Net Promoter Score (NPS) is a customer loyalty and satisfaction metrics tool, created by Fred Reichheld in 2003, that measures customer experience and predicts your company’s growth.
NPS has a single motivation: asking customers how likely they are to recommend your brand, product, or service to someone else.
To achieve this goal, you have to ask your customers a simple question: “How likely are you to recommend our product or service to a friend or colleague, on a scale of 0-10?”
Why Is It Important?
NPS can be used as a predictor of business success and growth. Asking customers about their probability of recommending your product can give you a lot of insights from the product itself to your onboarding and customer service. As you can imagine, satisfied customers will likely become promoters of your product.
If you are thinking this feels a little like a Yelp review, think again. According to the 2015 Global Report by Nielsen Holdings, general recommendations directly influence at least 30% of purchase decisions. Furthermore, personal referrals or recommendations generate the most trust in 83% of customers.
How Do You Measure NPS?
NPS is a scale of 0-10 divided into three types of customers: promoters, passives, and detractors. This scale is based on the direct relation between the customers' answers to the survey and their behavior.
Promoters (score of 9 and 10): this group represents the most loyal customer who will very likely become evangelists of your brand. Your promoters will help you grow by recommending your product to their friends and colleagues.
Passives (score of 7 and 8): these customers show a more passive behavior towards your brand. They won’t be recommending your brand, but will also not damage it with negative feedback. It’s very important to know if they’re closer to being a promoter or a detractor to understand how to engage with them.
Detractors (scores from 0 to 6): this group of customers doesn’t show any positive behavior and will not be recommending your products to others, and probably won’t repurchase it. These customers can hurt your brand with negative word of mouth.
Net Promoter Score is measured by detracting the percentage of detractors from the percentage of promoters:
NPS = % PROMOTERS - % DETRACTORS
NPS is expressed as a number from -100 to 100. The score will be negative when there are more detractors (customers who are not willing to recommend your brand and will possibly hurt it) than promoters (your most loyal customers), and positive if you have more promoters than detractors.
NPS results tend to break out into four areas:
Obtaining an NPS between -100 and 0 indicates that there needs to be some changes made in order to improve your customers’ experience.
An NPS of 0-30 is a good result but there still is some room for improvement.
A great NPS will be somewhere between 30 and 70. You are doing great, but you can aim higher.
NPS of 70 or more indicates that you are offering your users an amazing experience. Keep up the good work!
Are you ready to start measuring your NPS? Here you have more information on How To Set Up Your NPS Survey With FROGED.