Knowingly or otherwise, virtually everyone working in technology will have come across Net Promoter Score℠ (NPS®), but few really understand what it means, how it is calculated, and how improving it helps an organization.
Beyond software and tech workers, perhaps hundreds of millions of people have been exposed to NPS without knowing it. A dead giveaway that a company is likely using NPS in their customer satisfaction strategy is a survey question similar to, “How likely is it that you will recommend [company/brand] to a friend?” followed by a 0-10 rating scale.
Net Promoter Score is a simple, yet powerful metric to measure customer experience and satisfaction. It is a core customer experience metric for many software companies. It is easy to track, and easy for everyone in the organization to understand. It is equally easy to get a pulse on customer experience simply by comparing NPS from period to period. Put simply, the higher the score, the better the customer experience.
Calculating NPS is relatively straightforward. On a regular basis, customers are asked via email, SMS, or other channels a key question, as mentioned above:
“How likely is it that you will recommend [company or brand] to a friend?”
Customers answer on a scale from 0 to 10. Respondents are then grouped as one of the following:
- Promoters (9-10): Loyal enthusiasts who are likely to keep buying and to refer others.
- Passives (7-8): Satisfied but unenthusiastic customers vulnerable to competitive alternatives.
- Detractors (0-6): Unhappy customers who are likely to damage your brand and impede growth through negative word-of-mouth.
Add up the total number of respondents for the survey period. Calculate the percentage of Detractors and the percentage of Promoters; ignore the Passives. Subtract the percentage of Detractors from the percentage of Promoters to find your Net Promoter Score. It ranges from -100 to 100.
As an example, let’s say you have 1000 survey responses. Out of those there are 442 Promoters, 313 Passives, and 245 Detractors. So, 44.2 minus 24.5 yields a NPS of 19.7. Not bad: Bain & Company (creators of NPS) suggest:
- Anything above 0 is good
- Above 20 is great
- Above 50 is excellent
- Above 80 is the best of the best
Net Promoter®, NPS®, NPS Prism®, and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld. Net Promoter Score℠ and Net Promoter System℠ are service marks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.