What is NPS (Net Promoter Score)?
In 2003, Fred Reichheld wrote this article in the Harvard Business Review. He was dismayed by the lack of actionable data old customer satisfaction surveys provided. So Reichheld set out to find an indicator that would predict a company’s future growth and value.
His theory was simple: companies who were loved by their customers (enough to get them to recommend that company to their friends and colleagues) were more likely to grow. After two years of research, Reichheld came up with the question that would blossom into the NPS (Net Promoter Score) question.
The NPS question is:
“How likely are you to recommend this company to a friend or colleague?”
It’s so simple, yet so elegant. This question aimed to be the final arbitrator of a business’s future success.
Customers answer this question on a scale of 1-10. And then they are placed into different groups based on their loyalty levels:
- Detractors – those who ranked their experience from 1 to 6
- Passives – those who ranked their experience as a 7 or 8
- Promotors – those who ranked their experience as a 9 or 10
The goal of asking this question to your customers is to first see where they stand and then to brainstorm ways you can improve their experience and turn them into promoters (who will happily tell their friends and colleagues about your business).
Customers are given a chance to provide additional details after answering the NPS question:
This gives you an opportunity to hear actual praise and pain points from your customers about your product or service. Next, you need to take this information and act on it to raise detractors into passives and to turn passives into promoters.
How to find your overall NPS score
Once you’ve gathered NPS scores from your customers, you can use a simple equation to figure out your overall NPS score (and YesInsights will even do this part for you).
You need to take the overall percentage of Detractors and subtract it from the overall percentage of Promoters. Here’s what the equation will look like:
NPS = (Promoters/ Total Customers) – (Detractors/ Total Customers)
For example, say your company had 100 people complete the NPS survey.
65 customers answered with a 9 or 10 (65/100 = 65%).
20 customers answered with a 7 or 8.
And 15 customers answered with a 6 or lower (15/100 = 15%).
So, you would subtract the 15% of Detractors from the 65% of Promoters and your NPS score would be 50%. This is your business’s benchmark, which you actively try to improve.
You can locate this metric in your YesInsights dashboard by clicking on the individual survey you want to gauge.
NPS can’t do it alone
The NPS survey simply won’t work if you don’t follow up with your customers and proactively try to improve their experience. It’s designed as only one question so you can easily locate those who are about to churn so you can reach out in a personalized way and retain them.
Just asking the question won’t provide much real value to your business or your customers. You’ll get a new benchmark metric to track, but the effectiveness of the NPS survey is in the follow-up conversations you are able to have with your customers.
If you need an NPS survey software that can easily integrate into your emails or on your website, check out YesInsight’s 7-day trial.