How to Boost Your Business with a Net Promoter Score

Updated on: 08 February 2024 | 10 min read
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You’ve probably heard of Net Promoter Score (NPS), the popular metric that measures customer loyalty and satisfaction. But do you know how to use it effectively to grow your business and improve your customer experience?

In this blog post, we’ll explain what NPS is, how to calculate it, and how to use it to measure and improve various aspects of your business. We’ll also cover some common pitfalls and best practices for running NPS surveys and analyzing the results.

What is Net Promoter Score (NPS)?

Net Promoter Score is a simple but powerful way to measure how likely your customers are to recommend your product or service to others. It’s based on asking one question: “How likely are you to recommend us to a friend or colleague?”

Customers can answer on a scale of 0 to 10, where 0 means “not at all likely” and 10 means “extremely likely.” Based on their responses, customers are classified into three categories:

  • Promoters: Customers who give a 9 or 10. They are loyal, enthusiastic, and likely to spread positive word-of-mouth about your brand.

  • Passives: Customers who give a 7 or 8. They are satisfied but not thrilled, and may switch to a competitor if they find a better offer.

  • Detractors: Customers who give a 6 or lower. They are unhappy, dissatisfied, and likely to complain or leave negative reviews about your brand.

How Do You Calculate Net Promoter Score?

To calculate your NPS, simply subtract the percentage of detractors from the percentage of promoters. For example, if you have 40% promoters, 40% passives, and 20% detractors, your NPS would be:

NPS = % of promoters - % of detractors

NPS = 40 - 20

NPS = 20

Your NPS can range from -100 (if all your customers are detractors) to +100 (if all your customers are promoters). A positive NPS indicates that you have more promoters than detractors, which means you have a loyal customer base that can help you grow your business through referrals and retention. A negative NPS indicates that you have more detractors than promoters, which means you have a problem with customer satisfaction that can hurt your reputation and revenue.

Transactional vs. Relational NPS programs

TypeDescriptionTimingTarget AudiencePurpose
Transactional NPSSurveys sent after a specific interaction or touchpoint, such as a purchase, service call, or website visit. Provides insights into customer expectations, delivery performance, and identifies issues or pain points for resolution.Immediate post-interactionCustomers involved in the specific interactionUnderstand delivery performance, identify issues, and optimize specific processes and touchpoints.
Relational NPSPeriodic surveys sent every 3 to 12 months to the entire customer base or a representative sample. Aims to gauge overall customer sentiment and loyalty towards the brand.Periodic (3 to 12 months)Entire customer base or sampleEvaluate overall relationship with the brand, measure customer loyalty, and assess the effectiveness of the overall strategy and performance.

Both types of NPS surveys can provide valuable insights into your customer experience and satisfaction, but they serve different purposes and should be used accordingly. Transactional NPS surveys can help you optimize specific processes and touchpoints, while relational NPS surveys can help you evaluate your overall strategy and performance.

What Can You Measure Using NPS?

NPS is not just a single number that tells you how happy your customers are. It’s also a versatile tool that can help you measure and improve various aspects of your business, such as:

  • Customer retention: How well do you keep your existing customers from leaving or switching to a competitor?

  • Customer acquisition: How well do you attract new customers through referrals and word-of-mouth?

  • Customer lifetime value: How much revenue do you generate from each customer over their lifetime?

  • Customer advocacy: How well do you turn your customers into loyal fans who promote your brand to others?

  • Feedback: What do your customers like and dislike about your product or service? What are their needs and expectations? How can you improve their experience?

  • Segmentation: How do different groups of customers differ in their satisfaction and loyalty? How can you tailor your offerings and communications to each segment?

By tracking and analyzing these metrics using NPS, you can gain a deeper understanding of your customer behavior and preferences, identify opportunities for improvement, and take action to increase customer satisfaction and loyalty.

How to Run Surveys and Collect NPS Customer Feedback

Running NPS surveys is not as simple as sending out an email with a single question. You need to follow some best practices to ensure that you get reliable and actionable data from your customers. Here are some tips to help you run effective NPS surveys:

1. Choose the Right Timing

Make sure to send your NPS surveys at the right time to get the most relevant and accurate feedback from your customers. For transactional NPS surveys, you should send them shortly after the interaction or touchpoint (e.g., within 24 hours), while the experience is still fresh in their minds. For relational NPS surveys, you should send them at regular intervals (e.g., every 3 to 12 months), depending on your industry and customer lifecycle.

2. Select the Right Channel

Choose the channel that is most convenient and appropriate for your customers to respond to your NPS surveys. For example, you can use email, SMS, web, app, phone, or in-person channels. Consider the channel that is most likely to yield a high response rate and a representative sample of your customer base.

3. Determine the Right Format

Design your surveys in a way that is clear, concise, and easy to complete. Use a simple scale of 0 to 10 for the NPS question, and avoid using words or labels that may bias or confuse your customers. Include an optional open-ended question that allows your customers to explain their rating and provide additional feedback. Avoid asking too many questions or adding unnecessary fields that may reduce your response rate or quality.

