Feature
The Net Promoter Score (NPS) is one of the most common customer experience (CX) metrics used to measure customer loyalty and satisfaction by asking, “How likely are you to recommend this product to someone else?”
Many organizations and customer experience professionals use the NPS in conjunction with other industry-standard CX metrics including Customer Satisfaction Score (CSAT), Customer Effort Score (CES), Customer Lifetime Value (CLV) and Customer Churn Rate.
“The NPS is the most accurate measure of customer satisfaction and the likelihood of recommending a product to friends, colleagues and their professional network,” said Paul Staelin, chief customer officer at Trifacta. “Even better, an NPS gives CX professionals a data-driven measurement of the success of our customer engagement and of the product itself.”
The Benefits of Using Net Promoter Score
The benefits of using the Net Promoter Score can include:
- Determining your customers' level of satisfaction with your product or services
- Deploying customer experience metrics simply without a big resources and time grab
- Using data-driven customer experience feedback to drive action
- Sharing your positive feedback publicly with customers and prospects
The Net Promoter Score is the benchmark for customer experience. This is especially true, he added, for software as a service (SaaS) providers who measure how customers perceive businesses, according to Staelin.
“The score,” Staelin added, “indicates customer loyalty and asks one important question, ‘how likely are you to recommend my product to someone else?’ In today’s competitive market for enterprise technology organizations especially, entire CX programs are built around improving this metric.”
Related Article: What Is a Net Promoter Score? And Why You Should Know
How Do You Calculate Net Promoter Score?
Defining the Net Promoter Score is the first step. If it's right for your organization’s customer experience team, here's how you can make an NPS calculation:
Calculating NPS is all based on the question, “how likely are you to recommend the product?” Brands offer respondents the choice of a score between 0 and 10; 0 means "not likely at all," and 10 means "very likely and highly satisfied."
Net Promoter Score Definitions
- Promoters answer with a 9 or 10.
- Detractors answer with a score of 6 or lower.
- Passives answer with a 7 or an 8.
When calculating the final score, subtract the percentage of detractors from the percentage of promoters, and you will be presented with your NPS. For example, if 20% are detractors and 80% are promoters, your NPS score is 60. The best score would be 100, and the worst score would be -100.
What’s a Good Net Promoter Score?
“In my opinion, a good NPS score falls above 20%, he said. “However, for enterprise technology, I believe 30% is world-class since companies buying technology for business services are notoriously demanding."
For example, Trifacta’s NPS currently falls around 84%, scoring even higher than iPhone’s "famously positive CX," according to Staelin.
In order to be a successful enterprise technology solution, create CX programs that will get your NPS much higher, Staelin added. The market is incredibly competitive, so retention and continual successful use cases of your product have become more important than ever before, he said. “With that in mind, most technology companies aim to have an NPS of 30,” Staelin said. “We shoot for a score over 50.”
Related Article: How to Measure Customer Experience Beyond Net Promoter Score
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How Does Net Promoter Score Procedure Work?
Brands can choose a variety of NPS deployment options. You can gather responses from a variety of sources, which can include an online survey, email solicitation, checkpoints in an online digital customer experience or other online arenas such as ecommerce websites. SurveyMonkey lays out the steps to obtain your NPS:
- Enter all of the survey responses into an Excel spreadsheet
- Break down the responses by Detractors, Passives, and Promoters
- Add up the total responses from each group
- Take the group total and divide it by the total number of survey responses
- Subtract the percentage total of Detractors from the percentage total of Promoters
Real-World NPS Usage
Staelin said his teams group respondents into three categories:
- Promoters, the most loyal customers
- Passives, those happy with the service but not likely to actually promote offerings
- Detractors, customers who are not happy with the product
“The purpose of grouping customers by product satisfaction helps us to continually contextualize the feedback of our customers so we can identify the things that make our happy customers happy and those that make our unhappy customers unhappy,” Staelin said. “This feedback allows us to target where to improve or modify our CX efforts.”
What Is Your Key Driver Analysis for NPS?
If the Net Promoter Score is part of your customer experience program, you need to fully understand what is driving the metric, or your key driver analysis, according to Howard Lax, Ph.D., principal director, customer experience consulting at Forsta. The driver analysis will identify, quantify and prioritize the areas which businesses need to improve performance to enhance their overall loyalty scores. This is the factor that drives action, Lax added, brings the metric to life and helps build a stronger CX program.
Why Simple Is Good for Net Promoter Score
The simplicity of the NPS has, in part, given rise to its massive popularity, according to Lax. Apart from “overall satisfaction,” there is no loyalty metric cited and used more frequently than NPS. “This simplicity and popularity is part of the reason that the C-Suite is generally accepting of NPS,” he said. “For board members, senior executives and members of the C-Suite, the NPS provides the promise that all you need to do is ask one question to gauge insight into brand loyalty.”
In recent years there has been a greater understanding of the limitations of NPS, the pros and cons, and reasons why it should not be used as the be-all-end-all, according to Lax. The popularity of NPS continues to beg the question of why the score is what it is and how it can be improved.
"There has been wider adoption of questioning NPS and testing multiple metrics to determine which measure best explains or predicts customer behavior and business outcomes,” he said. “Businesses need to carefully examine their business model and focus intently on the ultimate business objective: boosting customer loyalty as a path to improving customer profitability.”
Avoiding Over-Reliance on NPS
“While the Net Promoter Score metric has soared in popularity and offers a simple and straight-forward way to gauge brand loyalty, it is not always the right CX metric to focus on,” Lax said. “Businesses that want to build better customer experiences should never blindly adopt NPS as their holy grail. The best CX metric is that which best explains the customer behaviors you are trying to encourage and the business outcomes you want to achieve.”
Derek Wang, CEO and founder of AI experience analytics platform Stratifyd, cautioned CX teams against over-surveying because they only provide a “limited view of the customer experience.”
According to Lax, the steps for determining the ideal CX metric are simple:
- Identify the outcome(s) that are the most important to your business
- Link the outcomes to customer survey and behavioral data
- Test which metric does the best job of explaining those outcomes
