Who are the best customers of your business? Those who buy the most? NO! you are wrong. Your best customers are those who promote your business and introduce you to others voluntarily. These are the gold mine of your business.
And It is not hard to guess who are the most dangerous ones for your business. Yes, those who talk behind the back of your business and discourage others from buying from you.
So, if you can find out how many of your customers are willing to promote you and how many of them are ready to detract your customers, you found a gold mine, right? If you have this data and know who they are, you can work on increasing the number of your promoters and decreasing the number of your demoters. Net Promotor Score (NPS) is the tool that will give you this power.
Read this article to understand what is this powerful tool, and how you can use it in your business.
What is NPS?
Net Promoter Score (NPS) is a customer experience metric developed by Fred Reichheld of Bain & Company. It measures the willingness of customers to recommend a company’s products or services to others. As you can see the concept is very simple and significantly important at the same time. Many studies show the Net Promoter Score can predict sales growth, especially in the near future period.
NPS is based on a simple question: “On a scale of 0 to 10, how likely are you to recommend our company to a friend or colleague?” Respondents are categorized into three groups: Promoters (9-10), Passives (7-8), and Detractors (0-6).
Promoters
Promoters are customers who respond to the question with a rating of 9 or 10. These individuals are highly satisfied and enthusiastic about their experience with your company. They not only continue to be loyal customers but also actively promote your business to their friends, family, and colleagues. Promoters can be potential brand advocates who can significantly contribute to positive word-of-mouth and help attract new customers.
Passives
Passives are customers who give a rating of 7 or 8 in response to the question. While they are somewhat satisfied with your products or services, they are not as enthusiastic or committed as Promoters. Passives are somewhat indifferent and may not actively recommend your business to others. Although they may continue doing business with you, they are more likely to switch to a competitor if offered a better alternative. It is important to pay attention to Passives and find ways to convert them into Promoters.
Detractors
Detractors are customers who respond with a rating between 0 and 6 on the question. These individuals are dissatisfied and unhappy with their experience with your company. Detractors are at risk of spreading negative word-of-mouth, potentially harming your brand’s reputation and hindering business growth. Addressing their concerns and improving their experience is crucial to mitigate the impact of Detractors and prevent further dissatisfaction.
NPS can be considered a KPI for some businesses. Especially for companies selling services. You can read more about KPIs and OKRs in the “OKR vs KPI” article.
How to Calculate NPS
Now that you understand what is NPS, it is time for you to learn how to calculate the NPS. It is actually a very simple calculation. All you need to do is subtract the percentage of Detractors from the percentage of Promoters.
The resulting score can range from -100 to +100. For example, if 40% of respondents are Promoters, 20% are Detractors, and the remaining 40% are Passives, the Net Promoter Score would be +20 (40% – 20% = 20%).
There are many online NPS calculators but you don’t need them. Just a simple Excel file will do the job for you.
What is a Good NPS Score?
The average of Net Promoter Score scores can vary across industries, so it’s essential to benchmark your score against competitors or industry standards.
Generally, a score above 0 is considered good, and anything above 50 is excellent. Keep in mind that this is not an absolute measure but rather a relative one, providing a snapshot of customer sentiment at a particular time.
Another important fact that you need to keep in mind is that the progress of your NPS score and its evolution is more important than just a one-time score.
As a globally recognized system, Net Promoter Score is widely measured and often published, making it easy to compare your performance with others in your market. This benchmarking allows you to gauge where you stand in relation to your industry peers and gain a better understanding of whether you are on the right path or need improvement.
Here you can find the average Net Promoter Score of various industries reported by Qualtrics XM Institute.
How Can You Create an NPS Survey?
Designing an effective NPS survey requires careful consideration. Keep it concise and easy to understand. Begin with the standard question and follow up with open-ended questions to gather qualitative feedback.
The standard form of the main question is:
How likely are you to recommend us to a friend or colleague?
This is the most important part of the survey. For this question, it is better to provide a form like an array from 1 to 10 as you can see below. The respondent can choose a score by clicking on the desired number.
We will provide some follow-up questions in the next part.
NPS Survey Best Practices and Examples
To maximize the response rate and quality of your NPS survey, follow these best practices:
- Keep the survey short and focused.
- Use clear and simple language.
- Act on the feedback received to show customers that their opinions matter.
- Keep your brand’s tone of voice.
It’s better to ask a few follow-up questions after asking the main question. But keep in mind that this survey should be short. Here are some follow-up example questions.
- What is the primary reason for your score?
- What could we do to improve your experience?
- If there was one action we could take to enhance your experience, what would it be?
- Which features do you use the most?
- What do you like the most about us?
If you need to have a segmented analysis of your Net Promoter Score you can ask for some general information too:
- Age
- Gender
- Profession
- The type of product/service he bought
Segmenting your respondents can help you to modify your “buyers persona“.
NPS email
An NPS email is a survey that is sent to customers or employees to measure their satisfaction with your products or services. The survey typically includes at least one question: “How likely are you to recommend [company name or a service] to a friend or colleague?”