4. Choose the Right Frequency

Send your NPS surveys frequently enough to get timely and relevant feedback from your customers, but not too often to annoy them or cause survey fatigue. You should also avoid sending multiple NPS surveys to the same customer within a short period of time (e.g., less than 3 months), as this may skew your results or lower your response rate.

5. Encourage Customers to Participate with Incentives

Consider offering incentives to encourage your customers to respond to your NPS surveys. For example, you can offer discounts, coupons, rewards points, free trials, gift cards, donations, or entries into sweepstakes. However, you should be careful not to overdo it or make it seem like you’re buying their feedback. You should also make sure that the incentives are relevant and appealing to your target audience.

Frameworks to Analyse Customer Feedback

Customer Feedback Wall for Focus Groups

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What Can You Do with Your NPS Score?

Getting an NPS score is only the first step in using NPS to improve your business. The next step is to act on the feedback you receive from your customers and use it to enhance their experience and loyalty. Here are some ways you can use your NPS score to grow your business:

Celebrate and reward your promoters. Your promoters are your most valuable customers who love your brand and spread positive word-of-mouth about it. You should thank them for their loyalty and support, and reward them with exclusive offers, discounts,

Identify and address the root causes of customer dissatisfaction. You can follow up with your detractors and ask them why they gave you a low rating. You can then use their feedback to fix the issues that are affecting their experience and prevent them from leaving or spreading negative word-of-mouth.

Convert your passives into promoters. You can reach out to your passives and ask them what would make them more likely to recommend you. You can then use their suggestions to enhance your value proposition and differentiate yourself from your competitors.

Track and improve your NPS score over time. You can monitor how your NPS score changes over time and see if your actions are having a positive impact on customer satisfaction and loyalty. You can also set goals and targets for improving your NPS score and align them with your business objectives.

How to Read Your Net Promoter Score Results

Look for trends and patterns. You can segment your responses by various criteria such as demographics, purchase history, product usage, or feedback channel. This will help you identify which groups of customers are more or less satisfied with your brand and why.

Analyze the reasons behind the ratings. You can use text analysis tools or qualitative methods to extract the main themes and sentiments from the comments. This will help you understand the drivers of customer satisfaction and dissatisfaction and the emotions they evoke.

Act on the insights. You can use the insights from your NPS results to prioritize the actions that will have the most impact on customer satisfaction and loyalty. You can also communicate the results to your team members and stakeholders and involve them in the improvement process.

Disadvantages of Employee Net Promoter Scores (eNPS)

Some companies also use NPS to measure employee satisfaction and engagement, by asking their employees the same question as their customers: ‘How likely are you to recommend us as a place to work?’

This is called employee NPS (eNPS), and it’s based on the assumption that happy employees lead to happy customers. However, eNPS has some limitations and drawbacks that make it a poor substitute for a comprehensive employee feedback program.

  • eNPS is a very broad and vague question that doesn’t capture the nuances and complexities of employee experience. It doesn’t tell you why your employees are satisfied or dissatisfied, what motivates or demotivates them, what challenges or opportunities they face, or what they need to perform better.

  • It is influenced by many factors that are beyond your control, such as the industry, the market, the economy, the culture, and the personal circumstances of your employees. It doesn’t reflect how well you manage and support your employees, or how aligned they are with your vision and values.

  • eNPS can create a false sense of security or complacency, as it may not reflect the true state of your employee engagement. For example, you may have a high eNPS score because your employees are afraid to speak up or leave, or because they have low expectations or standards. Conversely, you may have a low eNPS score because your employees are ambitious and demanding, or because they have high expectations or standards.

Therefore, instead of relying on eNPS as a measure of employee satisfaction and engagement, you should use more comprehensive and specific methods to collect and analyze employee feedback, such as surveys, interviews, focus groups, performance reviews, exit interviews, and employee engagement platforms.

Conclusion

NPS is a powerful tool that can help you measure and improve customer satisfaction and loyalty. By asking your customers one simple question, you can get a clear picture of how they perceive your brand and how likely they are to recommend you to others.

You can use your NPS score to benchmark your performance, identify areas of improvement, and take action to boost your business. You can also use your NPS results to reward your loyal customers, convert your passives into promoters, and address the concerns of your detractors.

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FAQs About Net Promoter Scores

What is a good NPS score?
There is no definitive answer to this question, as different industries and markets have different standards and expectations. However, a general rule of thumb is that a positive NPS score is good, a score above 50 is excellent, and a score above 70 is world-class.
How can I increase the response rate for my NPS survey?
  • Send your survey at the right time, when your customers are most likely to respond and when their experience is fresh in their minds.

  • Keep your survey short and simple, with only one question and an optional comment box.

  • Make your survey attractive and engaging, with clear instructions, appealing visuals, and a personalized message.

  • Choose the best channel for your survey, such as email, SMS, web, or in-app, depending on where your customers are most active and comfortable.

  • Remind your customers of the value and purpose of your survey, and thank them for their participation.

Author

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Hansani Bandara Content Specialist

Hansani has a background in journalism and marketing communications. She loves reading and writing about tech innovations. She enjoys writing poetry, travelling and photography.

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