Aug 16, 2018

A Net Promoter Score, often abbreviated as an NPS score, is used by businesses to measure the overall customer experience, acting as an indicator or predictor of long-term loyalty and business growth.

This information is acquired via a single-question survey which aim to assess an individual’s willingness to recommend a company’s products or services to others, a proxy introduced by Fred Reicheld and Bain & Company. Answers are typically ranked within a 1-3, 1-5, or 1-10 framework, with the smallest number correlating to the lowest likelihood of referral, and the largest number marking the highest.

For example:

Conduct a NPS survey using Dynamic Yield’s template for Satisfaction Questionnaire

Responses are categorized into three distinct groups:

Detractors: Are those who scored unlikely to recommend a brand. These individuals may never purchase from the associated company again, and may even damage it’s reputation by sharing their negative experience online with friends, family, or colleagues.

Passives: Are those who scored neutral when it came to recommending a brand. These individuals may have been somewhat satisfied with the experience they shared with the company, but they certainly won’t be leaving any positives reviews or sharing anecdotes of superior service.

Promoters: Are those who scored very likely to recommend a brand. These individuals were happy with their overall service and are destined to be repeat buyers, as well as advocates of the brand’s products and services.

Net promoter score calculation

After deploying a NPS survey, which typically happens on a regular, quarterly interval, companies can calculate their results by taking the percent of promoters and subtracting them by the % of detractors, generating a score ranging from -100 – +100. The larger the difference is between the number of promoters and detractors, the higher your company’s NPS.

% of Promoters — % of Detractors = Net Promoter Score

For example, if 15% of respondents are Detractors, 10% are Passives and 75% are Promoters, your NPS score would be 75-15 = 60.

In determining what is a good net promoter score, there has been a lot of research done across industries by the Temkin Group as a part of their ongoing Benchmark Study on the topic. Here are just a few:

Retailers – 31
Hotels & Rooms – 31
Banks – 26
Health Plans – 18
Streaming Media – 41

It’s important to remember that due to the simplistic nature of these surveys, much can be lost in translation when it comes to determining accurate results. In order to derive deeper insights, a number of additional questions or survey methods, such as the CSAT, should be employed. Therefore, the NPS should be used as just one KPI for measuring overall customer happiness or loyalty.

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