Assessing customer satisfaction is crucial and has become an important part of driving growth for a variety of businesses. A Net Promoter Score (NPS)® is one popular way of measuring customer satisfaction in a way that’s easy to understand. It will help you set benchmarks to get a clear picture of your performance with your customers. Let’s start with the basics.
What is a Net Promoter Score (NPS)?
A Net Promoter Score (NPS) is a customer satisfaction benchmark that measures how likely your customers are to recommend you to a friend or colleague. It might not be the only form of customer satisfaction survey, but NPS has been dubbed the “Ultimate Question” by Fred Reichheld, because it’s the question. Although there are sometimes variations, they always boil down to the same question: “On a scale of 0 to 10, how likely are you to recommend [Company] to a friend or colleague?” The NPS itself is a numerical value derived from the answers to this question. The Net Promoter Score meaning is really how loyal your customers are to your company and your product.
You can also include a simple follow-up question asking respondents to explain their ratings. This might help you gain a deeper understanding of your NPS score.
How to Categorize Responses to the NPS Question
Once you’ve got your NPS survey ready to go and sent out to customers, it’s important to know how to categorize and analyze the data. Respondents can be broken down into three categories: promoters, passives, and detractors.
Promoters are customers that have selected a rating of either 9 or 10 on your NPS question.
Passives have selected either a 7 or 8. Detractors are customers that selected a value between 0 and 6. Keep reading to learn a bit more about each type of respondent.
When you go to collect the survey data, you always want to find a large percentage of promoters. Promoters are the customers who will really help build your business, and they can be defined by a few key characteristics:
- They’re loyal. Promoters are going to stick with your brand or company, and they’re going to want to bring their friends or colleagues on board, too.
- They’re enthusiastic advocates. These are the people who always have something good to say about your business, and they’re major drivers of word-of-mouth advertising. They’ll actively provide positive feedback, which can help combat any possible negative comments.
- They’re stable. Promoters are unlikely to leave for arbitrary or trivial reasons. They’ll stick around through renewals, expansions, and often even a raise in prices.
Passives can be tricky to understand, since they often sit right in the middle of the feedback from that NPS ultimate question. Plus, they don’t usually have enough of an effect to drive you up or down just on their own. However, there are still some key things to keep in mind when you identify the passives in your customer base:
- They’re satisfied. Not happy. If a customer is only satisfied with a product, that doesn’t mean they’ll necessarily recommend it to someone else. This neutral level of satisfaction also leaves them open to alternatives — if a better offer came along, either in features or pricing, these customers might be convinced to jump ship.
- They’re not necessarily loyal. Like mentioned above, passives are not only open to alternatives but often likely to switch brands. They might even be keeping an eye out for something better coming down the pipeline. Often it takes heightened engagement to earn their loyalty, to try and show that your company is more than just its services or products.
- They’re price sensitive. Since passives don’t usually have any sense of strong brand loyalty, their decisions about which products to use often comes down to price. This can lead to churn if you’re not the low-cost leader in your industry. Engaging with customers on this topic can also help to see if their concerns boil down exclusively to pricing or if there’s something else in play.
Detractors, of course, are the ones who have given you the lowest satisfaction ratings. Their feedback and actions can have major impacts on your business, so it’s important to understand some of their key features:
- They’re likely to leave. Soon. According to statistics, nearly half of detractors will leave within the next 90 days, or sooner. To reduce that possible churn, reach out to your detractors and see if it’s possible to directly address their concerns.
- They’re louder than promoters. People are often more likely to share negative experiences with their friends and colleagues rather than positive ones. On top of that, we tend to remember hearing about bad experiences or bad news more so than good experiences or good news. All of that means that your detractors may have more of an effect on your brand than your promoters.
- They can be convinced. If you address concerns directly and immediately, your detractors can become your next promoters. Think about it: both types of customers are vocal and passionate consumers of your product. If you can match the needs of your detractors, they might start singing your praises.
How Do I Calculate My NPS?
Once you’ve broken respondents into three categories — promoters, passives, and detractors as outlined above — you take the percentage of promoters and subtract the percentage of detractors.
The resulting NPS will fall inside a range of -100 (which would indicate all detractors) and +100 (which would indicate all promoters). In general, you’re looking for a positive score, since this means you have more promoters than detractors.
You might wonder why passives aren’t included in the formula for calculating an NPS. Usually, passives do very little to contribute to either positive or negative satisfaction rates. It’s much more important to focus on those customers who are active and vocal about their opinions.
Why Does the NPS Question Matter?
NPS is often so widely adopted — and the NPS question is such an important one — because it’s considered an indicator of potential business growth and general growth opportunities. Not only that, but it’s easy to understand, and it’s a metric that can be shared easily with frontline employees. These team members, across various departments, can then utilize the data from the NPS question, which can have a measurable impact across your company. Here are some places NPS can make a real difference if implemented thoughtfully.
Chief officers of your company can take a look at the NPS as a key metric to answer the question, “What is the health of our organization?” It can impact the entire company, and it’s highly predictive as well, providing a clear picture of both the company’s current state as well as future possibilities.
Customer Success & Support
NPS should be a part of routine account engagement for Customer Success and Support departments. It’s a proactive method of identifying issues that may lead to reduction in product usage or customer churn. If Customer Support teams make use of the NPS ultimate question, they can locate and triage issues customers might be having before they become overwhelmingly significant and damaging to your company’s growth. Keeping track of this metric can also help reduce support possibly needed in the future.
Products & Engineering
Answers from the NPS question can provide feedback on sentiments surrounding not only the brand as a whole but also any specific products. These insights can be used to help identify individual trends or themes associated with various products, therefore helping to provide a clearer picture of usage and revenue data.
Marketing & Sales
NPS can provide crucial insights for both marketers and sales representatives. Marketers can use the NPS question to help determine whether or not key messaging is resonating with customers. Also, by combining NPS data with other customer information, marketers can figure out which customers with certain key traits are responding positively to the service or product.
For sales representatives, the NPS question can help them understand motivations of possible future buyers and take the positive feedback to bolster sales calls. Even the negative feedback can be helpful for sales representatives to identify potential objections that might surface on calls with potential leads.
Take Your NPS Further
Businesses often focus heavily on the NPS question, and how they can possibly go about improving scores. And while the NPS is referred to as the “Ultimate Question” for a reason, your NPS value isn’t necessarily your silver bullet for customer satisfaction if you’re not using it properly.
Once you have your NPS value, it’s important to take benchmarks into account, both those external ones from your industry as well as internal ones from your past performance. If you’re ready to dive in, check out our guide on what makes a good NPS score, including the best benchmarks to pay attention to.
If you want to keep all your knowledge of the NPS ultimate question in one place, you can download our NPS Cheat Sheet that includes not only definitions and terms, but also some extra tips for calculating and analyzing your NPS value.
To learn more about Net Promoter Score (NPS), check out our cheat sheet. In this NPS Cheat Sheet you will find a complete description of NPS and key terms to enrich your Customer Success vocabulary. You will also learn how to administer and calculate NPS, recommended follow-up actions for each segment, and other best practices.
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