NPS guide overview

A Beginner’s Guide to Net Promoter Score

 

The Net Promoter Score (NPS) is a measure of customer satisfaction and loyalty that you obtain from asking customers if they would recommend your product to others. Most questionnaires ask customers to rate the product on a scale of 0 to 10, among other questions. Data from these questions help the business determine the quality of their service, such as delivery and support which allows businesses to make necessary changes to improve them. Read on to understand NPS and how it can help your business.

Why do you need NPS?

 Your customers are the biggest brand ambassadors. Therefore, if they like your product, they will be willing to spread the word to their families and friends. Once a good relationship with the brand is established, the business enjoys a positive cycle of business growth as new customers who were brought in by a positive word of mouth bring others through the same way.

NPS can seem like a complex matrix but is fairly simple when understood correctly. It allows you to determine aspects that include:

• Your growth potential
• Quality of the customer experience for your goods and services
• Organisational performance
• Brand sentiment

Note: Some companies also use this tool to measure employee satisfaction with the company’s employee policies and work environment.

 

Determining customer behavior

NPS asks your customers to give a rating for the question, ‘how likely are you to recommend us?’ This allows you to determine the level of loyalty or satisfaction. There are three types of responses. Scores between 0 and 6 are detractors; 7-8 show that the customers are passives while those that give a score of 9-10 are the promoters.

Detractors

Customers giving a score of 0-6 are less likely to recommend the brand. However, they are also likely to damage the brand reputation through negative word of mouth. These customers will not stick around for another purchase and will persuade others not to buy from you.

Passives

Passive are less likely to recommend your product actively. However, they are also unlikely to spread a negative word about the product. While they are not included in your calculation, these customers are close to being promoters (especially if they give a rating of 8). Therefore, it is essential that you look at ways you could win them over to become promoters.

Promoters

Those customers that have given a rating of 9-10 are the most enthusiastic. They are likely to act as brand ambassadors, enhance your brand reputation and refer others to buy from you. This is also the group that helps fuel your company’s growth.

 

How to calculate Net Promoter Score

Net Promoter is expressed as a number from -100 on the lower side and 100 on the upper hand. The score is negative if there are more detractors than promoters in your company. However, if the result is the other way round, it is positive. Here is an example of how to calculate a NPS score:

1. Survey your clients by asking them, ‘On the scale of between 0 and 10, how likely are you to recommend us to a friend?’ (Repuzen does this for you)
2. Categorise respondents according to the score; detractors, passives and promoters
3. Disregard the passives and subtract detractors from the Promoter responses to determine the Net Promoter Score. Remember, the score can be anything between -100 and 100.

Here is an example

If you surveyed 100 customers and 40% were detractors and 50% were promoters, your score would be 50% – 40% =10. Passives affect the percentages of either side but are not included in the final calculation.

Good and bad scores

Good Score:

Any score of 30 and above is considered good. However, anything above zero is positive for the brand. If you can hit 50, this is excellent. Unfortunately, while you can increase your NPS, factors beyond your company may affect your score. If your industry is unique, the products are quite similar across the sector (there is little differentiation) and prices have little differentiation, your score may not go high even with company efforts.

Bad Score:

If your score is below zero, it means you have more detractors on your market. This may be interpreted in many ways. For example, a score of -4 may look bad when looked at in isolation. However, if the industry average is -6, a -3 score is better. However, even in such a case, the company still needs to do a lot to reduce the number of customers that are very negative about the brand and increase enthusiastic ones.

Utilising your own NPS Score

Understanding your NPS can help your company gain insights on how customers perceive you. Be sure to determine your own industry average NPS and then you can see how your company fits in with your own rating.

Don’t forget, NPS scores can be used as part of other surveys to help determine why customers love or hate specific areas of your business. You can use the Repuzen platform to get business reviews and determine your own NPS score, it’s super easy as we automate most of the process!

Reaching out to detractors

One of the important things for you to do is to reach out to detractors and determine why they are being negative. Negative online reviews can help determine the exact reasons why the customers are dissatisfied. Some reasons may be as simple as a delay in service delivery to more significant factors such as faulty equipment or poor customer service. Reach individual customers to resolve the problem where possible. The Repuzen platform helps you track which customers have been contacted so you know where to focus next.

Also remember, business reviews from customers who give 2.5 to 3 ratings can be easily turned around by resolving minor issues about your product or service. This group is easier to turn to promoters than detractors are, especially those with very low ratings (1-3).

If you need help getting your NPS score and more reviews why not give Repuzen a whirl?

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