The NPS is an indicator that measures customers' likelihood to recommend a company's products or services to others, reflecting customer loyalty.
Net Promoter Score (NPS) is a management tool used to assess customer loyalty towards a company.
First developed in 2003 by Bain and Company, it is now used by millions of companies worldwide, across various industries, to measure and monitor how they are perceived by their customers.
Calculating the Net Promoter Score is straightforward: subtract the percentage of detractors from the percentage of promoters. For example, if 10% of respondents are categorized as detractors, 20% are passive, and 70% are promoters, your NPS score would be 70 - 10 = 60.
But how do you identify detractors? How do you distinguish them from passives and promoters?
The calculation scheme for the Net Promoter Score dictates that detractors are those who responded to the survey with a score between 0 and 6: they are dissatisfied customers who can harm the brand and hinder its growth through negative word of mouth. Passives, on the other hand, are those who responded by assigning a score between 7 and 8: they are satisfied but not enthusiastic customers, susceptible to offers from competitors. Finally, promoters are those who responded by assigning a score between 9 and 10: they are enthusiastic and loyal customers who will continue to buy and grow y our business by recommending it to others.
Now that we understand how the Net Promoter Score calculation works, we need to identify what can be considered a good NPS.
In general, a good Net Promoter Score can vary depending on the industry your company belongs to. However, Bain & Company suggests the following evaluation framework:
Above 0 is satisfactory
Above 20 is very good
Above 50 is excellent
Above 80 is top class.
However, each industry has its specific benchmarks. Therefore, it is important not to consider the NPS score in isolation but rather focus on how it compares to competitors in the market and how to improve it over time.
Understanding how to calculate the Net Promoter Score and whether your NPS is valid or not, we share how to use this metric to measure various organizational areas.
In addition to calculating the overall NPS for the organization, it is possible to monitor scores for individual products, stores, web pages, or even staff members.
Implementing NPS in marketing or customer experience strategy can help better understand the target market and see how they react to the product or service, social media campaigns, and customer service.
If the Net Promoter Score is not as high as desired, there are several strategies that can be adopted to improve it. Here are some suggestions:
Ask for feedback: the simplest way to discover how to improve your NPS score is to ask customers. Many things can be discovered through a survey, such as the presence of a specific problem that is negatively impacting the score.
Act on feedback: it's not enough just to ask for feedback, you also need to act on it. If customers say there is a problem with a service or product, you need to do your best to fix it.
Provide excellent customer service: high-quality customer service can make the difference between a customer becoming a promoter and one becoming a detractor.
Keep promises to customers: if you promise something to customers, make sure to keep that promise. Doing so can build trust and loyalty, which in turn can improve the NPS score.
Monitor and analyze results to see which areas need improvements.
The Net Promoter Score is just one metric and should not be the only tool for measuring customer satisfaction. However, it can be a useful indicator of overall relationship health.
Indeed, it is an effective tool for measuring customer satisfaction and brand loyalty, capable of identifying areas where the company is excelling and where improvement may be needed. A good NPS score is not the only indicator of success. It is important to consider other metrics and customer feedback for a complete view of performance.
The NPS is an indicator that measures customers' likelihood to recommend a company's products or services to others, reflecting customer loyalty.
The calculation is based on responses to a key question about how likely the customer is to recommend the company on a scale from 0 to 10, dividing respondents into Promoters, Passives, and Detractors.
An NPS score varies by industry, but generally, a score above 0 is positive, over 20 is considered good, over 50 is excellent, and above 80 is exceptional.
Improving customer service, listening to and acting on customer feedback, and ensuring the product or service exceeds expectations are key strategies for improving the NPS.
