What is NPS (Net Promoter Score)? 😊 How to track them?

Positive customer experiences are essential for successful brand-customer relationships, and NPS provides a valuable tool for tracking progress. The Net Promoter Score is a well-established methodology for measuring customer loyalty through direct feedback. Our comprehensive guide delves into the concept of NPS, its calculation, and its numerous benefits to your business.

The Net Promoter Score (NPS) is a metric used to measure customer loyalty, satisfaction, and enthusiasm for a company by asking: “On a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?”. 

NPS rates the likelihood of a customer recommending a company or product to others.

Respondents provide a rating between 0 (not at all likely) and 10 (extremely likely), segment them as: 

• Promoters (scores 9 or 10): who are loyal and enthusiastic customers. 

• Passives (scores 7 or 8): who are content but not enthusiastic enough to be promoters. 

• Detractors (scores 0 to 6): who are dissatisfied and unlikely to repurchase, potentially discouraging others. 

  

NPS segments customers into three groups: Promoters, Passives, and Detractors.

The company's NPS score ranges from -100 to +100, calculated based on these categories. Higher scores, closer to +100, indicate better customer loyalty. Aggregate NPS scores guide improvements in service, support, and delivery for enhanced customer loyalty and satisfaction.

A high NPS predicts business growth, indicating a healthy relationship with customers likely to promote the brand, fuel word-of-mouth, and generate positive growth cycles. The NPS system empowers businesses to: 

• Understand what they're doing well and the areas for improvement, through follow-up questions as part of the standard NPS survey.

• Monitor and measure a metric over time to create internal benchmarks. 

• Rally the company around one pivotal goal - increased customer enthusiasm.

Calculate your NPS score by subtracting the percentage of Detractors from the percentage of Promoters. For example, if 10% of respondents are detractors, 20% are passers, and 70% are promoters, your NPS score would be 70-10 = 60. 

Subtract the percentage of Detractors from the percentage of Promoters to determine your overall NPS.

The NPS ranges from -100 to +100, with scores above 0 indicating more Promoters than Detractors. Top-tier companies score 70 or higher, but smaller businesses can also achieve high scores as well. 

Scores below 0 mean more Detractors, with a negative NPS indicating a need for improvement. Comparing scores to industry benchmarks helps you interpret NPS more accurately, but when you get a negative score, the business needs serious work to do to reduce the number of unhappy customers.

NPS helps brands and creators build better products and identify areas for improvement

There are two types of Net Promoter Score (NPS) survey questions for business:

Relational NPS surveys are deployed quarterly or annually. The objective is to regularly measure customer sentiment and grasp their general perception of your company. This data can be used to check the health of customers year-over-year and provide a benchmark for company success.

Transactional NPS surveys are sent out after the customer interacts with your company (i.e.- a purchase or support call). You can use it to understand customer satisfaction at a more granular level and collect feedback on a specific topic. Use both types of NPS surveys to understand your customers at macro and micro levels.

To create effective NPS surveys, utilize NPS software or a Form Builder such as Formo. Here are some common NPS survey questions you can use:

Begin NPS surveys with basic demographic questions such as age and income to assist with segmentation during analysis. Avoid unnecessary questions if the data is already available in CRM or customer databases. Fewer survey questions generally lead to better response rates, especially in privacy-focused Web 3

The NPS question is the primary measure of your NPS score. Additional questions aid in data analysis and facilitate follow-up with respondents to address their feedback.

The Net Promoter Score questions

With an open-ended question, ask the customer the reason for their score. This helps you identify the factors that drive Promoters and Detractors in your responses. 

Reasons for Net Promoter Score

Ask respondents for suggestions on enhancing their experience, which is useful for closing the feedback loop. Knowing this expedites issue resolution with the customer. Note that in some cases, both questions elicit the same response. For instance, if a low score reason is "long call waiting times," the improvement suggestion would likely involve "shortening wait times."

Customers can suggest ways to enhance the customer experience

Not everyone is willing to talk about their issues. Depending on how your survey was distributed, you may or may not have that customer’s email or phone number, so remember to ask for consent. Don’t ask for information you already have.

Ask for permission to follow up with customers

NPS predicts future business growth or decline by measuring the likelihood of future behavior based on customer experience now. Similar to sonar detecting icebergs for course correction, NPS alerts to issues at individual and macro levels. 

Here’s how to read your NPS results after running the survey and collecting data:

Initially, focus on collecting NPS data to uncover insights. As you advance, leverage segmentation to analyze scores across various customer segments, such as age, gender, or spending levels. Data segments enhance your understanding and allow tailored approaches for different customer groups.

NPS is a real-time metric, but its power lies in tracking trends and fluctuations over time. While high response rates are desirable, only some surveys yield many respondents. Use those with high response rates as benchmarks for future improvement. Once you understand how NPS changes over time, investigate contributing factors to make informed decisions.

The value of NPS is more than the score, it's the insights from follow-up questions that also matter. Close the feedback loop with customers to understand their context and reasons for their score. Use one-to-one interviews, follow-up sessions, and other methods to address specific issues, make improvements, and maintain a customer-centric focus.

Enhance the customer experience and drive growth with Formo’s Form Builder

An NPS survey gives a business a quick and familiar way to measure customer satisfaction. Formo’s Form Builder is a marketing tool that empowers brands and creators to uncover valuable insights into customer sentiments, enable informed decisions, and drive product-led growth. 

Net Promoter Score data provides clear insights into customer loyalty by identifying Detractors, Passives, and Promoters in your target market. Creating NPS surveys enables businesses to enhance the customer experience, refine service delivery, guide product enhancements, and showcase their commitment to customer satisfaction.

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