Net Promoter Score: What Is It and Why Do You Need It?
Net Promoter Score as a snapshot of customer satisfaction
There are a lot of customer service metrics out there that can improve your support quality and bottom line of your whole business.
It can be intimidating to get into the numbers game if you haven’t done it before. Where do you start?
There’s one specific metric that is easy to implement and measure, while still giving you a good overview of your customers’ experience through their eyes for a glimpse of whether things are ticking in the right direction or not.
That metric is net promoter score (more commonly referred to as just NPS).
Today, we’re going to take a detailed look at NPS, what it is, why you should care about it with regards to your business, and what to do when it’s not looking as good as you’d like it to.
What Is Net Promoter Score and Why It Matters
Net Promoter Score, at its core, is a measure of how likely people are to recommend your product or service to other people—basically, how satisfied your customers are with your business as a whole.
The concept was first introduced in 2003 by Fred Reichheld, a partner at Bain & Company, who was looking for a way to measure customer loyalty, satisfaction and opinion of a company’s performance.
The score, developed in cooperation with Satmetrix, soon became regarded as one of the simplest indicators of customer loyalty as a whole—a metric that sheds light on most, if not all aspects of the customer journey and their perception of your brand.
NPS is a powerful indicator completely on its own, but especially when combined with other customer service metrics, it’ll create insights into both the general customer experience and journey as well as specific parts of it.
How Net Promoter Score Is Measured
NPS is calculated based on responses to a single, simple question:
Customers answer this question on a scale of 1 to 10 (with 10 being “extremely likely” and 0 being “not at all likely”), and more often than not, there’s also an extra field for asking why they chose the score above:
Based on the score submitted, customers are then categorized as Promoters, Passives or Detractors.
This is how Satmetrix defines each of these groups:
- Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
- Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
- Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
Calculating the final score—your total NPS—based on these groups is pretty simple—your company’s net promoter score is the percentage of promoters minus the percentage of detractors.
As for benchmarking, according to Satmetrix, the average score is around 5, but the most efficient growth occurs for companies whose NPS is in the 50–80 range.
There are several tools out there you can use that are focused on measuring NPS. At Groove, we use Delighted, and are pretty delighted with it. Other options include Wootric and Promoter among others.
Improving Your Net Promoter Score
A low NPS, similarly to a low direct customer satisfaction score, tells you that your customers are unhappy and you need to find out why.
The things you should think about and figure out when it comes to fixing a low NPS are similar to other metrics closely tied to general customer satisfaction:
- Which customers are not satisfied with your service and what are the main reason?
- Is there a recurring issue that your customers mention as the reason for a low NPS that you should aim to get fixed as soon as possible?
- Are you making enough effort to engage your customers in a discussion about your product/service outside of simple things like measuring NPS?
Based on your drill-down into why your customers have negative feelings towards your product or service,
- Work out a system for asking more feedback from dissatisfied customers—extra brownie points if you reach out personally and ask to chat to them directly.
- If you don’t ask have a comment section in your rating system yet, make sure that you add it so that your customers can mention why they’ve given you a less than satisfactory rating.
- Make a list of the most common issues mentioned and move them up in your development/design backlog.
Remember—a low NPS score, like any other customer satisfaction indicator, isn’t something you’re powerless about.
Reach out to the customers who aren’t satisfied, find out more about why, and ask for honest and constructive feedback.
Not only will this give you enough information about the issues to take appropriate action, it’ll also show dissatisfied customers that you’re making a real effort to improve things on your side so they can have a better experience.
Use Net Promoter Score As an Instant Indication of Customer Satisfaction
We’re all striving to improve our customer experience.
However, you won’t get too far with it if you don’t have a thorough view of the customer journey, with actual metrics to back it up.
NPS, whether used alone of combined with other customer support metrics, gives you a great look into your customers’ overall opinion and “feel” of your company.
Do you measure NPS? What do you do with the insights it gives you? If you don’t use NPS at all, why?
Let us know in the comments!