In 2003, loyalty consultant Fred Reichheld proposed a simple method to measure loyalty, called the Net Promoter Score® (NPS®). This metric is great for measuring long-term customer satisfaction and loyalty. It’s the big picture metric of customer experience (CX).
The Net Promoter Score's aim is to establish what percentage of customers are happy with your product or service enough to recommend it to others. Measuring the customer experience (CX) is not only important for service delivery improvement but can also help to drive more revenue with Net Promoter Score as happy customers bring in new ones.
A recommendation by a trusted friend or family member is more effective and has a higher chance of persuasion than a commercial or influencer endorsement. This is why knowing who the loyal customers are by using the Net Promoter Score (NPS) is crucial to a business.
Multiple tools can help you conduct an NPS survey though one can also undertake a manual assessment for the same purpose. So exactly what is Net Promoter Score and how does it work?
What is the Net Promoter Score (NPS)?
As observed above, the Net Promoter Score is a metric for gauging customer loyalty on a scale of 0-10. This is achieved through a simple NPS survey question sent out to customers at defined times in their customer journey.
In an NPS survey, customers receive a simple and generally universal question: “How likely are you to recommend us to your friends or family on a scale of 0-10? The marketer then uses the answers to segment customers into Detractors with scores 0-6, Passives with 7-8, and the Promoters at 9-10.
The overall NPS score is calculated by subtracting the percentage of Detractors from the total number of survey responses by Promoters. Such as: (% Promoters – % Detractors = NPS).
For credible results, initiate NPS surveys at determined points in the customer journey when the customer has had sufficient time to answer truthfully from experience.
If done right, a precise NPS score can help in predictive analytics to paint a credible picture of your business growth projection, including what segment of customers to direct your marketing efforts and how to improve your overall customer experience.
How to conduct an NPS survey
Regardless of the segment of the industry you operate in, the basic NPS question and survey template is the same: it asks a single question, “On a scale of 0-10, how likely are you to recommend the product/service to a friend or family member?”
There is no further ingenuity in constructing this question except to either align it to a product if you are in goods or service as the case may be. You then share the NPS survey question on your website by way of pop-up notifications, through email, or on social media.
On the various platforms, design the NPS survey question in such a way that your customers find it easy to respond. Plan your surveys for specific times to allow for closure and collection of the responses given for further analysis and calculation.
Segregate and aggregate your responses according to the scores on a scale of 0-10 to cluster them into Detractors, Passives, and Promoters. It does not hurt to include a rider asking for reasons behind their responses for additional insights.
Determining when to send NPS survey questions
Net Promoter Score (NPS) surveys come in two types that determine when a business can send out questions to customers. One is the relationship-based NPS survey that targets customers that have been with the company for many years and who enjoy a solid relationship.
For this category, consider dispatching NPS surveys on a monthly or quarterly basis, preferably using AI-powered automation to ensure their continued loyalty while addressing any arising concerns.
Another type of NPS survey is deployed following a key event in the customer’s journey to gauge their reaction and loyalty. Send transactional NPS surveys after a customer completes an action that may comprise a simple call to customer care, a purchase, or has gone for long without any activity.
Using CRM analytics, you may choose either one of the two types of surveys to collect customer feedback while at the same time gauging their continued loyalty. It pays to know how strong your customer base is for a better marketing strategy.
How to calculate NPS
Here is how it works: You start with the collection of data through the survey conducted either in-app or via email dispatch. When all the answers or a substantial number are in, you group these into three categories of Detractors, Passives, and Promoters before calculating your NPS score.
To calculate the three NPS categories, you base their scoring on a scale of 0-10 in clusters of 0-6 for Detractors, 7-8 Passives, and 9-10 Promoters. Subtract the total number of Detractors from the total number of responses Promoters to arrive at the NPS score.
Now, who are these categories anyway? Promoters are the customers you are looking for and they score between 9-10, indicating they are happier with your product or service and can gladly recommend to others; they are the ones you want to spread their positive experience by word-of-mouth. This is the category you simply cannot lose and must work hard at retaining for their invaluable advocacy leverage.
Passives scoring 7 or 8 sit in between and though they bring in business, they are likely to decamp at the slightest appearance of a better option. Detractors, on the other hand (scoring 0-6), are the unhappy customers that are likely to cause you to harm through negative advocacy based on their disappointment. They will churn and might turn off potential new customers from your brand.
