Net Promoter Score (NPS) is a customer experience staple, so we wanted to break down the basics of NPS and share why every customer-focused company needs to be leveraging the power of your NPS.
NPS is a metric that measures the loyalty of customers to a company, and its scores are measured with a single question survey and reported with a number from -100 to +100. The higher the score, the better off you are. (Sounds pretty straightforward, right?)
NPS® is often held up as the gold standard customer experience metric, having first been developed in 2003 by Bain and Company, it’s now used by millions of businesses to measure and track how they’re perceived by their customers.
It measures customer perception based on one simple question:
How likely is it that you would recommend [Organization X/Product Y/Service Z] to a friend or colleague?
How NPS is rated:
Respondents give a rating between 0 (not at all likely) and 10 (extremely likely) and, depending on their response, customers fall into one of 3 categories to establish an NPS score:
- Promoters respond with a score of 9 or 10 and are typically loyal and enthusiastic customers.
- Passives respond with a score of 7 or 8. They are satisfied with your service but not happy enough to be considered promoters.
- Detractors respond with a score of 0 to 6. These are unhappy customers who are unlikely to buy from you again, and may even discourage others from buying from you.
How to calculate your Net Promoter Score
It’s actually quite simple to calculate your final NPS score – just subtract the percentage of Detractors from the percentage of Promoters.
For example, if 10% of respondents are Detractors, 20% are Passives and 70% are Promoters, your NPS score would be 70-10 = 60
The difference between transactional vs relational NPS Programs
Relational NPS surveys are deployed on a regular basis (i.e.- quarterly or annually), and the goal is to get an ongoing pulse on your customers and understand how they feel about your company overall. This data is oftentimes used to used to check the health of a customer year-over-year and provide a benchmark for company success. Transactional NPS surveys are sent out after the customer interacts with your company (after a purchase or support call, for example) – and it’s used to understand customer satisfaction on a granular level while providing feedback about a very specific topic. Typically, it’s best practice to use both types to programs to understand your customer at both the macro and micro levels.
What else can you measure using NPS?
Good news, you can pretty much measure almost anything using an NPS score. In addition to understanding the overall NPS for the company, you can track scores for everything from individual products, stores, websites, employees – and more. While most net promoter score surveys are designed to collect customer feedback, they can also be used to measure employee sentiment, or – what is commonly referred to as employee net promoter score (eNPS). This measures how likely your employees are to recommend your company as a great place to work. There is something interesting to note, however – Qualtrics recommends not using eNPS to measure employee feedback in favor of other more comprehensive survey methodology such as employee engagement surveys because eNPS lacks the complexity an engagement survey has, as it’s only one question. If you’re just getting starting with exploring employee engagement, it can be a great starting place. Although, it is good to notate that it doesn’t give you a complete picture of employee health, and it could be challenging to know where to make improvements once you have the data. That is – unless you partner with a team like ours who are NPS Masters – in which case, bring on all form of NPS!