What is the Net Promoter Score?

The NPS for Customer Success Managers 

 

Net Promoter Score (NPS) is a management tool that can gauge the loyalty of a firm’s customer relationships. It is an alternative to traditional customer satisfaction research and claims to be correlated with revenue growth. 

The NPS is based on one simple question: How likely are you to recommend our company/product/service to your friends and colleagues? 

Respondents answer the question on a 0–10-point rating scale, and they are categorized as follows: 

Promoters (score 9-10) are loyal enthusiasts who will keep buying and referring others, fueling growth. Passives (score 7-8) are satisfied but unenthusiastic customers vulnerable to competitive offerings. Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.  

Your Net Promoter Score is calculated by subtracting the percentage of Detractors from the portion of Promoters. The result falls within a range from -100 percent to 100 percent, which makes it possible for companies with unhappy customers – more Detractors than Promoters – to have negative Net Promoter Scores. 

 

How the Net Promoter Score works 

Using NPS to gauge customer loyalty, satisfaction, and advocacy is one of the most effective ways to grow your company. To get started, you’ll need a survey to help determine if you’re doing everything possible to retain customers. Here are some tips: 

  • Make it quick – Keep the survey short and simple, so customers don’t get overwhelmed by too much information or become confused about what they’re asked. The more streamlined your questionnaire is, the better the chance for honest responses from your clients. 
  • Ask open-ended questions – One of the best things about NPS surveys is that they allow customers to give specific answers instead of just choosing from pre-made options like “satisfied” or “dissatisfied.” This means that when someone says “dissatisfied,” for example, they might also be able to explain why (for example, lousy service). 
  • Use multiple-choice questions only when necessary – As mentioned above, asking open-ended questions allows users more freedom in their response—but sometimes, this can lead people astray by giving them too many options that may not reflect their feelings toward a certain issue directly related to their experiences using your product/service/brand, etc. For example: If I ask someone whether they would recommend my product without offering any option other than “Yes,” then obviously, they would probably say yes just because they don’t want me thinking poorly about them instead of because they truly love using it every day! Therefore, try asking fewer follow-up questions after receiving initial feedback rather than asking for details first before moving onto the next question type.” 

Qualities of NPS 

When it comes to NPS, the best qualities include: 

  • Prompt and honest feedback. The survey is quick and easy to fill out, so there’s no need to be a customer to provide your opinion on how we’re doing. In fact, anyone who interacts with our company in any way can take this survey. 
  • Anonymity. Because responses are anonymous, they’re less likely to be influenced by social pressure or fear of repercussions from management. 
  • Free access. The NPS survey is free for all employees at your company (including you!) who want to take it! Just send an email blast or post on Slack once you’ve set up the survey link, so everyone has access—you’ll find everything else is automated after that point! 

Reasons to use the Net Promoter Score. 

You can use the Net Promoter Score to measure the relationship between you and your customers regularly, which helps you know where you stand with them. You’ll be able to see if they’re happy with their experience or if they have complaints. NPS will also help you identify areas of improvement that could make your customers happier, leading to higher customer satisfaction and loyalty. 

Analyzing the Net Promoter Score 

To get started with measuring NPS, you first need to identify your customers. If you already have a customer list and some way of tracking them (like an email marketing tool or CRM), great! If not, it might be time to start thinking about building one. Once you’ve got the data in hand, there are two main ways to analyze it: 

  • Customer satisfaction: You can gauge how satisfied your customers are with the service they’re getting from you by asking them how likely they’d be willing to recommend your product or service (on a scale of 0-10). A score between 9 and 10 means that this person would tell friends about his experience with your company; anything below eight (8) means he likely wouldn’t recommend it. 
  • Customer loyalty: This metric measures how long customers stay loyal before leaving for another company or brand. To calculate this number, subtract the total number of churners from those who stayed with their current provider over the past 12 months (typically calculated as monthly average revenue per user). In other words, if 20% churned but 80% remained loyal during this period, then 20%/120% = 16%. 

In Conclusion 

So, what is the Net Promoter Score? It’s a way to measure customer loyalty. It has been shown to correlate with customer retention and growth. And as we’ve seen, it’s simple to calculate and easy for your customers to participate. If you want to track how much your customers are engaged with your product or service, then you should consider using NPS. 

Learn more about what NPS is and how it’s calculated here: 

With this article, we have shown you how beneficial measuring NPS is, but this, like any other KPI, has its weaknesses. To learn more about it, check out what Rick Adams, our CEO, and Founder, the author of the Practical CSM Framework, didn’t like about NPS: https://practicalcsm.com/what-i-dont-like-about-nps-rants-musings-with-rick-adams/. 

This training asset is worth 17 CPD Minutes