Manual NPS calculation
When using a manual NPS calculator for the Net Promoter Score, you will use Excel or Google Sheets for encoding your data. Once encoded, next categorize responses into three segments with Detractors being those that scored 0-6, Passives 7-8, and Promoters with 9-10. Promoters and Detractors are the key factors in this equation and as such, you will tally each their total of responses from which to derive percentages.
Divide the total number of Promoters by the total number of respondents in the NPS survey multiplied by 100 to determine the percentage. Following the same formula, work out the percentage for the Detractors and then subtract this percentage from the one for Promoters to get your NPS.
Alternatively, to simply calculate one percentage, subtract the number of Detractors from Promoters, divide by the total number of respondents and multiply by 100 for your NPS, thus: (Number of Promoters- Detractors) / (Number of Respondents) x 100.
How to use NPS survey tools
The SAAS companies provide plenty of online NPS calculators that simplify these surveys for small and medium businesses with small budgets. A few of these are free to use, all you need to do is gather your survey data, input it online, and your NPS is instantly calculated.
However, that is the easy part of the important aspect of this survey involves the sending of the question and the aggregation of responses before feeding into the online calculator.
The best option is to go for integrated tools that can perform multiple functions in survey management. These advanced tools will help build the survey with the required question, including the follow-up question for each category on why they responded that way.
The tools then proceed to sort and send the survey question individually to each customer at optimized sent times and intervals. It further saves time by automated analytics providing accurate scores and actionable insights with little human intervention.
NPS survey methodology
Two methods are common for sending Net Promoter Score surveys and both have their weak and strong points. The first is the in-app NPS survey that targets website visitors to collect their customer satisfaction ratings.
The in-app surveys have a higher response rate, are instant, and spontaneous as the customer has to answer while in session and does not have the luxury of time to ponder over it. However, this “on the feet” response may only reflect what the impulsive mood or feeling of the customer was at that moment and may not indicate their overall feeling about your brand.
The other method uses email NPS surveys send out individually and works well for customers with a long history doing business with the brand. The response times from emails may take longer, but they always reflect an accurate indication of the customer’s loyalty rating as they have time to answer emails.
The key to effective use of these methods is to adopt one and stick by it for consistency and clarity, as both are not comparable.
Avoid arbitrary NPS surveys
For better customer experience and accurate Net Promoter Score results avoid sending survey questions without a defined action by the customer.
The best practice is to survey at the same point in the customer’s journey to solicit a credible response that will form the basis on how to calculate NPS without bias. The timing guarantees that everyone has experienced the use of the product for the same length of time and is giving a qualified opinion.
To conduct planned surveys, you may rely on two triggers for send-time optimization. First, is action by a customer where you only send out the question after they have made a purchase or spend a certain amount. The timing of customer actions can also come into play when launching your survey.
Send a survey to those who have just signed up for your service/product or the trial version, probably at the end of the free trial period. Be consistent in the use of these triggers to avoid sending surveys at a time when a customer has no current experience to share.
Always allow a break between NPS surveys
Good marketing practice implies regular surveys, while at the same time, you avoid the appearance of being overly intrusive. It is a good thing to allow respectable breaks between surveys so that when one happens, customers are happy to participate and it brings out fresh, actionable insights.
Breaks will also allow the marketing team to address possible reasons for the way detractors were disappointed in the previous survey.
Use the breaks to customize marketing content to win over the passives and Detractors and gauge this in the subsequent NPS survey. This can include curated follow-up questions and emails to address issues raised while offering solutions and guaranteeing superior customer experience to draw them back.
Engage the Detractors to understand why they rated you poorly, apologize, and offer to correct the offending issues while making sure you deliver on your promise to earn their loyalty.
A final word about Net Promoter Score (NPS)
Every business strives for customer satisfaction (CSAT) and enhanced experience to earn their loyalty. That is why it is important to know by whichever means how the customer feels about your brand, products, services, and customer care. Put to good use NPS surveys to get these insights for a progressive business marketing strategy.
Editor's Note: The content in this article reflects the guest speaker's personal opinions.
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About the Guest Author
Alice Jones is a San Francisco, CA-based freelance essay writer who provides finance assignment help to college students. The assignments include thesis, dissertation, essays, term papers and coursework. She holds a degree in management from the University of San Francisco and has been working for professional writer service for four years.