Net Promoter Score NPS graphic - VHT

What Is Net Promoter Score (NPS) And How Good Customer Service Improves It

7 min to read · By Mindful

The Net Promoter Score (NPS) is a metric widely used by many of the world’s global market leaders to measure where they stand with their customers. At first glance, the NPS metric is relatively straightforward—customers are either satisfied with your brand or company, or they aren’t. But examined closely alongside other customer experience metrics, NPS can unlock significant actionable insight.

Our “What’s That Stat?” series explores some of the most important customer experience (CX) metrics and what they mean for you and your customers. Learn more about how examining NPS can help you target ways to improve customer experience.

What is NPS?

In the simplest terms, NPS shows your company the percentage of customers who would recommend the company to people they know. You’ve no doubt responded to some NPS surveys yourself.

Typically, these queries include variations of the question, “How likely are you to recommend this company (or product or service) to a friend (or coworker or family member)?” Usually, marketing analytics collects NPS responses using a scale of 0 to 10 at various points in the customer journey. Low scores equate with poor CX, and high scores signal exceptional CX.

NPS is popular partly because of its simplicity. Customers can answer quickly, and companies can easily track and understand their responses. Brands that use NPS often use it to establish benchmarks, create employee incentives, predict future gains or losses, and hone strategies like word-of-mouth marketing.

Why is NPS important?

NPS is important because it gives the most direct answer to how a consumer feels about your brand or company. Each of the most common customer satisfaction metrics (NPS, CSAT, and CES) can be boosted through positive customer experiences. Investments in enhancing client relations, improving contact center operations, and reducing customer journey frustrations all lead to better CX and improved NPS.

How do you calculate NPS?

Customers are asked to rate (on a 0–10-point scale where 0 is the lowest and 10 is the highest) whether or not they will recommend you to others. Then you group the responses and label the group as detractors, passives, and promoters.

  • Detractors: not happy, most likely to negatively speak about your brand or service
  • Passives: could care less and may switch brands
  • Promoters: the ideal happy, satisfied, loyal customers

To calculate your NPS, you take the (Number of Promoters – Number of Detractors) / (Number of Respondents) x 100. So, if out of 200 respondents, you had 80 promoters and 20 detractors, then you’d have an NPS of 30:

Promoters (80) – Detractors (20) ÷ Respondents (200) x 100 = NPS (30)

What types of surveys collect NPS feedback?

There are two main types of surveys used to collect NPS data, with their own advantages and disadvantages.

A text survey lets you capture your consumer’s experience as it’s happening. A quick pop-up SMS-based survey will ask an NPS-style question while the customer is still on the website (and usually post-purchase). With an open rate of almost 100% and a response time hovering around three minutes from delivery, text surveys are sure to get a customer’s full, immediate attention. The disadvantage is that text surveys are limited (in character and in tone), so anything besides a quick question will not be served well by a text survey.

An email survey can go a little deeper, and maybe ask an assortment of NPS questions (Would you recommend our brand to others?) combined with open-ended follow-up questions (What could we do to make the experience better?) that give you a better insight into the customer’s experience. The disadvantage is the open rate—according to MailChimp, the average open email rate across industries is just over 21%.

How should you read your NPS results?

How do you read NPS results effectively so that the data can be analyzed correctly without losing focus on your ultimate goal of improving customer satisfaction?

1. Look at data in segments.

Don’t stress about analyzing the big picture—look for just one particular group’s data (marketing, call center, design) and analyze that. This will help to segment and identify where the pain points are. If your scores are low overall, but you find out they’re really dismal in call center relations, then you know that it may be just one segment of business that needs to be addressed, and not bad news company-wide.

2. Keep tracking performance over time.

You have to track your NPS over time because your NPS score will change over time as your customer experience goes through changes.

This is also a good indicator of your brand’s perception over time. If there’s a rise in detractors over time, then your brand may be losing value out in the marketplace.

3. Close the loop.

Don’t just receive feedback—act on it. That’s the customer’s expectation: 89% of customers want to leave feedback, but less than half believe a company actually acts on their suggestions. By “closing the loop” with follow-up surveys (Tell us what we can do to improve your experience?) and customer advocacy programs (Thanks for taking the survey, here’s a 15% off code), you have the opportunity to not just receive feedback, but increase your promoters over detractors ratio.

Use a contact center voice of customer solution like Survey Dynamix to receive customer feedback in real time, allowing you to close the loop and act in minutes.

What is a good NPS score?

An ideal overall NPS goal is a positive percentage where you have mostly promoters, some passives, but few detractors. According to global NPS standards, a net promoter score above 50 is good, and one above 70 is outstanding. SurveyMonkey’s global benchmark data shows the average NPS score is +32, with the top quarter of organizations showing an NPS of +72 or more.

How can you improve your NPS score?

There are three surefire methods to improve your NPS score—and naturally, they center around prioritizing the customer.

1. Empathize with your customer.

Buy your own product. Sign up for your own service. Experience your customer’s journey through your product or brand, and let that experience guide the questions you want to ask and the action you want to take to improve your NPS scores.

2. Make your goal a customer-centric experience.

Make sure every department—from marketing, sales, design, and support—has prioritized the customer’s needs over all other objectives. Seeking out ways to make the customer feel appreciated and respected will consequently raise your NPS scores in the long run.

3. Listen to detractors.

The customer who doesn’t like you? Find out why. See where the customer’s pain point occurred and do everything in your power to fix it. This will also help the ratio of promoters to detractors and raise your NPS score.

What are the limitations of NPS?

NPS helps measure overall customer perception, but it’s important to understand the limitations of this metric. Often, companies zero in on NPS and focus only on how the metric moves up and down. This is not surprising. Research, such as this London School of Economics study, indicates that an average NPS increase of 7% correlates with roughly 1% growth in revenue.

Sometimes, companies have an outsized response to a falling NPS, establishing committees to get to the bottom of the issue and holding emergency meetings. Panic can set in. However, considering NPS in a vacuum does not offer much in the way of usable insight.

While NPS is powerful in its simplicity, it is, in fact, a simple metric. You’re gaining information about how a customer felt at a precise moment in time but little information about why they felt that way.

To this end, it’s vital to examine NPS in relation to other key CX metrics. It can be especially insightful to consider NPS in the context of Customer Satisfaction (CSAT), Customer Effort Score (CES), and Average Time Resolution (ATR).

Here’s a quick refresher on what these metrics measure, taken from other articles in our “What’s That Stat?” series:

  • CSAT measures how products, services, and customer experiences meet or exceed customer expectations.
  • CES is a CX survey metric that allows companies to analyze the ease of customer interactions and resolutions during a request.

You’ll gain much more helpful, actionable insight when you pair NPS with these other metrics to get a better understanding of why customers fell into detractor, passive, or promoter NPS categories.

Summing up

If you’re seriously looking at big data for ways to improve and connect with customers across the board, then every team in your company should be looking at all data—don’t rely on the first positive data set you encounter.

A combination of the top three metrics is always the safest and most comprehensive way to know your customer—and NPS scores are a big part of that. Know how to use them, when to use them, and ways to improve them, and then get to work on raising your CES and CSAT scores. And good luck.

 

This post was originally published in October 2020, and has since been updated.

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