Customers are then asked to rate their likelihood on a scale of 0 to 10, with 10 being the most likely. It’s a highly effective way to gauge customer loyalty, and satisfaction, and gather valuable insights into your business or organization.
The average NPS survey response rate can usually be around 25 to 50 percent. You can increase your NPS email response rate and obtain more useful information by using the following best practices.
- Send the email at the right time. You should send the NPS email when the customer is still thinking about your product or service. This could be immediately after they make a purchase, or after they use your product or service for the first time.
- Personalize the NPS email. Address the customer by name and use language that is relevant to their experience.
- Keep the email short and sweet. Customers are more likely to respond to short and concise emails.
- Offer an incentive to respond. You could offer a discount, a free gift, or entry into a contest.
- Follow up with non-responders. If a customer doesn’t respond to your initial email, you can send them a follow-up email.
- Segment your email list to send NPS email surveys to relevant groups or cohorts. This allows for more targeted analysis and action based on feedback.
NPS relational vs transactional
Before we explain the difference between transactional and relational, it is better to define each of them separately.
Transactional NPS
Transactional NPS is a type of Net Promoter Score (NPS) that measures customer satisfaction after a specific transaction. It is typically used to measure the satisfaction of customers with a product, service, or customer support interaction.
Transactional NPS surveys are typically sent out immediately after the transaction has taken place, while the customer’s experience is still fresh in their mind. This allows businesses to get feedback on specific areas of their customer experience that need improvement.
The transactional NPS survey asks customers the following question:
How likely are you to recommend [product or service] to a friend or colleague?
Customers are asked to rate their likelihood on a scale of 0 to 10, with 10 being the most likely.
Transactional NPS benefits:
- t can help you identify areas where you can improve your customer experience.
- It can help you track your progress over time.
- It can help you compare your performance to other businesses in your industry.
- It can help you identify customers who are at risk of churn.
Transactional NPS examples
- Amazon: Amazon sends out transactional NPS surveys after customers make a purchase. The survey asks customers how likely they are to recommend Amazon to a friend or colleague. Amazon uses the results of these surveys to improve its customer experience, such as by making it easier to find products, providing better customer support, and offering faster shipping options.
- Netflix: Netflix sends out transactional NPS surveys after customers watch a movie or TV show. The survey asks customers how much they enjoyed the content and how likely they are to recommend Netflix to a friend or colleague. Netflix uses the results of these surveys to improve its content selection and recommendations.
- Uber: Uber sends out transactional NPS surveys after customers take a ride. The survey asks customers how their experience was and how likely they are to use Uber again. Uber uses the results of these surveys to improve its driver training, customer support, and overall ride experience.
- Starbucks: Starbucks sends out transactional NPS surveys after customers make a purchase at one of its stores. The survey asks customers how likely they are to recommend Starbucks to a friend or colleague. Starbucks uses the results of these surveys to improve its customer service, food and beverage quality, and overall store experience.
Relational NPS
Relational NPS (or in some resources the relationship NPS) is a type of Net Promoter Score (NPS) that measures customer satisfaction with the overall relationship they have with a business. It is typically used to measure the satisfaction of customers with a company’s products, services, customer support, and overall brand.
Relational (relationship) NPS surveys are typically sent out less frequently than transactional NPS surveys, such as quarterly or annually. This allows businesses to get feedback on the overall customer experience, rather than just a specific transaction.
The relational NPS survey asks customers the following question:
How likely are you to recommend [company] to a friend or colleague?
Differences between transactional and relational NPS
- Transactional NPS is focused on a specific transaction, while relational NPS is focused on the overall relationship between the customer and the business.
- Transactional NPS surveys are typically sent out immediately after a transaction, while relational NPS surveys are typically sent out less frequently.
- Transactional NPS is more granular than relational NPS, as it can be used to measure satisfaction with specific aspects of the customer experience.
Which type of NPS is right for you depends on your specific needs. If you are looking to improve a specific aspect of your customer experience, then transactional NPS may be a good choice. If you are looking to get a more holistic view of your customer experience, then relational NPS may be a better choice. Most companies measure both types of NPS on a regular basis.
How Can You Use Your NPS Score to Improve the Business?
Your Net Promoter Score serves as a powerful tool for enhancing your business performance and understanding the bottlenecks in customer satisfaction. By leveraging your score effectively, you can drive positive changes and achieve long-term success. Here are some suggestions for you to make the most of your Net Promoter Score results.
Aim for a Higher NPS
Aiming for a higher score should be a priority. As you actively work towards improving your score, you are also elevating customer satisfaction and loyalty. By consistently exceeding customer expectations, you increase the likelihood of customers becoming promoters who passionately advocate for your brand.
Identify Areas for Improvement
Your Net Promoter Score provides a valuable indication of customer sentiment, but it’s essential to dig deeper. Analyze the feedback received from promoters, passives, and detractors to identify patterns and areas where your business can improve. Look for recurring themes and common pain points that customers mention in their feedback.
