the content we come across on the internet contains terms such as customer satisfaction, feedback, and Net Promoter Score. But what exactly is Net Promoter Score and how do you calculate it?
Defining Net Promoter Score
Developed by Fred Reichheld, Bain & Company, and Satmatrix in 2003, NPS is a tool to measure customer experience and loyalty. It involves asking the customer one simple question rated on a scale of 0-10. The question can be as simple as “how likely are you to recommend our service to a friend or a colleague” or as in my case “how likely are you to share this article”. The aim is to measure the loyalty between a consumer and a producer. NPS has proven itself to be the metric to measure customer experience, which is adopted by many major corporations around the world.
How to Calculate Net Promoter Score
Alright, so now that we know what NPS, the next question, how do I calculate NPS Score? Calculating NPS involves three steps:
- Create and send a survey
- Categorize the responses
- Calculate the NPS Score
Create NPS Surveys
NPS surveys are categorized by asking your customers a rating-based question and enquiring them why they gave that specific answer. This question can be sent out to customers in a number of ways: through an email survey, a website pop-up or a poll on social media.
Make sure you provide a numerical rating scale and a blank field for them to elaborate on their point. Consider Uber as an example; after every ride, the mobile app asks you to rate the driver and also provide you with a dialog box to mention why you liked or disliked your driver. You can create similar questions and surveys or alternatively use our NPS survey software to help you create and share your survey.
Pssst... You can also include them in articles like these as well!
Categorize the Responses
Say you have created your survey and now shared it on any platform and have received 100 responses. NPS questions provide points with a range of 0-10 to rate customers from. The responses received can be divided into three categories:
- Promoters: Promoters are your happy customers who give you a score of 9-10. These are your most loyal customers and will recommend your products to their family and friends without hesitation.
- Passives: The customers who rate you 7 or 8 are your passives. While they are satisfied with your products and services, these customers can’t be trusted to be loyal at present. Given an opportunity, they will switch to your competitors instantly.
- Detractors: The customers who rate you between 0-6 are your detractors. They are your most dissatisfied customers and more likely to churn. They are responsible for most of the negative feedback that you receive and as such their concerns should be attended to as soon as possible.
How to Calculate your NPS score
Calculating your NPS score is not just simply an average number of loyal customers. It involves two main metrics for calculation:
- Percentage of Loyals
- Percentage of Detractors
Your NPS is decided by the difference between the percentages of loyals and detractors. For example, if 20% of readers rate you 9-10 and around 15% rate you between 0-6, then your NPS score is 5 (20-15=5). While the rating scale exists between 0-10, your NPS score can vary between -100 to 100, as it is decided by the percentage of loyal and detracting customers. So, while a score of 5 would concern most people, you should not be worried about it. These scores are classified as:
- Danger Zone: This refers to scores that lie between -100 to 0. The number of detractors is far greater than the number of promoters and so your customer base is not loyal to you.
- Good: This refers to scores between 0-50. A company is said to have achieved its stakeholder satisfaction threshold if its scores lie between 20-40.
- Excellent: Scores that lie between 50-75 are considered excellent scores. It indicates a loyal customer based whose demands have been met.
- World Class: These are scores between 75-100. It signifies a world-class approach to customer satisfaction.
But what about the passives?
You probably had this question too, why are passives not part of the NPS equation. Simply because they are not influencers. While they are happy with the business and the products they have zero influence over business growth and standards. If they don’t impact business there’s no point in counting on them for measuring customer satisfaction levels.
It’s always more expensive to acquire a new customer than to retain an existing one. Calculating and evaluating NPS responses allows you to identify these detracting customers and by acting on their feedback you can turn them into loyals. Keep conducting regular NPS surveys and set a benchmark for yourself to improve upon.
I'll leave you with the question I began with. On a scale of 0-10, how likely are you to share this article?
Do provide your feedback!