Customer experience indicators are data used by companies to measure the experience their products or services bring to customers. Based on these indicators, companies can make up for their shortcomings. This article will explain in detail one of the core indicators of customer experience - Net Promoter Score (NPS).
What is Net Promoter Score (NPS)?
The concept of NPS was proposed by Fred Reichheld in his article "The One Number You Need to Grow" published in Harvard Business Review in 2003. In 2006, Fred Reichheld published "The Ultimate Question: Creating Healthy Profits and Promoting Growth", which systematically introduced NPS, and in "The Ultimate Question 2.0: The Customer-Driven Future of Enterprises" published in 2011, NPS was developed into a customer experience management indicator system. With companies around the world putting it into practice, it has now become one of the most popular indicators for measuring customer satisfaction.
The so-called Net Promoter Score (NPS) means "how willing are you to recommend xx to others." This indicator is used to measure the value or indicator of customer happiness and loyalty to a brand, service or product, and is the most important indicator for measuring whether a customer is satisfied with your product.
How to Calculate NPS
Respondents are rated on a scale of 0 to 10 (0 for very unwilling, 5 for neutral, and 10 for very willing). Net Promoter Score (NPS) = (Number of Promoters/Total Sample) × 100% - (Number of Detractors/Total Sample) × 100%
Promoters are respondents who chose 9 to 10. They are loyal customers of the business and are most likely to recommend the business to their friends and colleagues.
Detractors are respondents who chose 0 to 6. Detractors are dissatisfied customers who are unlikely to do business with the business again and are likely to spread negative word of mouth about the business.
Passives are respondents who chose 7 to 8. They are very satisfied with the business's services, but they are not loyal fans of the business. They are not considered in the NPS calculation.
The value obtained by subtracting the percentage of detractors from the percentage of promoters is the Net Promoter Score.
For example, if 70% of respondents gave a score of 9 or 10, and 10% gave a score between 1 and 6, the result would be (70% - 10%) x 100 = 60. Getting a 60 NPS is a perfect metric because most of your customers are promoters.
What is a good Net Promoter Score (NPS)?
The NPS score range is expressed as -100 to 100. If the company has more critics than recommenders, the score is negative; otherwise, the score is positive. Generally speaking, NPS ≥ 0 is considered a "good" score, and NPS > 30 is considered an "excellent" score. If your NPS is < 0, it means that the company needs to start working on improving customer satisfaction immediately.
The NPS benchmark values for different industries are different. From Retently's 2021 NPS Benchmark Report, the average NPS score for B2B Software & SaaS is 30.
How to set up NPS survey questions?
The typical NPS survey structure consists of two questions: a rating and a free-response, open-ended question.
The main NPS question is: “How likely are you to recommend xx to others.”
Respondents are asked to select a score from 0 (“unlikely”) to 10 (“very likely”).
The second question asks respondents to share their feedback and explain their score. The answer to this question will help you add context to the numerical results and understand your customers’ thoughts.
The first Net Promoter Score question is set in stone, but businesses can get more ideas with the second question.
Examples of Net Promoter Score survey questions:
- How likely are you to buy from us again?
- How likely are you to recommend our product to others?
- How likely are you to return to our website?
How to Use NPS?
- Improve your products/services It is very difficult to achieve perfection in your products, and customers will always have complaints about your products or services in some places. If these critics are not completely dissatisfied with your products, this means that you can get key insights from them to improve your products.
If your survey includes follow-up questions, you should already have the information you need. If you are not sure what the critics are saying, you can contact them by email and phone, and express their ideas, which is likely to help the product, and hope to learn more. Finally, the data collected from the follow-up questions can really help you understand the shortcomings of your products.
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Follow up with critics You can talk to them regularly, which is an opportunity to follow up and ask them why they scored so. Or you can send a short email saying that you see that they are not completely satisfied with the product, so you want to understand and improve it. Most customers will appreciate your customer-centric attitude, value their opinions and are willing to take the time to listen to their ideas, and they will be happy to provide you with the information you need.
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Convert recommenders You can extract comments and case studies from customers with NPS=9, and extract recommendation reasons from customers with NPS=10. You need to contact them and find a way to get them to agree to use these contents. It’s best to involve the customer success team because they have already established a solid relationship with the customer and will know how to persuade the customer effectively.
The Value of NPS
Its importance is also reflected in the following aspects:
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Evaluate customer satisfaction and loyalty NPS.
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Predict business growth Studies have shown that there is a correlation between NPS and business growth.
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Identify improvement opportunities NPS can help companies understand customers' views on products, services or companies, thereby discovering opportunities for improvement.
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Compare competitors NPS can also be used to compare the performance of competitors.