Address Customer Concerns
Negative feedback from detractors can highlight critical issues that need immediate attention. Prioritize addressing these concerns and resolving customer complaints promptly and effectively. By addressing and rectifying issues, you have an opportunity to turn detractors into satisfied customers who may even become promoters.
Enhance Customer Experience
Use the insights gained from NPS feedback to enhance the overall customer experience. Identify touchpoints throughout the customer journey where you can make improvements. Focus on personalization, convenience, and providing exceptional service. By consistently delivering a positive and memorable experience, you can create a loyal customer base that promotes your brand.
Engage with Promoters
Promoters are your brand advocates, and their insights are invaluable. Engage with them, seek their opinions, and leverage their positive experiences to promote your business further. They can provide valuable testimonials, and referrals, and even participate in case studies or online reviews that showcase your exceptional service.
Monitor Trends Over Time
Continuously track and monitor your NPS score over time to identify trends and changes in customer sentiment. Are there specific periods when your score increases or decreases? Analyze what might have influenced these fluctuations, such as new product releases, policy changes, or shifts in customer expectations. This information can guide your decision-making and help you adapt to evolving customer needs.
Foster a Customer-Centric Culture
Cultivate a customer-centric culture within your organization. Ensure that every employee understands the importance of customer satisfaction and contributes to delivering exceptional experiences. Empower your employees to take ownership of customer issues and provide them with the necessary training and resources to deliver excellent service.
How to Improve the NPS of Your Company?
Improving your NPS requires a holistic approach. Here are some strategies to consider:
- Foster a customer-centric culture throughout your organization.
- Train and empower employees to deliver exceptional customer experiences.
- Actively listen to customer feedback and respond promptly.
- Implement process improvements based on customer insights.
- Continuously monitor and track your score to gauge the impact of your initiatives.
Employee Net Promoter Score
Employee Net Promoter Score (eNPS) is a survey-based method of determining whether employees are happy, satisfied, and loyal to their workplace. It is based on the Net Promoter Score (NPS), which is a measurement of customer loyalty.
eNPS asks employees the following question:
How likely are you to recommend [company name] as a place to work to a friend or colleague?
Just like NPS, the eNPS score is calculated by taking the percentage of employees who give a score of 9 or 10 and subtracting the percentage of employees who give a score of 0 to 6.
eNPS can be a valuable tool for businesses to measure and improve their employee experience. By understanding how employees feel about their workplace, businesses can identify areas where they can make improvements to increase employee satisfaction, loyalty, and productivity.
Key Insights
- Net Promoter Score is a valuable metric for assessing customer experience and satisfaction.
- NPS categorizes respondents into Promoters, Passives, and Detractors, providing a clear understanding of customer sentiment.
- Aiming for a higher NPS score should be a priority, as it signifies increased customer satisfaction and loyalty.
- Analyzing the feedback from all NPS groups helps identify areas for improvement and address customer concerns.
- Engaging with Promoters and leveraging their positive experiences can further promote your business.
- Monitoring NPS trends over time helps identify changes in customer sentiment and adapt to evolving needs.
- Understanding industry-specific benchmarks is important when interpreting NPS scores.
- Businesses should consider combining NPS with other metrics to gain a holistic view of customer satisfaction.
Frequently Asked Questions about NPS
How to improve Employee Net Promoter Score (eNPS)?
Improving eNPS involves creating a positive work environment that fosters employee satisfaction and loyalty. Some strategies to consider include:
- Listen to Employee Feedback: Encourage open and honest communication. Act on employee feedback to address concerns and make improvements.
- Invest in Employee Development: Offer training and growth opportunities to help employees advance in their careers within the company.
- Recognize and Reward: Acknowledge and reward outstanding performance to show appreciation and motivate employees.
- Promote Work-Life Balance: Support work-life balance to reduce burnout and boost overall well-being.
- Promote a Positive Work Culture: Create a workplace culture that values inclusivity, collaboration, and a sense of belonging.
What is the Employee NPS question?
The Employee Net Promoter Score (eNPS) question typically asked to employees is: “On a scale of 0 to 10, how likely are you to recommend our company as a place to work to a friend or colleague?”
What is a good Employee NPS (eNPS) score?
A good eNPS score typically falls in the positive range, which means more employees are likely to recommend the company as a great place to work than not. An eNPS score above 0 is considered good, with scores above 50 often considered excellent. However, the specific benchmark may vary by industry and organization.
What is the NPS rating?
The NPS rating, or Net Promoter Score, is a metric used to gauge customer loyalty and willingness to recommend a company’s products or services. It is calculated based on responses to a key question: “On a scale of 0 to 10, how likely are you to recommend our company to a friend or colleague?” Respondents are categorized into Promoters (9-10), Passives (7-8), and Detractors (0-6). The NPS rating is derived by subtracting the percentage of Detractors from the percentage of Promoters, resulting in a score that can range from -100 to +100. A higher NPS indicates greater customer loyalty and satisfaction.
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