Net Promoter Score or NPS score measures how loyal your customers are to your brand. It’s measured by asking customers how likely they are to recommend your product or service. It’s an important metric because it offers insights into overall customer satisfaction and long-term brand perception.
Calculating Net Promoter Score
It’s pretty straightforward. NPS is calculated by asking customers one question: “On a scale of 0-10, how likely are you to recommend our product or service to a friend or colleague?”Customers then have to pick a number on a scale.
Based on customer feedback, they fall into one of 3 categories. These are promoters, passives, and detractors. These can then be used toward the final net promoter score calculation.
- Promoters (9-10): Customers who give a score of 9 or 10 are considered to be brand promoters who are loyal to your product or service. They have had a positive customer journey and would likely recommend you to others.
- Passives (7-8): Those who give a score of 7 or 8 are considered to be passives. They are not necessarily dissatisfied but they could be swayed away by competitors. You should reach out to these customers for detailed feedback and fix some of their issues.
- Detractors (0-6): Customers who give net promoter scores between 0 and 6 are considered detractors. They are unhappy with your brand and can affect your growth through negative word of mouth. This would also discourage others from engaging with the brand. Too many customers in this pool could be a threat to your business growth.
Once you have the individual scores from customers, you then use the following equation to calculate NPS: NPS = % of Promoters – % of Detractors. The result is a score between -100 and +100, where a higher score reflects a more loyal and satisfied customer base.
Since the passives can swing either way, we don’t directly include them in the calculation. While it is optional, some large companies do include them with reduced weightage that they have on the calculation. This is simply because you can’t say which way they would swing. Usually, we provide a weightage of 0.5 to passives. But based on the industry and competition, this can change.
The modified formula for this would be: Modified NPS=(%Promoters−%Detractors)+(%Passives×Passive Weight)
Optimizing NPS
No matter how great your product or service is, you will always find certain detractors. But among those unhappy customers and their responses, there are inputs to improve your product or service. This is what you use to optimize your Net Promoter Score.
- Analyze Feedback: The pain points shared by your detractors affect them deeply. These issues likely affect your promoters or passives as well, but they ignore it, simply because it’s a non-issue for them. When you analyze your NPS data, you will find direct ways to improve your product and services.
- Enhance Products or Services: Making improvements shared by your customers can help you launch new tools, features, and updates to your products. These changes make your customers feel supported, as they feel that their feedback matters.
- Strengthen Customer Relationships: Product updates and changes are not the only way to get a higher NPS. Don’t get me wrong, they are important, but there are softer aspects to this as well. Strengthening customer relationships can also positively affect your NPS. Personally reaching out to customers and resolving their issues is a great way to do this. Discounts, schemes, and gift cards for NPS survey respondents are also helpful.
- Agent Training: Lastly, agent training. When customers have complaints or issues, your agents should proactively resolve their issues. Quick and accurate issue resolution is the best way to boost customer loyalty. Make sure your agents know their way around your products and can effectively assist customers when the time comes.
Conclusion
NPS is the most transparent way of gathering customer satisfaction levels. Scores like CSAT Score and Average Handle Time are great for calculating immediate satisfaction levels, but only NPS can help measure long-term satisfaction. A high average NPS means that your products and customer service are excellent, and most of your customers are loyal to your brand. A low NPS on the other hand is a cause for concern, and it must be optimized. In the long term, this optimization will create loyal and enthusiastic customers who will represent your brand to others, leading to more business growth.
