Understanding  Net Promoter Score (NPS)

When it comes to measuring customer satisfaction, Net Promoter Score (NPS) is one of the most popular and effective metrics. NPS helps businesses to understand how their customers perceive their brand and how likely they are to recommend it to others. In this post, we'll dive deep into NPS, discussing its definition, calculation, benefits, and more.

What is Net Promoter Score?

Net Promoter Score (NPS) is a metric used to measure customer loyalty and willingness to recommend a brand to others. It's based on a simple question "How likely are you to recommend this product/service/company to a friend or colleague?" The answer is measured on a scale of 0-10, where 0 means "not at all likely" and 10 means "extremely likely."

How is Net Promoter Score calculated?

To calculate NPS, you need to subtract the percentage of detractors (respondents who gave a score of 0-6) from the percentage of promoters (respondents who gave a score of 9-10). The resulting number will be your NPS score. The score can range from -100 (if everyone is a detractor) to +100 (if everyone is a promoter).

What are the benefits of Net Promoter Score?

NPS provides businesses with several benefits:

  • Customer satisfaction: NPS helps businesses understand how satisfied their customers are with their products/services.
  • Customer experience: By measuring NPS at various touchpoints in the customer journey, businesses can identify areas for improvement in the customer experience.
  • Customer loyalty: NPS measures customer loyalty and helps businesses identify loyal customers who are more likely to repurchase and recommend their brand.
  • Customer retention: Loyal customers are more likely to stick around and continue doing business with a brand.
  • Brand advocacy: Promoters are more likely to advocate for a brand, leading to word-of-mouth referrals and increased brand awareness.

How do I use Net Promoter Score?

Once you've calculated your NPS score, you can use it in several ways:

What are some best practices for Net Promoter Score?

To get accurate results from your NPS survey, follow these best practices:

  • Keep it simple: Stick to one question and make sure it's easy for respondents to understand.
  • Avoid bias: Don't lead respondents towards certain answers. Keep the question neutral.
  • Follow up: Reach out to respondents who give low scores and ask them for feedback.
  • Act fast: Use the feedback you receive from the survey to make improvements quickly.

Conclusion

Net Promoter Score (NPS) is an effective metric for measuring customer loyalty, satisfaction, and advocacy. By using NPS surveys, businesses can gain actionable insights into their customer base and make improvements that lead to increased retention, revenue growth, and brand advocacy.

References

  1. Reichheld, F. F., & Markey Jr, R. G. (2011). The Ultimate Question 2.0 (Revised and Expanded Edition): How Net Promoter Companies Thrive in a Customer-Driven World.
  2. Blogg, J., & Reynolds, D. (2019). Net Promoter Score - A practical guidebook for beginners.
  3. Hogan, C., Lemon III, K., & Libai B. (2004). What is the true value of long-term customer satisfaction? Journal of Marketing Research, 41(1), 1–14.
  4. Keiningham T.L., Aksoy L., Cooil B., Andreassen T.W., & Williams L.(2007). A Longitudinal Examination of Net Promoter Scores® In Firm Performance Management Science
  5. Markey Jr RG (2012) “The Ultimate Question 2.0” eBook
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