Net Promoter Score

NPS is a customer loyalty metric that measures how likely customers are to recommend your product or service to others.

To get this metric, you first need to conduct surveys to see how happy customers are on a scale of 1 to 10. Here’s how the scale works:

  • 1-6 are considered “detractors”
  • 7-8 are “neutrals”
  • 9-10 are “promoters”

Then, calculate your net promoter score by subtracting the percentage of "detractors" (those who would not recommend your product or service) from the percentage of customers who are "promoters" (those who would recommend your product or service to others).

If the net score shows a positive number, it means that your product or service is doing well and customers are happy with it. A negative score shows that there is room for improvement and customers are less likely to recommend it to others.

Why is Net Promoter Score Important Today?

Customers have more power and choices now than ever before. Because of this, businesses need to go the extra mile to attract and retain them. This is where NPS comes in handy.

NPS has been around for a while, and it’s valued for being straightforward yet insightful. It helps companies focus on what’s really important—hearing what customers have to say. Each response, whether positive, neutral, or negative, offers valuable insights that help businesses understand what they’re doing right and where they need to improve.

In today’s competitive market, having loyal customers is essential for a business to thrive long-term. NPS helps in understanding and enhancing customer loyalty, making it a useful tool for companies aiming for sustainable growth.

History of Net Promoter Score

In 2003, Fred Reichheld, a partner at Bain & Company, introduced the concept of NPS in his Harvard Business Review article titled “One Number You Need to Grow.” He wanted a simpler, more efficient way to measure customer loyalty, as opposed to long and complex surveys.

Reichheld’s NPS offered a simple metric derived from asking customers a single question about their likelihood to recommend a business. This simplicity and the actionable insights that came from it made NPS an instant favorite among companies.

Since its introduction, NPS has remained a popular tool for assessing customer loyalty. Many businesses around the world, both large and small, continue to use NPS to gain insights into customer satisfaction and loyalty.

How to Implement Net Promoter Score in Sales

So, you’re ready to dive into NPS and integrate it into your sales strategy. Here’s a straightforward way to get started.

Begin by asking your customers the key NPS question about their likelihood to recommend your business. Incorporate this question into your post-purchase surveys, follow-up emails, or customer service interactions.

Once you collect the responses, focus on analyzing the feedback. Look for patterns and trends in customer sentiments. Pay attention to both positive feedback from Promoters and critical insights from Detractors, as both can offer valuable paths to improve and innovate your services or products.

Taking action on the feedback is crucial. Address the concerns raised by Detractors, and consider the neutrality of Passives, aiming to turn them into Promoters. Enhance the strengths that make your Promoters advocate for your brand.

NPS should be an ongoing effort. It’s not a static metric but something dynamic, changing with every interaction your customers have with your business. Continually monitoring and acting on NPS can pave the way for enhanced customer loyalty and business growth.

Frequently Asked Questions About Net Promoter Score (FAQs)

What is a Good Net Promoter Score?

A good Net Promoter Score varies by industry, but generally, a positive NPS (above 0) is considered good as it indicates there are more promoters than detractors. An NPS of 50 is excellent, indicating significantly high customer loyalty and satisfaction. An NPS of 70 or above is considered world-class.

How is NPS calculated?

NPS is calculated by asking customers a single question: “How likely are you to recommend our company to a friend or colleague?” Customers respond on a scale of 0-10. Respondents are then categorized as Promoters (9-10), Passives (7-8), or Detractors (0-6). The NPS is then calculated by subtracting the percentage of detractors from the percentage of promoters.

Can NPS Be Negative?

Yes, NPS can be negative. A negative NPS indicates that there are more detractors than promoters, signaling that improvements in customer satisfaction and loyalty are needed. This provides businesses with an opportunity to identify areas for improvement and enhance the customer experience to increase loyalty and satisfaction.