What Is a Net Promoter Score (NPS)?

Net Promoter Scores measure customer support and how much promotion your happy customers will give you through word of mouth on social media and among friends and family.

The fundamental question asks, “How likely are you to recommend our product to a friend or family member?”

There are other ways to ask this simple question, though, and depending on how the question is asked can impact what the metrics demonstrate.

For instance, you could ask, “How likely are you to recommend our company to a friend or family member?” or “How likely are you to recommend our product or service on Google?” Both of these questions are asking something entirely different from the first example.

• The first question asks if they will recommend your product to friends and family members.
• The follow-up question asks if their total experience with your company is recommendable to friends or family members.
• The third question asks if they will recommend your company to strangers.

Despite the essence of each question having differing meanings, the results should generally be equal indicators of how well you’re retaining customers, how satisfied they are with the customer experience, and how effective your marketing is.

What Are Different Net Promoter Scores and What Do They Mean?

When you request a customer, or respondent, to provide customer feedback through an NPS Survey, you’re asking them if they are happy with your company and the product or service you offer.

The NPS Survey gives respondents the option to choose a number that ranges from 0 to 10, with 0 representing no chance for referral, also known as detractors, and 10 representing a definite chance, known as promoters.

You want your customers to choose between 9 and 10. Anything less would mean there is a significant probability that they will be susceptible to marketing from your competitors.

For example, a good NPS score (a 9 or 10) means that the customer is very satisfied with their experience, your company, and the product or service delivered. A more average NPS score of 7 or 8 means that they are satisfied, loyal customers but that they believe there is space for improvement to create a more positive experience.

This category is also referred to as passives. This more unhappy customer is less likely to be a provider of referrals.

Anything less than 7 means the customer is dissatisfied and is unlikely to promote your company, product, or service, and most likely churn, bringing the customer journey to an end.

How Is NPS Calculated?

When calculating metrics for NPS Surveys, only people qualifying as promoters or detractors are considered. Passives represent an unpredictable influence. Therefore, to determine your NPS Score, which ranges from -100% to 100%, you subtract the percentage of detractors from promoters.

For example, if respondents were sent an NPS Survey and 45% were detractors, and 55% were promoters, your NPS would be +10%. On the other hand, if 65% were detractors and 35% were promoters, your NPS would be -70%.

Using percentages when calculating your NPS is vital to ensure reliable NPS Benchmarks. For example, you always want to represent your NPS as a percentage between -100% and +100%, not -100 to +100.

The latter assumes only 100 people were sent the survey, and depending on the size of your company, this may not be feasible for accurate metrics.

Using percentages versus actual respondents surveyed, you can keep a consistent NPS that ranges between -100% and +100%, regardless of the number of completed surveys. Therefore, you maintain a solid NPS Benchmark metric whether 1,200 people were surveyed or only 25.

How Do I Know My Net Promoter Score Is High Enough?

Now that you understand what NPSs represent and how the metrics are obtained, you may wonder what defines a good NPS. You’ll be happy to know that an NPS above 0 indicates that you are doing well at retaining customers.

More specifically, anything below 0 is bad, and anything above 0 is good. An NPS of 50 or higher would represent excellent customer retention, and anything above 70 would indicate that you are at the top of your game and outperforming all of your competition.

Scores that are 50 or higher are not typical, so don’t be too hard on yourself if you are below that number so long as you are above 0. It’s okay to be above 0 but below 50 or 70 and strive to be better, and honestly, we would hope that you would never be settled unless your NPS was +100.

Accepting that there is always room for growth and improvement is the sign of a company that will experience long-term growth and success.

How Do I Interpret My Net Promoter Score Results?

It’s not simply enough to conduct NPS Surveys, receive feedback from respondents, and calculate your score.

These metrics are purposeless in isolation; therefore, the work put into getting them is pointless if you don’t use them to institute refined marketing, product innovation, and investment strategies.

Therefore, when you get your Net Promoter Score and establish your baseline NPS metrics, use that NPS data and metrics to influence your strategy development and reach a more positive score.

If your historical NPS metrics are declining below the industry average, identify what has changed and may be affecting it. If your NPS metrics are rising, what are you doing most likely influencing this change?

If your NPS metrics remain stagnant and are neither increasing nor decreasing, what can you do to start moving the needle upward? In other words, use your NPS metrics as tools that drive your decision-making processes.

Anything below +30% is a sign of a slightly negative NPS, meaning you’re performing well but have room for improvement. Anything above +30% with a consistent increase shows that you have a high NPS; your strategy is working, and you should stay the course.

Suppose your NPS is below +30% and is consistently declining. In that case, you should immediately begin an exploratory process designed to identify what part of your methodology is causing more and more customers to move out of the promoter category and into the detractor category.

One reason for this decline could be that more respondents fall into the passives category and therefore do not contribute to your calculations. This is a good sign that fixing the issue could be much simpler than if the decline resulted from increasing detractors.

Calculating Net Promoter Scores Recap

We know dealing with math is not a favorite among many people, so we wanted to sum up how you calculate your NPS without all of the fluff:

• Step One: Record the number of NPS survey respondents in segments
• Step Two: Calculate the percentage of Promoters versus Detractors
• Step Three: Subtract the percentage of Detractors from Promoters
• Step Four: The sum of these two percentages represents your NPS
• Step Five: Record your NPS Metric for ongoing net promoter score benchmark analysis
• Step Six: Refer to industry benchmarks for strategy development

These six steps represent the big picture of Net Promoter Score metrics and are a straightforward way of measuring your company's customer retention.

Example of a Net Promoter Score Calculation:

• Number of Respondents: 1,216
• Percentage of Promoters: 55%
• Percentage of Passives: 15%
• Percentage of Detractors: 30%
• NPS Equals: 25 (55-30 = 25) Remember, passives are not used in your calculation, but they represent an essential metric*

How We Can Help

Awesome CX is a company dedicated to partnering with businesses across industries to enhance customer service and amplify the customer experience.

Higher customer satisfaction represents higher NPS metrics.

Customers frustrated with the quality of customer service they receive are more likely to impact your NPS feedback negatively than anything else. Therefore, partnering with one of the industry’s leading experts in world-class customer service outsourcing is a great way to increase your NPS significantly.

Give us a call or connect with us today online to discover more.

Sources:

What is Net Promoter Score (NPS)? | TechTarget

Net Promoter Score - an overview | ScienceDirect Topics

What is a Net Promoter Score? (And Why it Matters) | Jack Welch MBA